FRAUD

Regulatory provisions and authorities

1. What are the main regulatory provisions and legislation relevant to corporate fraud?  

In the Seychelles, the offences related to corporate fraud can be found in numerous Acts, for example:

  • International Business Companies Act 2016.
  • Financial Services Authority Act 2013.
  • Companies Ordinance Act 1972.
  • Securities Act 2007.
  • Anti-Corruption Act 2016.
  • Penal Code.
  • Prevention of Terrorism Act 2004.

Offences

2. What are the specific offences relevant to corporate fraud?

The specific offences relevant to corporate fraud can be found in the Financial Services Authority Act 2013. They are as follows:

  • Money laundering.
  • Financing of terrorism.
  • Misuse of information.
  • Offences involving dishonesty.
  • Defrauding creditors.
  • Acting fraudulently or in bad faith.
  • Breach of trust.
  • Providing false statements.
  • Conspiracy to defraud.

Enforcement

3. Which authorities have the powers of prosecution, investigation and enforcement in cases of corporate or business fraud? What are these powers and what are the consequences of non-compliance? Please identify any differences between criminal and regulatory investigations.

Authorities

In the Seychelles, the authorities that have the powers of prosecution, investigation and enforcement in cases of corporate or business fraud are as follows:

  • The Company Executive Office (CEO) or an officer of the Anti-Corruption Commission.
  • Police
  • Financial Intelligence Unit (FIU).
  • Financial Services Authority (FSA).
  • Court of Seychelles.

Prosecution powers

Under the Anti-Corruption Act 2016, prosecution in relation to cases of corporate fraud must be instituted by or with the consent of the Attorney General. However, the FSA still has the authority to revoke licences in cases of non-compliance.

Powers of interview

The police and related authorities have the power to interview. After investigations have been carried out, the CEO of the Anti-Corruption Commission may request (by giving notice in writing) that an individual answers certain questions in relation to the alleged offence.

Powers of search/to compel disclosure

Under the Criminal Penal Code, a police officer has the power to search with a warrant granted by the court. However, the FIU together with the anti-money laundering authorities can equally investigate through searches. This is because in the Seychelles, anti-money laundering laws allow the FIU to investigate and freeze the funds of fraudsters. Under the Anti-Corruption Act, an officer of the Commission can search premises, and seize and remove relevant evidence. This is on the condition that the officer does this in the presence of the owner of the premises (or any person in control of the premises).

Powers to obtain evidence

The court has the power to obtain evidence under the Criminal Procedure Code. Thereafter, the CEO of the Commission can investigate further.

Power of arrest

The police and the associated authorities mainly have the power of arrest.

Under section 57(1) of the Anti-Corruption Act 2016, the following can act where they have reasonable grounds to believe that a person has committed, is committing, or is about to commit any offence in relation to corruption:

  • The CEO.
  • An officer of the Anti-Corruption Commission who has been granted permission by the CEO.

They can request that the police arrest that person, without a warrant, and that person will be dealt with in accordance with section 101 of the Criminal Procedure Code. The law provides that the detainees must appear before a magistrate/judge within a 24-hour period.

Court orders or injunctions

Court orders and/or injunctions are issued by the court.

4. Which authority makes the decision to charge and on what basis is that decision made? Are there any alternative methods of disposal and what are the conditions of such disposal?

In the Seychelles, the court charges under the Penal Code. The court will examine and determine whether the accused acted fraudulently before deciding whether or not to charge. The Anti-Corruption Commission, which was set up through the Anti-Corruption Act 2016, has the power to investigate whenever a complaint has been lodged within the Commission.

5. What are the sanctions for participating in corporate fraud?

Criminal proceedings

Right to bail. The police have the right to bail until the trial, where the magistrate/judge will decide whether to adjourn the hearing or not. However, the police must bring the detainee before the court within a period of 24 hours.

Penalties. Individuals accused of corporate fraud will be sentenced under the Proceeds of Crime (Civil Confiscation) Act and the court may assign a fine of SCR500,000 or an imprisonment for a term of five years or both.

Civil proceedings

An individual found guilty of corporate fraud may:

  • Have their accounts frozen by the FIU.
  • Be asked to pay financial penalties.
  • Find themselves in a position where they will not be granted approval to undertake certain activities in the country.

