Central Bank of Seychelles (CBS)

Overview

The Central Bank of Seychelles (CBS) was officially established on January 1, 1983, succeeding the Seychelles Monetary Authority. The CBS operates as the primary monetary and financial regulatory authority for the Republic of Seychelles, an island nation in the Indian Ocean with a tourism-dependent economy. The institution is headquartered in Victoria, Mahé, the capital city.

Current Leadership: Governor Caroline Abel has led the institution since 2023, presenting the CBS Annual Report 2024 to the President on March 31, 2025. She oversees a board of eight directors chaired by the governor, providing governance oversight of all central banking functions.

Mandated Responsibilities: The CBS holds responsibility for formulating and implementing Seychelles' monetary policy, managing official foreign reserves, issuing and regulating currency, supervising the banking system, promoting financial system stability, and maintaining an efficient national payment system.

Key Monetary Statistics (December 2024):

• 12-month average inflation rate: 0.3%
• Year-on-year price increases: 1.7%
• Monetary Policy Rate: 1.75% (maintained since Q2 2024)
• Currency: Seychellois Rupee (SCR)
• Banking sector capital requirement: minimum paid-up capital of SCR 20,000,000 (or USD 2,000,000 for offshore-only banks)

The CBS pursues an accommodative monetary policy stance designed to facilitate steady private credit growth while maintaining price stability. Inflation is projected to remain below 2 percent in 2025, with policy rates subject to adjustment if economic conditions warrant.

Basic Identity

Classification

Inclusion Justification

What This Entity Oversees

Licensing Framework:

The CBS is the sole administrative body responsible for receiving and processing banking license applications and issuing licenses for both domestic and offshore banking operations. All commercial banks, whether locally incorporated or foreign branches, must obtain explicit CBS authorization before commencing operations.

Banks must distinguish between domestic banking operations (serving local residents and businesses) and offshore banking operations (serving non-resident clients). Offshore-only banks face streamlined but strict regulatory requirements tailored to international best practices.

Prudential Requirements:

Licensed banks must meet multiple prudential standards enforced through comprehensive supervisory oversight:

• Minimum Capital Requirements: Domestic banks must maintain unimpaired paid-up capital of not less than SCR 20,000,000 (approximately USD 1.5 million). Offshore-only banks must maintain minimum paid-up capital of USD 2,000,000 or equivalent in freely convertible currency, reflecting international standards for cross-border operations.
• Capital Adequacy Ratio: Banks are required to maintain a risk-weighted capital adequacy ratio calculated as the sum of Tier 1 (core) capital and eligible Tier 2 (supplementary) capital divided by total risk-weighted assets. The regulatory framework defines core capital as unimpaired paid-up capital net of any accumulated losses, and eligible Tier 2 capital includes hybrid instruments, general loan loss provisions, and revaluation reserves subject to haircuts.
• Liquidity Standards: Banks must maintain liquid assets sufficient to meet short-term obligations and unexpected deposit withdrawals. The CBS conducts stress testing to ensure banks can withstand liquidity shocks under adverse scenarios.
• Governance and Fit-and-Proper Requirements: Banks must demonstrate that all directors, senior management, and key shareholders meet fit-and-proper criteria, including relevant expertise, financial integrity, and absence of adverse regulatory history.

Supervisory Methodology:

The CBS employs risk-based supervision combining on-site and off-site examination programs. Off-site surveillance monitors regulatory returns including prudential statements, profit-and-loss accounts, and regulatory ratios. On-site inspections occur at minimum every other year, with intensified examination frequency for banks showing elevated risk profiles or compliance issues. Supervisory priorities include asset quality assessment, management competency evaluation, earnings sustainability review, and capital adequacy verification.

Enforcement During Supervision:

When supervisory findings reveal compliance gaps or prudential concerns, the CBS issues formal directives requiring corrective action within specified timeframes. Escalation follows a graduated approach from written warnings and compliance orders to temporary operational restrictions and, in severe cases, license revocation.

