Caroline Abel: Remarks - 13th Regional Conference of Heads of
AntiCorruption Agencies in Commonwealth Africa
Remarks by Ms Caroline Abel, Governor of Central Bank of Seychelles, at the13th
Regional Conference of Heads of Anti-Corruption Agencies in Commonwealth Africa,
Beau Vallon, 16 May 2023.
* * *
Distinguished Heads of Anti-Corruption Agencies,
Invited Guests,
Good morning,
Introduction
I am pleased to be given the opportunity to address you as Seychelles hosts the 13th
Regional Conference of Heads of Anti-Corruption Agencies in Commonwealth Africa.
It has been said on countless occasions and still holds true today that corruption knows
no borders. While the extent of this problem varies across countries and regions,
corruption has the ability to hinder development, including economic growth and
stability, wherever it exists and whatever form it takes.
From a central bank perspective, corruption offences and their links to money
laundering can have severe repercussions on the financial system, and ultimately, the
broader economy. Being a small island nation heavily dependent on tourism and
imports, Seychelles cannot turn a blind eye to the potential impact of such illegal
activities on the integrity of its financial system.
My intervention today will be about the Central Bank's role as a regulator in helping to
identify suspicious activities and ensuring that the country meets international standards
in regard to tackling money laundering.
Setting the scene - has the impact of money laundering hit home
As mentioned, corruption offences and money laundering can pose a serious threat to
the integrity and stability of the financial system and expose countries to various risks.
Seychelles is as vulnerable to these threats as any other country.
The impact list is quite long, to name a few; it can include increased costs for
businesses when dealing with international partners, loss of tax revenue, risk of
international sanction, and correspondent banking challenges for banks, among others.
On the latter risk, it is to be noted that Seychelles has faced its share of correspondent
banking challenges due to the global tightening in the regulatory environment as a
result of the de-risking phenomenon. In 2014, the Central Bank took control of the Bank
of Muscat International Offshore (BMIO), whose correspondent banking relationship
was discontinued. The bank was subsequently restructured and re-established a
correspondent banking relationship.
In the face of these challenges and cognisant of the impact on the integrity and stability
of the domestic financial system, CBS has undertaken several initiatives over the years
to create an enhanced understanding of the various risks and their repercussions, as
well as to display the country's commitment to improving its AML/CFT framework.
Some of the initiatives include:
*Working with the banks to build their capacity as well as their levels of AML/CFT
controls
*Encouraging annual or even bi-annual engagements of local banks with their
correspondent banks
*CBS and the Financial Services Authority went on a roadshow in New York and
several European countries in September/October 2017 to meet with regulators and
correspondent banks in these countries. The aim was to better understand the
derisking issue and concerns that correspondent banks and regulators have regarding the
jurisdiction as well as to inform the international community about efforts being
undertaken to strengthen the effectiveness of the country's AML/CFT regimes
*Although the Financial Intelligence Unit had the overall mandate for AML/CFT
supervision at that time, the Central Bank conducted AML/CFT on-site examination of
financial institutions under its regulatory purview to help identify weaknesses and
strengthen their AML/CFT framework. Bilateral meetings were conducted between the
CBS and FIU to share the outcomes of the on-site examinations.
New impetus given to the efforts in 2020
In recent years, there have been further efforts to identify the gaps and enhance the
necessary frameworks not only at an institutional level but at a national level to ensure
that the country is adhering to international standards aimed at assisting the fight
against illegal acts such as corruption and the associated illicit financial flows.
The new Anti-Money Laundering and Countering the Financing of Terrorism and
Beneficial Ownership laws are two key pieces of legislation that came into force in 2020
as part of national efforts to improve the country's AML/CFT regime. Enhancing the
country's AML/CFT legal framework is one of the strategic objectives outlined in the
Seychelles National AML/CFT Strategy for 2020 - 2023.
The new AML/CFT law makes provision for a sectoral supervisory approach by the
CBS, FSA and FIU. Given that the activities and services offered by the different types
of financial institutions can give rise to different kinds of money laundering risks, the
respective regulators have a crucial role to play in their continuous supervision and in
ensuring that the financial institutions have the necessary internal policies, procedures,
transaction monitoring systems, and other control measures in place. This is imperative
to strengthen the financial institutions' ability to detect and report suspicious
transactions and, more importantly, mitigate the risk of being used as enabling channels
for laundering funds derived from illicit activities and preventing operational and
reputational risks.
It is to be noted that the Central Bank had been preparing to take on board the AML
supervisory mandate since 2019 with the setting up of a new AML/CFT Section within
its Financial Surveillance Division, as having the relevant laws in place is a step in the
right direction, but ensuring their implementation is even more critical.
Some of the work that CBS has done thus far under the new regime include:
*Conducting research and formulate policies and procedures to ensure effective
implementation of the relevant laws
*Conduct risk-based AML/CFT supervision of financial institutions and other entities
falling under its regulatory purview through on-site and off-site examination
*Take appropriate supervisory action or impose penalties for non-compliance to the
regulatory and prudential requirements
*Issue guidelines, circulars and directives to its reporting entities about their obligations
under the law.