Safeguards

6. Are there any measures in place to safeguard the conduct of investigations? Is there a process of appeal? Is there a process of judicial review?

Appeal

Under the Seychelles Human Rights Commission Act 2018, defendants have the right to a fair trial and are considered innocent until proven guilty, with the right to appeal. The Seychelles Court of Appeal is the final appeal court. The President is the Head of the Court of Appeal and usually sits with two Justices of Appeal.

Judicial review

Any party who is not satisfied with the decision-making process of a public authority can petition the Supreme Court to review the decision.

7. What are the main regulatory provisions and legislation relevant to bribery and corruption?

The main regulatory provisions and legislation relevant to bribery and corruption in the Seychelles are as follows:

  • Public Services Code of Ethics and Conduct 2008.
  • Anti-Corruption Act 2016.
  • Seychelles Transparency Initiative (set up in 2017).

8. What international anti-corruption conventions apply in your jurisdiction?

The UN Convention against Corruption 2003 (Corruption Convention) was signed by the Seychelles in 2004, and was ratified in 2006.

Offences

9. What are the specific bribery and corruption offences in your jurisdiction?

Foreign public officials

A public officer may be found guilty if they:

  • Promise (corruptly or unlawfully), offer, accept, attempt to accept or receive, agree to accept, obtain or give gratification, for himself/herself, as an inducement or to take an undue advantage for doing or forbearing to do anything in connection to any matter or transaction which foreign public body is or may be concerned with.
  • Solicit or accept (directly or indirectly) any undue advantage, or benefit from an individual so as to not act in the exercise of their official duties.
  • Misuse his/her position, office and authority.
  • Breach the procurement procedure or wilfully fail to comply with the procedure.

(Section 29, Anti-Corruption Act 2016.)

Domestic public officials

There are no specific bribery and corruption offences for domestic public officials in the Seychelles.

Private commercial bribery

A public officer cannot solicit, receive or agree to accept or attempt to receive or obtain from any individual any gratification as an inducement for doing or abstaining from doing something, in relation to any matter or transaction with any private body (section 23(3), Anti-Corruption Act 2016).

Defences

10. What defences, safe harbours or exemptions are available and who can qualify?

The main defence is an ability to satisfy the court that the alleged perpetrator was not involved in the offence. The law has not established any specific way to demonstrate this. However, whenever a complaint is lodged, the Commission and the CEO will investigate further in order to establish whether the alleged corrupt practice is frivolous or vexatious (section 48(1), Anti-corruption Act, 2016).

No other defences are provided.

11. Can associated persons (such as spouses) and agents be liable for these offences and in what circumstances?

The Seychelles law is silent regarding associated persons such as spouses or agents. However, under section 40 of the Anti-Corruption Act 2016, it is stipulated that any person who abets, counsels or conspires as a third party, with any person, to commit an offence, is also guilty of committing that offence, and will be liable to whatever penalty would be imposed on the person committing the offence.

Under section 51 of the Act, every director and manager of a corporate body will be liable as if he/she has committed the offence until he/she is able to convince the court that the act was done without his/her knowledge, consent or involvement. If the Commission (on reasonable grounds) considers that a person has been implicated in an offence and/or has benefited from gratifications or inducements, it can institute civil proceedings against that person (section 77(1), Anti-corruption Act).

Enforcement

12. Which authorities have the powers of prosecution, investigation and enforcement in cases of bribery and corruption? What are these powers and what are the consequences of non-compliance? Please identify any differences between criminal and regulatory investigations.

Authorities

In the Seychelles, the following authorities have the powers of prosecution, investigation and enforcement in cases of bribery and corruption:

  • The CEO or an officer of the Anti-Corruption Commission.
  • Police
  • FIU
  • FSA
  • Court of Seychelles.

Prosecution powers

Under the Anti-Corruption Act 2016, prosecution in connection to cases of corporate fraud must be instituted by or with the consent of the Attorney General however the FSA may revoke licences in case of non-compliance.

Powers of interview

The police and related authorities have the power to interview. After investigations have been carried out, the CEO of the Anti-Corruption Commission may request (by giving notice in writing) that an individual answers certain questions in relation to the alleged offence.