AML/CFT Framework:

The Anti-Money Laundering and Countering the Financing of Terrorism Act 2020 (effective August 28, 2020) established a comprehensive sectoral supervision approach dividing responsibility among three key regulators:

• Central Bank of Seychelles — Supervises financial institutions and banking-related entities
• Financial Services Authority (FSA) — Supervises capital markets, insurance, and collective investment entities
• Financial Intelligence Unit (FIU) — Serves as the central reporting authority and analysis center for suspicious transaction reporting

CBS AML/CFT Section:

In 2019, the CBS established a dedicated AML/CFT Section within its Financial Surveillance Division. This specialized unit conducts risk-based supervision of all financial institutions and other entities falling under CBS regulatory jurisdiction through:

• On-site Examinations — Comprehensive audits of customer due diligence (CDD), enhanced due diligence (EDD), beneficial ownership records, transaction monitoring systems, and suspicious activity reporting procedures. Examination frequency is risk-rated, with higher-risk institutions subject to annual or semi-annual reviews.
• Off-site Supervision — Monitoring of regulatory returns including AML/CFT compliance certifications, suspicious transaction reports submitted to the FIU, and self-assessment questionnaires.
• Guidance and Enforcement — Publication of AML/CFT guidance documents, issuance of directives addressing identified deficiencies, and escalation to enforcement proceedings for serious violations.

Reporting Obligations:

Financial institutions must file Suspicious Transaction Reports (STRs) with the Financial Intelligence Unit without delay (and in any event within 10 days) upon detecting indicators of potential money laundering or terrorist financing. Institutions must also file Currency Transaction Reports (CTRs) for large cash transactions exceeding reporting thresholds, typically SCR 100,000 or USD 20,000.

Institutions must not disclose to customers that a suspicious transaction report has been filed ("tipping off" is prohibited). Customer due diligence is mandatory for all customers, with enhanced procedures applied to politically exposed persons (PEPs), high-risk jurisdictions, and beneficial owners of legal entities.

Financial Intelligence Unit:

The Seychelles FIU serves as the central authority responsible for:

• Receiving and analyzing STRs and other financial crime-related information from reporting entities
• Disseminating analytical products and investigation leads to law enforcement and other competent authorities
• Operating as Secretariat of the National AML/CFT Committee, which coordinates policy implementation and inter-agency cooperation
• Representing Seychelles in international FIU networks and mutual legal assistance processes

Policy Framework:

The CBS recognizes financial inclusion as a strategic priority essential for sustainable economic development, poverty reduction, and productive capacity building. The institution has developed and actively implements a comprehensive financial inclusion agenda combining digital infrastructure, consumer protection, and financial education.

Digital Banking Strategy:

The CBS is pursuing a technology-driven financial inclusion strategy with multiple objectives:

1. Digitalization Goals — The national financial system modernization program targets comprehensive digitalization of banking and payment services, substantially eliminating physical cash dependency by 2023 (with ongoing implementation), and establishing digital channels as the primary delivery mechanism for financial services.
2. Mobile Money Expansion — Licensed banks and authorized payment service providers are encouraged to develop mobile money solutions accessible to underbanked populations. Mobile platforms enable account opening without physical branch visits, reducing geographic and cost barriers to financial access.
3. Interoperability Standards — The CBS promotes technical standards enabling interoperability between different mobile money providers, banks, and payment networks, ensuring consumers can transact seamlessly across platforms.

Financial Literacy Programs:

The National Financial Education Strategy (2017-2020), developed collaboratively by the CBS and Financial Services Authority, establishes the vision of future generations well-versed in financial services and products.

