Advisory in respect to recurrent issues relating to entities purporting to be licensed and regulated by the Financial Services Authority

The Financial Services Authority (“FSA”) issued an advisory dated August 30th, 2019 advising the general public and potential investors to be vigilant when engaging with entities providing services within the Financial Technology (“Fintech”) landscape, including but not limited to services pertaining to virtual assets, such as crypto-currencies and other services that are required to be undertaken only by approved, licensed or regulated persons. It is important to note that a vast majority of these services are being offered over the internet and the operators in question are not based in the Seychelles.

Regrettably, it has recently come to the FSA’s attention that it appears that there continues to be a number of companies purporting to be carrying on businesses and providing services related to the Fintech realm, when they are not authorized to do so. Furthermore, some of these entities are claiming that they are licensed and regulated by the FSA which is not correct.

For clarification purposes, the FSA licences and regulates entities as can be found here only.

The FSA would like to inform the public in general that it has come to be aware that some of these businesses are set up as International Business Companies (“IBCs”) that may be registered in Seychelles. It is necessary to note that being an IBC does not translate that an entity is licensed or regulated by an Authority but rather that it has been set up or incorporated as company in Seychelles. To carry out any activity, the IBC, similar to any legal person, has to have the appropriate authorisations in the form of a licence to carry out specific activities.

As such, this Advisory is being issued in order to alert members of the public and investors alike when it comes to their dealings with such unauthorized service providers. The FSA also strongly advises that the public and investors be aware of the risks that are associated with such services, including but not limited to the potential loss of funds.

The FSA would like to inform members of the public and investors that whilst it is necessary that it is contacted in cases of perceived wrong doing by the service providers in question so that it can carry out necessary enquiries, it would equally like to point out that in such cases it is difficult for the FSA to assist members of the public and investors with some form of redress, such as the retrieval of any funds from the providers concerned, in view that they are not licensed nor regulated by the FSA and often times are not based or conducting the activity in the Seychelles.

Before engaging the services of such companies and any other entities providing services specified herein, it is recommended that investors and members of the public undertake careful due diligence to evaluate the investment opportunity. The following questions, amongst others, should be duly considered:

  1. What do I know about this company and the services being offered?
    1. Is the business a company? If yes, where is it incorporated?
    2. Is the business licensed to provide the services being advertised particularly when it includes the taking or holding of client funds?

  2. Does the business itself express or disclose in a clear manner the risks associated with the services being offered? 

  3. Do I understand both the opportunities (i.e. the potential gains) as well as the potential risks (such as, the loss of funds) associated with such services?

  4. Is this company regulated and if yes, by which Regulatory Authority?

  5. Does this company have appropriate Anti-Money Laundering (AML) controls in place?
    1. If yes, under the law of which country/jurisdiction(s) are those controls based on?

  6. What dispute resolution mechanisms exist if there is a dispute with this company?
    1. If yes, which country/jurisdiction(s) is identified as the jurisdiction for dispute resolution.

In light of the above, the public is invited to provide the FSA with any relevant information on any entities purportedly operating in or from within Seychelles, and on any improper activities engaged in by such entities.

The FSA has issued this Advisory pursuant to Section 4(1)(m) of the Financial Services Authority Act, 2013.

The Financial Services Authority