The Seychelles Financial Services Authority IBC Restrictions Reminder: Circular No. 5 of 2026 and What It Signals for Seychelles IBCs

Circular No. 5 of 2026, issued on 14 August 2026, zeroes in on IBCs operating across regulated financial sectors specifically virtual asset services without securing the mandatory licences or statutory approvals. The subtext is unambiguous. The grace period of passive oversight is over, and formal enforcement measures are actively being queued for entities found operating outside their legal parameters.

For corporate service providers, registered agents, and cross-border advisers, treating this notice as routine administrative circularisation would be a serious miscalculation. The timing is deliberate. With the IBC Amendment Bill currently moving through the National Assembly and Seychelles preparing for its high-stakes Third Round Mutual Evaluation by ESAAMLG, the FSA faces acute international pressure to prove that its regulatory framework has teeth. This circular serves as an opening salvo in establishing an evidentiary trail of active, dissuasive supervision.

What the FSA Has Found

Through supervisory and monitoring activities, the FSA has identified IBCs appearing to conduct regulated activities in foreign jurisdictions without the requisite local licences or approvals. The word “appear” does some diplomatic work there, but the substance is clear: this is not a theoretical concern. Specific conduct has been observed, and the circular is the FSA’s response.

The regulated activities at issue — banking, insurance, securities, mutual funds, corporate and trustee services, gambling, and the full spectrum of virtual asset activity are prohibited under section 5 of the IBC Act unless the relevant licence or permission has been obtained either in Seychelles or in the foreign jurisdiction where the activity is being conducted. An IBC incorporated in Seychelles is not a licensed entity by virtue of its incorporation. That point has always been true, but it is evidently not universally understood.

Incorporation is a legal status, not a regulatory permission. The FSA’s decision to say so explicitly, in a formal circular, reflects a documented pattern of that distinction being blurred — whether through genuine misunderstanding or deliberate opacity.

The Virtual Asset Dimension

The most operationally significant part of Circular No. 5 concerns virtual assets, and it reflects the maturity that Seychelles’ VASP regulatory framework has now reached. The Virtual Asset Service Providers Act, 2024 is in force, the FSA is licensing VASP operators, and the period during which IBC structures could engage in virtual asset activities in a regulatory grey zone has closed.

The prohibitions are specific. An IBC may not carry on virtual asset service business in or from Seychelles without a VASP licence. It may not issue, purport to issue, or promote initial coin offerings or non-fungible tokens in or from Seychelles without FSA authorisation. It may not operate mixing or tumbling services. These prohibitions apply regardless of where the customers are located or how the activity is described.

This matters particularly for IBCs that have been used as vehicles for crypto-adjacent businesses, trading platforms, token issuance structures, DeFi participation vehicles and similar arrangements, on the assumption that cross-border digital activity does not attract local regulatory scrutiny. That assumption is no longer safe in Seychelles, and in most other jurisdictions it has not been safe for some time.

Penalties are material

A contravention of section 5 of the IBC Act may result in a fine of up to USD 50,000. A contravention of the VASP Act, whether for conducting unlicensed virtual asset services or for unauthorised ICO or NFT activity, carries a maximum fine of SCR 5,250,000 per offence. At current exchange rates that is approximately USD 370,000. For structures operating at any meaningful scale, these are numbers that matter.

The Disclosure Obligation That Many IBCs Are Not Meeting

Beyond the activity restrictions themselves, the circular addresses something that tends to receive less attention: the positive obligation on IBCs conducting regulated activities outside Seychelles to make clear disclosures to clients, prospective clients and the public about the basis on which those activities are being conducted.

The FSA’s requirements on this point are specific. Websites, client agreements and marketing materials must prominently state the authority under which the IBC is operating. Where the IBC is providing services in a foreign jurisdiction under that jurisdiction’s authorisation, that should be stated. Critically, the circular prohibits any IBC from creating the impression, even implicitly, that its Seychelles incorporation constitutes FSA licensing, supervision or endorsement. An IBC that says “licensed and regulated in the Seychelles” when it holds no licence is, on the FSA’s analysis, in breach. The same applies to vaguer formulations that rely on the jurisdictional association without making the distinction clear.

This is not a technicality. Misrepresentation of regulatory status is one of the issues that attracts the most serious supervisory and enforcement attention internationally, and the FSA has now signalled that it is paying attention to how Seychelles IBCs are presenting themselves in foreign markets.

What This Means for Registered Agents

Registered agents occupy a particular position in this context. They are the gatekeepers for IBC incorporation and maintenance, and they are themselves regulated by the FSA. A registered agent that facilitates or maintains an IBC which is evidently conducting prohibited activities faces its own regulatory exposure, separate from the liability of the IBC itself.

The circular does not address registered agents directly, but its implications for them are real. Any registered agent that becomes aware of an IBC in its portfolio conducting unlicensed regulated activities, including through public-facing materials that misrepresent the IBC’s regulatory status, should be considering its own obligations carefully. Continuing to act without raising the issue with the client is not a neutral course of action.

The Immediate Steps

The circular calls on IBCs to review the nature of their activities and any related public representations. Where a potential contravention is identified, the FSA’s instruction is unambiguous: cease the relevant activity or representation immediately and take all necessary corrective action. There is no grace period indicated.

In practice, that review should cover the following. First, what activities is the IBC actually conducting, and do any of them fall within the categories prohibited by section 5 of the IBC Act unless licensed? Second, does the IBC hold the required licences or approvals, either in Seychelles or in the relevant foreign jurisdiction — for each regulated activity it is conducting? Third, do the IBC’s website, client agreements and marketing materials accurately describe its regulatory status, and do they avoid creating any impression of FSA authorisation that does not exist?

Where the answer to any of those questions is uncomfortable, the time to address it is now, before the FSA’s monitoring activities produce a more formal intervention. The circular is a warning shot. It is also a reasonable opportunity to put things in order without the pressure of an active enforcement process.

The FSA has now documented what it has seen and stated the consequences of non-compliance in a formal circular. That is the last notice most regulators give before enforcement follows.

The Broader Context

Circular No. 5 of 2026 is the third significant regulatory development in Seychelles within a matter of weeks, following the IBC Amendment Bill and the Trusts Amendment Bill introduced in July. Taken together, they describe a jurisdiction that is actively tightening its regulatory framework in the run-up to its mutual evaluation and doing so with specificity about what it has observed and what it requires.

For those who use Seychelles IBC structures for legitimate international business purposes, holding, trading, intellectual property, employment and similar arrangements that sit well outside the restricted activity categories, none of this creates particular difficulty. The IBC vehicle remains fit for purpose for those applications, and the regulatory enhancements being made now should, over time, strengthen the jurisdiction’s standing.

For those operating at the edges of what an IBC is permitted to do, the position is now considerably clearer, and less comfortable, than it was a year ago.

We are available to advise on the implications of Circular No. 5 for specific structures, on the licensing options available in Seychelles for activities that require authorisation, and on how to bring existing public representations into alignment with the FSA’s requirements.