Implementation activities include:

• Baseline Assessment — The 2016 National Financial Literacy Baseline measured financial literacy levels among Seychellois population segments, identifying gaps and target demographics.
• Curriculum Development — Creation of school-based financial education curricula and community awareness programs covering budgeting, savings, credit use, investment basics, and consumer protection.
• Consumer Protection — Enhanced disclosure requirements for financial products, complaint mechanisms, and dispute resolution services accessible to consumers without legal representation.
• Credit Infrastructure — Establishment of the Credit Information System (CIS) operational since 2014, providing credit history reporting that facilitates responsible lending and protects borrowers through transparency.

Access Metrics:

The CBS publishes periodic financial inclusion indicators including bank account ownership rates, mobile money user statistics, point-of-service terminal density, and geographic branch coverage. Performance monitoring guides policy adjustments and targeted interventions.

Regulatory Powers

Investigation Authority:

The CBS possesses comprehensive authority to investigate suspected violations of banking legislation and prudential requirements. This authority extends to:

• Examination of books, records, accounts, and correspondence of banks and other supervised entities
• Issuance of formal information requests requiring production of specified documents within defined timeframes
• Interview of directors, officers, and employees regarding institutional operations and compliance
• Appointment of external examiners to conduct detailed investigations on CBS behalf
• Coordination with law enforcement and fiscal authorities where investigations reveal potential criminal conduct

Corrective Actions and Gradations:

CBS enforcement follows a graduated escalation approach:

Written Warnings and Compliance Orders — Initial enforcement response to compliance gaps, requiring remedial action within specified periods with CBS monitoring.

Formal Directives — Binding orders requiring cessation of unsafe practices, implementation of control procedures, or remediation of supervisory findings. Non-compliance may result in escalated enforcement.

Operational Restrictions — Prohibitions on specific activities (e.g., restrictions on new loan originations, limitations on foreign exchange dealing, suspension of new account opening) imposed when violations threaten depositor protection or systemic stability.

Administrative Penalties — Monetary fines assessed against the institution or individual officers for violations, graduated by severity and compliance history.

Temporary Suspension — Suspension of operating license for defined periods (e.g., 30 days to 6 months) when serious violations occur but resolution and remediation remain possible.

License Revocation — Permanent withdrawal of banking authorization in response to severe violations, persistent non-compliance with prudential requirements, unsafe operations threatening depositor safety, or criminal conviction of institution officers. License revocation triggers resolution and wind-down procedures.

Resolution Procedures:

Upon revocation or where an institution becomes insolvent, the CBS acts as resolution authority. Functions include:

• Appointment of an administrator to manage the institution during resolution
• Coordination with depositor protection mechanisms
• Orderly liquidation of assets and payment to creditors according to legal priority
• Enforcement of personal liability against directors and officers for unsafe practices

Regulatory Role and Function

Legal Foundation

Primary Legislation:

The Central Bank of Seychelles Act 2004 (as amended and consolidated in 2024) provides the foundational legal framework conferring binding regulatory authority on the CBS. This Act grants the CBS institutional and operational autonomy within the government structure and establishes its mandate for monetary and exchange rate policy formulation.

The Financial Institutions Act 2004 supplements the Central Bank Act by establishing detailed prudential supervisory frameworks for licensed financial institutions, including capital adequacy, liquidity, and governance requirements. These laws collectively form the binding Layer 1 regulatory framework for banking and financial sector supervision in Seychelles.

Organizational Structure:

The CBS operates through several specialized divisions:

1. Monetary Policy Division — Formulates monetary policy and manages monetary policy operations, including the Monetary Policy Technical Committee (MPTC) which provides technical advice on policy rates and inflation targeting.
2. Banking Supervision Division — Conducts on-site and off-site examinations of licensed banks, enforces prudential requirements, reviews applications for banking licenses, and supervises compliance with capital and liquidity standards.
3. Financial Surveillance Division — Hosts the AML/CFT Section (established 2019), responsible for risk-based supervision of financial institutions to ensure compliance with anti-money laundering and countering terrorist financing obligations.
4. Financial Stability and Payment Systems Division — Manages national payment system infrastructure, oversees payment service providers, monitors systemic risk, and promotes financial system resilience.
5. Foreign Reserves Management Division — Manages official foreign exchange reserves, executes FX market operations, and coordinates external sector policy implementation.