Powers of search/to compel disclosure

Under the Penal Code, a police officer has the power to search with a warrant granted by the court. However, the FIU together with the Anti-Money Laundering authorities can equally investigate through searches. This is because in the Seychelles, anti-money laundering laws allow the FIU to investigate and freeze the funds of fraudsters. The Anti-Corruption Act does provide that an officer of the Commission may where, in the presence of the owner or any person in control of the premises consents to the entry, search, seizure and removal of evidences.

Powers to obtain evidence

The court has the power to obtain evidence under the provisions of the Criminal Procedure Code. Thereafter, the CEO of the Commission can investigate further.

Power of arrest

The police and the associated authorities mainly have the power of arrest.

Under section 57(1) of the Anti-Corruption Act 2016, the following can act where they have reasonable grounds to believe that a person has committed, is committing, or is about to commit any offence in relation to corruption:

  • The CEO.
  • An officer of the Anti-Corruption Commission who has been granted permission by the CEO.

They can request that the police arrest that person, without a warrant, and that person will be dealt with in accordance with section 101 of the Criminal Procedure Code. The law provides that the detainees must appear before a magistrate/judge within a 24-hour period.

Court orders or injunctions

Court orders and/or injunctions are issued by the court.

13. Which authority makes the decision to charge and on what basis is that decision made? Are there any alternative methods of disposal and what are the conditions of such disposal?

An officer of the Anti-Corruption Commission may seek the assistance of the police, the FIU or the Seychelles Revenue Commission to investigate. At first, a complaint must be lodged within the Commission who will then investigate. The Commission will then examine the following:

  • The severity of the conduct to which the allegations relate.
  • Whether there are any aggravating factors relating to the allegations.
  • Whether the complaint has been subject to prior investigation.

If the CEO determines that the allegation is founded, he/she must decide whether the Commission will carry out the investigation or whether the case needs to be referred to another authority. The Anti-Corruption Commission may seek the assistance of the police, the FIU or the Seychelles Revenue Commission to investigate.

Convictions and sanctions

14. What are the sanctions for participating in bribery and corruption?

Civil/administrative proceedings or penalties

The FSA has specific guidelines that corporate bodies must comply with. Failure to comply with such guidelines may incur penalties such as fines and/or revocation of licence.

Criminal proceedings or penalties

Right to bail. See Question 3 and Question 5.

Penalties. Sanctions for participating in bribery and corruption include a fine not exceeding SCR300,000 and/or imprisonment for a term not exceeding seven years.

The funds and assets of the accused may be frozen.

Safeguards

15. Are there any measures in place to safeguard the conduct of investigations? Is there a process of appeal? Is there a process of judicial review?

See Question 6.

Tax treatment

16. Are there any circumstances under which payments such as bribes, ransoms or other payments arising from blackmail or extortion are tax-deductible as a business expense?

There are no circumstances under which payments such as bribes ransoms or other payments arising from blackmail or extortion are tax deductible as a business expense.

17. What are the main regulatory provisions and legislation relevant to insider dealing and market abuse?

The main regulatory provision in connection to insider dealings and market abuse is under section 92 to 103 of the Securities Act 2007.

Offences

18. What are the specific offences that can be used to prosecute insider dealing and market abuse?

Under the Seychelles Securities Act 2007, an individual is known to be an insider if they are aware that the information is considered to be inside information. Inside information is described as any detail relating to particular securities or the issue of securities, that has not been made public.

An individual is guilty of this offence if they are found:

  • Dealing in related securities whose price is affected by that information.
  • Encouraging another person to deal in securities based on that information.
  • Disclosing information.
  • Maintaining, increasing, reducing or causing fluctuations to the market price of the securities by way of a purchase or sale that is not related to the change in beneficial ownership.
  • Entering into or carrying out transactions relating to securities that may directly or indirectly increase, reduce or stabilise their market price with the intention of inducing or halting the sale or purchase of the securities issued by the same or a related company.
  • Publishing statements, promises or forecasts that are misleading and false so as to induce or attempt to induce another individual to deal in securities.

Defences

19. What defences, safe harbours or exemptions are available and who can qualify?

An individual has a defence if he/she can demonstrate that he/she had reasonable grounds to believe that the alleged insider information was known to the public.