The wins vs the challenges
The ongoing efforts to prevent the integrity of the country's financial system from being
compromised by illicit activities are starting to produce the desired results. The
strengthening of the legal framework through enacting new laws and other legislative
amendments has enabled the country to be re-rated against 14 recommendations of
the Financial Action Task Force, previously graded non-compliant or partially compliant.
Seychelles is now either compliant or largely compliant with 34 of the 40 FATF
Recommendations.
Work continues to address remaining or emerging deficiencies in the face of some
challenges, such as the difficulty being encountered by the financial institutions to fulfil
the compliance officer appointment requirement, given a lack of qualified individuals on
the market. Discussions have started on possible training programmes that can be
developed to address this challenge.
CBS as the regulator, is also finding ways to address its human resource capacity to
ensure the successful delivery of its AML supervisory role, given continued
developments and emerging challenges and risks in the economy.
Importance of education
It is important to note that achieving the desired results also requires education, and the
Central Bank places a lot of emphasis on creating awareness.
Public understanding of the consequences of money laundering and why financial
institutions are required to update their customers' information regularly and ask for
information about the beneficial owners, whether a customer is a politically exposed
person and source of income, can help improve the conduct of customers and the way
they respond to these requirements.
CBS as a participant in the money laundering/corruption fight
At this juncture, it is essential to note that the regulators should not only ensure that
institutions under their supervision adhere to the expected standards but should also
adopt best practices and hold themselves to the highest standards.
While it is not a reporting entity under the provisions of the AML/CFT law, the Central
Bank is also investing efforts to assist the fight against money laundering through its
own internal policies and processes:
Some of the initiatives include:
*An internal AML/CFT/CPF policy that guides the discharge of its banker to government
function
*Various solutions in place to assist in performing customer due diligence. This includes:
SWIFT transaction Screening, which allows for the screening and flagging of
transactions so that staff can analyse and decide whether to block or release
Subscription to World-Check, a platform that screens individuals/entities to
determine if they have not been sanctioned or have any other adverse information
that CBS should be aware of
Uses Payment Guard solution, which is a fraud detection solution
The operational and governance teams are constantly monitoring these solutions to
ensure they are being used efficiently and to identify any areas needing improvement.
*An Anti-Bribery and Corruption Policy was recently approved outlining the standard of
behaviour that is expected from board members, employees and external parties and
this document has been published so that the public is also made aware of the level of
expectations if they are to engage with CBS in the supply of services and products
*The operational teams report any suspicious transactions to the governance functions,
which analyse and ascertain whether there is reasonable ground to report these
suspicions to the FIU
*CBS responds swiftly to questions or clarifications that any local or international
authorities may have concerning transactions processed for ministries, agencies or
departments
*CBS maintains good communication with correspondent banks and engages with them
on any arising concerns to find a solution on the way forward
*CBS completes all KYC forms received from counterparties to reflect the controls in
place and the continued work underway to improve the framework
*CBS escalates matters of concern to other relevant authorities as part of the
information-sharing and collaboration approach
*CBS also ensures the ongoing capacity building of its staff in relevant areas to assist
the performance of their duties.
Looking ahead
While much has been done and the efforts are ongoing, we are cognisant that
corruption remains complex.
As the world continues to evolve and as we continue to bear witness to various
transformations, including the ongoing digital revolution, we can be sure that existing
and new corruption practices will continue to emerge, requiring our collective efforts to
find ways to build on our anti-corruption initiatives and measures.
In light of this reality, the theme of this conference - "Uniting Commonwealth Africa in
the Fight Against Corruption" - could not be more fitting. Cooperation is crucial at the
national level, as recognised in Seychelles, with the grouping of relevant supervisory
and law enforcement agencies under the National AML/CFT Committee, which is
fostering greater coordination and collaboration.
Additionally, several regulatory and law enforcement authorities have established
collaboration arrangements to share information and expertise. The Central Bank has
formalised such an agreement with several law enforcement and supervisory
authorities, including the Anti-Corruption Commission, Seychelles Revenue
Commission, FSA and FIU.
With globalisation, our countries also depend on one another, such as for trade,
investment or cross-border payments, thus highlighting the need for enhanced
collaboration beyond our respective shores.
I have no doubt that the conference will provide the grouping of regional anti-corruption
agencies with a platform to share experiences, challenges and best practices and an
opportunity to continue working together to adopt new strategies that be shared with
other relevant agencies to assist our respective institutions, countries and the region to
continue moving forward and making strides in our fight against corruption.
Conclusion
In conclusion, combatting corruption requires a concerted approach, and each
individual has a role to play in this fight.
I would also like to reiterate the importance of education as we pursue the fight against
corruption. Let us continue to instil in our young children, students, employees and all
citizens the need to maintain high standards of integrity, ethics and conduct in all their
undertakings - personal or professional. All institutions - government, public bodies,
private sector, and civil society - can lead by example by being committed to
transparency, good governance and accountability.
With this, I would like to thank you for your attention and I wish you all continued fruitful
deliberations.
I also wish our international guests an enjoyable stay on our beautiful shores.
Thank you.