The Governor chairs an eight-member Board of Directors that provides strategic oversight and governance accountability. The CBS reports directly to the President of Seychelles and is accountable to Parliament through statutory reporting obligations.

Licensing and Authorization Relevance

The Central Bank of Seychelles (CBS) is a key licensing authority in Seychelles's financial system:

The licensing process typically involves assessment of capital adequacy, fitness and propriety of management, business plan viability, AML/CFT compliance frameworks, and IT systems readiness.

Payments and Money Movement Relevance

Legal Framework:

The National Payment System Act 2014 (as amended by Act 15 of 2023) provides the regulatory foundation for payment system oversight and payment service provider authorization. This legislation grants the CBS authority to make regulations regarding payment system design, payment service provider conduct, consumer protection, and operational risk management standards.

The National Payment System (Licensing and Authorisation) Regulations 2014 establish specific requirements for entities seeking authorization to operate payment systems or provide payment services in or through Seychelles.

Payment Service Providers:

The CBS issues licenses to qualified entities meeting regulatory criteria to operate as Payment Service Providers (PSPs). Licensed PSPs may undertake the following activities:

• Money transmission and fund transfer services
• Issuance of electronic money and electronic money instruments
• Settlement and clearing operations for payment transactions
• Merchant payment processing and acquiring services
• Payment gateway and switching services

All PSPs must obtain specific authorization before commencing operations. The CBS maintains a public register of authorized PSPs to ensure consumers and counterparties can verify legitimate service providers.

Mobile Payments and Financial Technology:

Seychelles has embraced mobile payment innovation as a strategic financial inclusion priority. The CBS actively encourages development of mobile money services by established banks and authorized PSPs, viewing mobile payments as critical infrastructure for extending services to underbanked populations and reducing cash dependency.

The government's digitalization strategy targets a substantially cashless financial system by 2023 (with ongoing implementation through 2025), with mobile and digital payment channels replacing physical cash for most transactions. This infrastructure supports financial inclusion and reduces payment system inefficiency.

Modernization Initiatives:

The CBS is modernizing the national payment system infrastructure through technology upgrades including real-time gross settlement (RTGS) systems, faster payment networks, and harmonized messaging standards. These initiatives reduce settlement risk, accelerate transaction processing, and improve interoperability between payment service providers.

Managed Float Regime:

Following severe economic pressures and a government default on external debt in 2008, the Government of Seychelles implemented structural economic reforms under an International Monetary Fund program. A central element was liberalization of the foreign exchange regime, executed on November 3, 2008.

Prior to 2008, the Seychellois Rupee (SCR) was pegged to a basket of international currencies. The CBS implemented a managed float arrangement, unpegging the SCR and allowing it to float freely based on market forces. The rupee initially depreciated significantly (from approximately 8 SCR/USD to 16 SCR/USD), reflecting underlying economic imbalances and the restoration of exchange rate reality.

This transition to a managed float has since enabled more efficient price discovery, currency adjustment to economic shocks, and improved competitiveness of Seychelles' tourism and export sectors.

Foreign Exchange Controls Elimination:

Concurrent with exchange rate liberalization, the government abolished all foreign exchange controls. Residents and non-residents may freely convert, transfer, and repatriate currency without central bank authorization or licensing restrictions. This openness facilitates foreign investment, tourism industry operations, and international trade.

FX Dealer Regulation:

Entities engaged in foreign exchange dealing activities (including banks, money changers, and trading firms) must comply with CBS requirements for transparent pricing, record-keeping, customer identification, and reporting of suspicious transactions. The CBS monitors FX market concentration to prevent manipulation and maintains oversight of cross-border FX flows for balance of payments monitoring and capital account surveillance.