Enforcement

20. Which authorities have the powers of prosecution, investigation and enforcement in cases of insider dealing and market abuse? What are these powers and what are the consequences of non-compliance? Please identify any differences between criminal and regulatory investigations.

Authorities

Authorities governing the powers of prosecution, investigation and enforcement in cases of insider dealing and market abuse are as follows:

  • The CEO or an officer of the Anti-Corruption Commission.
  • The police.
  • FIU.
  • FSA. This has been established under the Financial Services Authority Act as the main authority in cases of insider dealing or market abuse. The FSA acts to:
    • promote the protection of investors;
    • maintain effective compliance and enforcement programmes;
    • promote and prevent financial crimes and illegal practices.
  • Court of Seychelles.

Prosecution powers

Under the Anti-Corruption Act 2016, prosecution in connection to cases of corporate fraud must be instituted by or with the consent of the Attorney General. However, the FSA may revoke licences in cases of non-compliance.

Powers of interview

The FSA may engage or appoint any expert or competent person to perform any of its assigned duties.

The police and related authorities have the power to interview. After investigations have been carried out, the CEO of the Anti-Corruption Commission may request (by giving notice in writing) that an individual answers certain questions in relation to the alleged offence.

Powers of search/to compel disclosure

Under the Criminal Penal Code, a police officer has the power to search with a warrant granted by the court. However, the FIU together with the anti-money laundering authorities, can also investigate. Additionally, under the Anti-Corruption Act, an officer of the Commission can search premises, and seize and remove relevant evidence. This is on the condition that the officer does this in the presence of the owner of the premises (or any person in control of the premises).

Powers to obtain evidence

The court has the power to obtain evidence under the Criminal Procedure Code. Thereafter, the CEO of the Commission may investigate further.

Power of arrest

The police and associated authorities have the main powers of arrest.

Under section 57(1) of the Anti-Corruption Act 2016, the following can act where they have reasonable grounds to believe that a person has committed, is committing, or is about to commit any offence in relation to corruption:

  • The CEO.
  • An officer of the Anti-Corruption Commission who has been granted permission by the CEO.

They can request that the police arrest that person, without a warrant, and that person will be dealt with in accordance with section 101 of the Criminal Procedure Code. The law provides that the detainees must appear before a magistrate/judge within a 24-hour period.

Court orders or injunctions

See Question 3.

21. Which authority makes the decision to charge and on what basis is that decision made? Are there any alternative methods of disposal and what are the conditions of such disposal?

The FSA, together with the court, make the decision to charge in cases of insider dealings or market abuse.

Convictions and sanctions

22. What are the sanctions for participating in insider trading and market abuse?

Civil/administrative proceedings or penalties

The FSA can suspend and revoke licences if a company:

  • Contravenes the Financial Services Authority Act 2013 or any other financial services legislation or guideline issued by the Authority.
  • Contravenes provisions of the Securities Act 2007.
  • Operates in a manner that is detrimental to the public interest.
  • Ceases to operate securities exchange.

The FSA can take actions if it is found that:

  • The direction or management of a business is operating dishonestly.
  • A licensee is in breach of the Securities Act 2007.
  • A licensee is convicted of an offence in relation to fraud or dishonesty.
  • A licensee is carrying or attempts to carry out business in a way which may be prejudicial to its creditors or clients.

Criminal proceedings

Right to bail. The FSA does not provide for the right to bail (see Question 5).

Penalties. An individual who commits an offence is liable on summary conviction to either/both a:

  • Fine of USD100,000 or the equivalent in Seychelles Rupees, or up to three years’ imprisonment (for individuals).
  • Fine of USD200,000 or the equivalent in Seychelles rupees (SCR).

Civil suits

A person that is convicted of insider trading will be liable for any civil action that an individual chooses to bring for suffering economic loss as a result of selling or purchasing securities.

Safeguards

23. Are there any measures in place to safeguard the conduct of investigations? Is there a process of appeal? Is there a process of judicial review?

See Question 6.

24. What is the main legislation and regulatory provisions relevant to money laundering, terrorist financing and/or breach of financial/trade sanctions?

