Monday, March 7, 2011

Financial Piracy in Seychelles?

Call it Financial Piracy or daylight robbery but "it" has been happening for a few years now. A commercial bank receives instructions from the Financial Intelligence Unit ("FIU") to block a bank account and the commercial bank goes on to block the account without questioning the legality of the FIU's instructions or considering their contractual duties to their customers. Things are made worse when the commercial bank then allows incoming transfers of funds to the account but continues to refuse outbound transactions.

Things have apparently now come to a head through a New York lawsuit which is the subject of an article which is making the rounds in Seychelles. The article can be viewed through the following link:

Seychelles attorneys have argued that the whole exercise is likely to be unconstitutional and that the FIU are erroneously applying powers given to them under Anti-Money Laundering laws and that the commercial banks are blindly following the FIU's instructions without considering their legal position in the matter.

The Anti-Money Laundering Act ("AML") places a duty on commercial banks to report a suspicious transaction to the FIU. The FIU can then instruct the bank to block or prevent the specific transaction. In practice, the FIU has been instructing banks to block the entire account despite the fact that the AML does not allow for this. 

The Robing Room is the official blog of the Seychelles Legal Environment Website (, the only website about the Seychelles Legal Environment that is constantly updated.

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