Capital Account Management:

While the exchange rate floats freely, the CBS retains the ability to monitor and analyze international capital flows to identify systemic risks, external vulnerabilities, and potential speculative pressures. Current policy permits unrestricted capital account transactions, supporting the country's positioning as a competitive offshore financial center and tourism destination.

Payment Systems Governed or Overseen

The CBS operates and/or oversees the national payment and settlement infrastructure of Seychelles. Specific systems include:

[Further detail on specific system names requires verification from official sources]

Relationship to Other Regulators

International Monetary Fund:

Seychelles maintains a longstanding relationship with the International Monetary Fund characterized by technical cooperation and policy coordination. Following the 2008 debt crisis, Seychelles implemented an IMF-supported Extended Fund Facility (EFF) program incorporating exchange rate liberalization, fiscal consolidation, and financial sector reforms. The IMF currently provides technical assistance to the CBS on central bank strategic planning and institutional capacity building in line with international best practices.

Recent IMF engagement includes technical assistance on governance modernization, inflation targeting frameworks, and reserve adequacy assessments. Seychelles reached a staff-level agreement with the IMF in April 2025 on the Fourth Reviews under the EFF and Resilience and Sustainability Facility (RSF) arrangements, demonstrating continued policy coordination.

Regional Integration — COMESA:

The Common Market for Eastern and Southern Africa (COMESA) includes Seychelles among its 21 member states. Seychelles is part of COMESA's free trade area and is engaged in the Monetary Cooperation Programme, which establishes a staged pathway toward monetary union. Cooperation mechanisms include:

• Central bank coordination on monetary policy and exchange rate management
• Harmonization of prudential and AML/CFT supervision standards
• Joint central bank working groups on payment system modernization
• Participation in COMESA financial institutions supervision forums

Regional Integration — SADC:

The Southern African Development Community (SADC) includes Seychelles in its 16-member organization. SADC coordination extends across macroeconomic policy dialogue, banking supervision information sharing, and financial system infrastructure development.

Bilateral Agreements:

The CBS participates in bilateral memoranda of understanding with central banks of major trading and financial partners, establishing protocols for:

• Supervisory information sharing and cross-border institution oversight
• Currency arrangement discussions and intervention coordination
• Payment system interoperability and settlement arrangements
• AML/CFT cooperation and suspicious transaction intelligence exchange

Trade and Currency Arrangements:

Seychelles has signed trade agreements with regional blocs including COMESA, SADC, and the African Union. The country ratified the African Continental Free Trade Area (AfCFTA) in June 2021, positioning itself within the broader pan-African trade architecture. The CBS supports the government's trade policy objectives through exchange rate management and international payment system coordination.

Geography and Jurisdiction Notes

Important Departments and Divisions

Key Public Resources

Official Address and Contact Information:

Central Bank of Seychelles

Independence Avenue

P.O. Box 701

Victoria, Mahé

Seychelles

Telephone: +248 4282000

Fax: +248 4226104

Email: [email protected]

Website: www.cbs.sc

SWIFT Code: SSCBSCSCXXX

Banking Hours: 8:30 AM to 12:30 PM, Monday to Friday

Key URLs and Resources:

• Homepage and Organization: www.cbs.sc
• Banking Legislation: CBS Legislation Page
• AML/CFT Regulatory Framework: CBS AML/CFT Page
• Financial Inclusion Programs: CBS Financial Inclusion Overview
• Monetary Policy and Technical Committee: CBS MPTC
• Payment System Modernization: CBS Payment System Modernization
• Annual Reports: CBS Annual Report 2024
• Central Bank of Seychelles Act 2004 (Consolidated): CENTRAL BANK OF SEYCHELLES ACT 2004.pdf)
• National Payment System Act 2014 (Consolidated): NATIONAL PAYMENT SYSTEM ACT 2014.pdf)

Notes on Naming and Language