In order to diminish and combat money laundering and the financing of terrorism, major steps have been taken by the Seychelles. Amendments to the Anti-Money Laundering Act were made in 2012 to improve the independency of the FIU. As part of these amendments, a specific timeframe was launched for the administrative freezing of assets, and for related parties to produce relevant documentation and information. The FIU also worked on the solidification of its legislative framework which governs offshore activities.

The Seychelles has been qualified by the Organisation for Economic Co-operation and Development (OECD) Global Forum as fully compliant in respect of international standards of exchange. In the Seychelles, the FSA reports cases of suspicious transactions to the FIU which then reports back to the President.

Money laundering

The Seychelles has autonomous terrorist regimes under the Anti-Money Laundering Act 2006 and the Prevention of Terrorism Act 2004. Breaching sanctions in the Seychelles is known to be a criminal offence.

Terrorist financing

The Prevention of Terrorism Act 2004 is the main law in relation to terrorist financing.

Financial/trade sanctions

The Seychelles, which is a member of the UN, implements all of the UN Security Council resolutions in relation to financial/trade sanctions.

Offences

25. What are the specific offences that can be used to prosecute money laundering, terrorist financing and breach of financial/trade sanctions?

Money laundering

An individual may be found guilty of money laundering if he/she:

  • Knows or believes the money or property originated from unlawful conduct.
  • Is reckless with regard to determining whether or not the property originated from unlawful conduct and:
  • converts, transfers, handles or removes the property;
  • hides the true nature, source, location and ownership of the property, or any of its rights; or
  • uses and take possession of the property.

If an individual attempts, counsels, conspires or contributed in any way to money laundering, they may be liable, and can be tried and punished under the Anti-Money Laundering Act 2006.

Under the Anti-Money Laundering Act, an individual found guilty of money laundering is liable to a fine not exceeding SCR5 million and/or imprisonment for a term not exceeding 15 years. A person other than a natural person who is found guilty on conviction is liable to a fine not exceeding SCR10 million. The individual may also have their assets frozen and be banned from travelling.

Terrorist financing

Under the Anti-Money Laundering Act 2006, the financing of terrorism is described as criminal conduct. The Prevention of Terrorism Act 2004 describes a terrorist act as any action or threat of action involving:

  • Serious damage to property.
  • The endangering of an individual’s life.
  • Releasing any dangerous, harmful substances, toxic chemicals or toxins into the environment.
  • Disrupting, destroying or destabilising services and institutions such as the police, civil defence, religious, political and economic institutions of a country or international organisation.
  • Obliging the government or any international organisation to act or to refrain from acting.
  • Intimidating the public.
  • Prejudice to national security.

Any individual who offers or collects (directly or indirectly) any funds, knowing or having reasonable grounds to believe that the funds will be used in full or partially to finance terrorist acts, commits an offence. Such an offence is punishable with imprisonment for a term of between seven and 20 years.

Financial/trade sanctions

The Seychelles implements the UN Security Council resolutions in relation to financial/trade sanctions.

Defences

26. What defences, safe harbours or exemptions are available and who can qualify?

Money laundering

The main defence is that the accused can demonstrate that he/she undertook all reasonable measures and related due diligence.

Terrorist financing

The main defence is disclosure of the criminal act, which may prevent civil and criminal liability.

Enforcement

27. Which authorities have the powers of prosecution, investigation and enforcement in cases of money laundering? What are these powers and what are the consequences of non-compliance? Please identify any differences between criminal and regulatory investigations.

Authorities

The authorities dealing with cases of money laundering are as follows:

  • FSA.
  • FIU.
  • Police.
  • Attorney General.

Prosecution powers

See Question 3.

Powers of interview

The police and related authorities have the power to interview. After investigation, the CEO of the Anti-Corruption Commission can request that an individual answers questions in relation to the alleged complaint and supply information in person.

Powers of search/to compel disclosure

Under section 22 of the Anti-Money Laundering Act 2006, a judge, on hearing evidence under oath by an assets agent who is a police member, may issue a search warrant. This is if he/she is satisfied that there are reasonable grounds for suspecting that useful evidence may be found.

Powers to obtain evidence

The court has the power to obtain evidence under the Criminal Procedure Code. Thereafter, the CEO of the Commission may investigate further.

Power of arrest

The law provides that the police and associated authorities have the main powers of arrest.

