The Big Interview with Dr. Steve Fanny… CEO of FSA

Tuesday 9 January 2018
The Big Interview with Dr. Steve Fanny… CEO of FSA


“People seem to think that the offshore is only there to help rich people hide their money”
Chief executive officer for the Financial Services Authority, Dr. Steve Fanny, discusses some of the misconceptions about the offshore industry. A misunderstanding which comes from not understanding the sector. Education is key, but a challenge, he says.
by J. Florentine
How would you describe the business environment for offshore companies in Seychelles?
These days the word ‘offshore’ is a bit of a taboo, and yet international financial services are important for the Seychelles economy, despite some claiming that it is either bad or non-existent. Today we have 65 corporate service providers and over 2,500 people working in this industry. Many of them are graduate professionals such as lawyers and accountants who are skilled and are very well paid.
Furthermore, the offshore companies bring in additional business for third parties. Taxi drivers, for example find themselves going back and forth to the FSA for clients. Also benefiting are the embassies, lawyers and accountants. None of them are directly involved in the offshore business, and yet they do benefit, as some have to do the accounts for these companies, as they have to submit their annual reports to the accountants. There is a lot of demand for legal opinions. One example is the firms which provide legal opinions on the Seychelles structure.
There is also the dividend that the offshore sector pays directly into the government coffers. There are also a lot of benefits for the jurisdiction in this industry.
Do you actually look for businesses to invest in Seychelles? What kind of businesses you look for and what criteria you use?
At the FSA we do not go out to get businesses per se. We do not deal with the end users directly. It is done through the Corporate Service Providers (CSP). They are the licensed entities who will look for clients out there on the international market, who would like to set up a company in Seychelles. These can be different companies such as an International Business Company (IBC).
The IBC can be involved in any activities that you can see domestically (in Seychelles). For example; construction, re-exporting, retailing - any. It can be merely a holding structure. The IBC can be part of a more complex structure. We have the trust, foundation, securities, etc. There’s a number of licenses and different products within our portfolio which encourage people abroad to choose Seychelles as the preferred jurisdiction and will go through the CSP who will apply on their behalf with the FSA. They will then undergo a vigorous process, to ensure that we have all the ‘KYCs’ (know your customer), the due diligence, etc., before we approve license.
There is this belief that more people abroad are investing in Seychelles than Seychellois themselves. In addition to that, the perspective is that they are taking over all businesses and are not giving Seychellois investors the opportunity to develop themselves. What are your views on this?
This is true, and honestly, there is nothing wrong with it. This is the international finance services industry and our main focus is to get international clients to set up companies in Seychelles for them to invest money somewhere, or to use it somewhere else. Domestic investments will fall within the department of investment, but the FSA will focus more on the international business side. This is the business model which we completely support. There’s no two-ways abound it.
Don’t you think that there are too many international investors in Seychelles?
Absolutely not. There’s nothing wrong with that because everybody is looking for foreign investors. There is no country in this world that is not looking for foreign investors. Everybody is. Why shouldn’t we?
There is also the allegation that some people tend to come to Seychelles as ‘investors’ but in reality they are here to hide money which they acquired illegally. What can you say on the matter?
We have heard about this so many times. This has been one of the main accusations about the offshore sector, which comes from people who do not really understand the financial services industry. They have made a lot of noise without substantial evidence.
There are a lot of financial services all over the world, all of them trying to find ways to attract investors. We are not trying to attract crooks and I am not saying that there aren't people trying to set up companies for unscrupulous purposes, but the majority of businesses are not that way.
There are people evading tax for unscrupulous purposes domestically. We cannot control the motives of people. We are here to provide the service and we focus on our service. But these allegations have been levelled at the financial services many times. They are often done with a lack of knowledge about the FSA. We’ve talked about people coming here and the risks of having an international financial services industry. In my opinion, I would say that such an industry is good. Simply because risk is the other side of the coin of opportunities. Wherever there are risks, there must be opportunities. This is what we tend to focus on in this industry – the opportunities. I ensure that I maintain the risks I take efficiently and properly, at the reputation of Seychelles so that it remains intact.
People out there who say that the financial services are bad should change their perspectives and become more positive.
What are the risks associated with getting foreigners to invest in Seychelles?
Risk is always part of the business. Somebody might come and set up a structure which they use for something else. This might be for illegal purposes or something that they did not mention when they were signing the agreement. Nonetheless, there is a mechanism within the law to deal with these situations. At the FSA, we are very comfortable knowing that all these mechanisms are based on best practices and adhere to international laws.
What if someone comes with evidence that an investor is doing any sort of fraud or illegal activities?
There is definitely a process where actions can be taken. The company can be struck off, depending on what they have done. They are not immune to the legal ramifications which one would get on the domestic scene, if they were to do something like that. They will be treated the same. The irony is that in the offshore, people are scrutinised more and it is an industry which is more regulated than the domestic financial sector.
Your limitations at the FSA?
I would not say limitations, but I would rather say that we have different challenges. Firstly, there is the lack of understanding of the international financial industry, especially the non-banking side. We need to sensitise people and make them understand the whole thing. It seems to me there is this myth - people seem to think that the offshore is only there to help rich people hide their money . The education on this side becomes a challenge for us.
Another challenge is capacity building. We need to build the right capacity that will serve Seychelles as a very modern financial services industry and we need to provide these kinds of trainings.
We also need to provide a wider portfolio of products, which makes Seychelles more attractive. Moreover, we need to be able to streamline our processes so that we ensure that when somebody comes in Seychelles, it is served effectively and efficiently, as well as within a reasonable time period.
Nonetheless, these are the challenges that keep us awake at the FSA. This is what makes us grow.
What are the changes that you would like to see at the FSA or that you are working towards?
I don’t believe in re-inventing the wheel. The FSA has been in existence for a very long time now.
Firstly, we need to consolidate our base. Then we need to improve on customer services, streamline it, establish better co-orperation between the FSA and the industry and also between the different stakeholders; the government (Central Bank of Seychelles), the FIU (Financial Intelligence Unit) and everybody which involved with the financial services.
Seychelles has to become like all the other jurisdictions. We have to speak one language when it comes to the international financial services. And we all have to understand its opportunities. Seychelles must never allow anybody to come here and tell us that we are inadequate. We have to believe in ourselves and show people that we are successful. Nobody is going to do it for us.
What do you have to say on the issue of the FIU and the NDEA in relations to the frauds that were discovered?
I am not in the position to make any comments about this matter.
However, the only thing I can say is that at the FSA I will never be in a position to say that in this world we will never get an investor who will not be doing illegal activities because nobody can control human motives. We can only put safeguard for us to protect against it and have good regulations which are based on international laws. This is what we have in Seychelles.
What about the anti-money laundering regulations which are continuously being revised.
Anti-money laundering regulations do not really fall under the FSA but the FIU. But we have to adhere with principles of money laundering. We also need to ensure that with the clients who come to Seychelles we do the ‘KYC’ and hence we also look at ensuring that they are not involved in unscrupulous activities, that they are not laundering money, etc. These are part and parcel of our due diligence and this is why at the FSA we have a section which deals with compliance.

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