Under section 24(1)(a) of the Anti-Money Laundering Act 2006, an arrest agent can arrest a suspect who is committing or has committed criminal conduct without a warrant. Section 21 of the Prevention of Terrorism Act 2004 equally states that the police may arrest any individual who has committed, is committing or is about to commit an offence under the Act, without a warrant. The suspect must be released within 24 hours unless:

  • He/she is produced before a court and the court orders him/her to be remanded.
  • The police officer has reasonable grounds to find it necessary to continue to detain the suspect in the interests of securing or preserving evidence connected to the offence.

Court orders or injunctions

Court orders and/or injunctions are to be issued by the court itself.

28. Which authority makes the decision to charge and on what basis is that decision made? Are there any alternative methods of disposal and what are the conditions of such disposal?

See Question 4.

Convictions and sanctions

29. What are the sanctions for participating in money laundering, terrorist financing offences and/or for breaches of financial/trade sanctions?

Money laundering

Right to bail.  In cases of money laundering, the right to bail is the same as for other crimes (see Question 5).

Penalties. Under the Anti-Money Laundering Act, individuals found guilty of money laundering will be liable to a fine not exceeding SCR5 million and/or to imprisonment for a term not exceeding 15 years. A person other than a natural person who is found guilty on conviction is liable to a fine not exceeding SCR10 million. The individual may also have their assets frozen and be banned from travelling.

Terrorist financing

Right to bail. See Question 5.

Penalties. Under the Prevention of Terrorism Act 2004, individuals found guilty of terrorist financing will be liable to a term of imprisonment of between seven years and 20 years.

Financial/trade sanctions

Right to bail. See Question 5.

Safeguards

30. Are there any measures in place to safeguard the conduct of investigations? Is there a process of appeal? Is there a process of judicial review?

See Question 6.

31. What are the general requirements for financial record keeping and disclosure?

Section 174 of the International Business Companies Act 2016 provides that the financial records of a company must be able to:

  • Explain the transactions of the company.
  • Enable the company’s financial position to be accurately determined at any time.
  • Help prepare the company accounts.

The financial records must be true and fair, and they must be kept at the company’s registered office or any other place which the director may think fit. Accounting records must also hold at least seven years of records. Additionally, the bank must monitor all the developments in connection to the credit market and foreign exchange (section 32, Central Bank of Seychelles Act). At any time, the bank may require financial institutions, or other entities registered in the Seychelles, to provide statistical data when carrying out its monetary policy and supervisory functions.

32. What are the penalties for failure to keep or disclose accurate financial records?

A company that fails to comply with the International Business Companies Act 2016 will be liable to a penalty fee of USD100, and an additional fee of USD25 for each day or part of a day that the contravention continues to occur. The same penalty applies to the director if he/she knowingly permits a contravention relating to financial records.

The Central Bank of Seychelles Act 2004 provides that the refusal, neglect or delay in supplying requested information is liable on conviction to a fine of SCR20,000 and up to six months’ imprisonment.

33. Are the financial record keeping rules used to prosecute white-collar crimes?

Not applicable. A fine may be imposed on conviction.

34. What are the general due diligence requirements and procedures in relation to corruption, fraud or money laundering when contracting with external parties?

The Anti-Money Laundering Act 2006 provides that all reporting entities must apply due diligence procedures in relation to customers, business relationships and transactions. Under the Anti-Money Laundering Act, the due diligence process refers to the identification of the customer on the basis of documents or data/information that has been received from trustworthy and independent sources. The Act stipulates that an entity must apply due diligence measures for:

  • The establishment of a business relationship.
  • One-off transactions.
  • Validating the authenticity and adequacy of data and documents.

Investigating suspicions of money laundering, the financing of terrorism and related crimes.

35. Under what circumstances can a corporate body itself be subject to criminal liability?

The law is silent in relation to whether a corporate body can itself be subject to criminal liability. However, section 51 of the Anti-Corruption Act 2016 provides that whenever an offence is committed by a corporate body or unincorporated body, every director or manager of that body will be liable on conviction as if he/she has personally committed the offence. This is unless the director or manager can prove that the offence was done without the knowledge, consent or involvement of the director or manager.

Type

Legal Guide

Locations

Seychelles

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