The primary objective of the Financial Surveillance Division (FSD) is to promote a sound financial system. This is mainly achieved by (a) ensuring effective regulation and supervision of entities under the portfolio of the Central Bank of Seychelles (CBS) at both micro and macro levels; and (b) regulating and overseeing the national payment system to ensure its safe, secure, efficient and effective operation. Entities falling under the purview of the FSD include banks, bureaux de change, financial leasing companies, non-deposit taking financial institutions, credit unions, non-bank credit granting institutions, payment system participants and financial market infrastructures (FMIs).

At a micro-prudential level, there is an effective authorisation and licencing process to ensure the safety and soundness of supervised entities. Once authorised and licensed, the division assesses the entity’s safety and soundness through a continuous cycle of risk-based supervision, which comprises both off-site surveillance and on-site examinations. In addition, the division plays a pivotal role in contributing towards financial stability, by acting as the secretariat to a high-level committee comprising of various authorities, whose aim is to identify and monitor the excessive build-up of risks, which can have a systemic impact. The division is also tasked with the development and implementation of a macro-prudential framework to support financial stability objectives.

FSD is organised into four sections, whose roles and functions are briefly outlined below:

1. Financial Regulation Section
   • Analyses, reviews and formulates legislation, associated regulations, circulars, guidelines and directives governing entities under the portfolio of CBS, including banks, other financial institutions and payment systems;
   • Researches, develops and formulates policy papers, which effectively address regulatory and supervisory matters, legislative requirements as well as improvements in procedures;
   • Administers prudential regulations aimed at ensuring the financial soundness of supervised entities as well as any other legislations furthering this mandate;
   • Processes licencing for banks, bureaux de change, financial leasing companies, and payment service providers;
   • Authorises a person to operate a payment, clearing or settlement system;
   • Processes applications for administrators and external auditors for financial institutions supervised by CBS; and
   • Coordinates publications of the division, such as annual reports.
2. Micro Prudential Supervision Section
   • Conducts on-site examination of financial institutions in accordance with relevant legislations to ensure adherence to those legislation;
   • Prepares and analyses reports based on off-site surveillance to assess potential areas of risk in these institutions;
   • Identifies weak and problematic areas in financial institutions and make recommendations for corrective action;
   • Appraises the quality and competence of management and reviews the adequacy of the system of internal controls of financial institutions;
   • Confirms compliance with the legislative framework, prudential regulations and other relevant directives issued by CBS;
   • Ensures off-site supervision of financial institutions to make certain that they are complying with regulatory and prudential requirements, and where necessary recommends appropriate supervisory action or imposition of penalties for non-compliance;
   • Reviews and analyses the financial performance of financial institutions, identifying and quantifying key trends in their profitability, liquidity, solvency and other financial indicators;
   • Ensures that timely and accurate financial and prudential returns are submitted by the financial institutions, in line with the prevailing legislative framework; and
   • Evaluates and analyses prudential returns and Financial Soundness Indicators (FSIs) of financial institutions and prepares monthly or ad hoc analyses/reports based on the soundness of these institutions.
3. Financial Stability Section
   • Assesses the overall stability of the financial system by identifying the build-up of systemic risks using relevant indicators;
   • Conducts periodic stress tests to analyse the effect of adverse conditions on systemically important financial institutions and the system as a whole;
   • Oversees and conducts risk analyses of the Financial Market Infrastructure;
   • Updates the Risk Assessment Matrix and reviews the level of risk to the whole economy;
   • Reviews the trends over time within the financial sector and the interplay within the fiscal and real sector; and
   • Reviews the impact of the financial sector from a macro-economic perspective.
4. Anti-Money Laundering and Counter Terrorism Financing (AML/CFT) Section
   • Conducts risk-based AML/CFT supervision of financial institutions and other entities falling under the supervisory ambit of CBS, which includes:
     • On-site examination of financial institutions in accordance with relevant legislation to ensure adherence; and
     • Off-site supervision of financial institutions to ensure that they are complying with regulatory and prudential requirements, and where necessary, recommends appropriate supervisory action or imposition of penalties for non-compliance.
   • Collaborates with other national agencies in the fight against money laundering and financing of terrorism;
   • Coordinates activities on AML/CFT issues at regional and international levels; and
   • Researches and formulates policies and procedures for better implementation of the AML/CFT regulatory framework.
5. Payments System Section
   • Analyses, reviews and formulates legislation, associated regulations, circulars, guidelines and directives governing the payments system
   • Researches, develops and formulates policy papers, which effectively address regulatory and supervisory matters, legislative requirements as well as improvements in procedures
   • Administers prudential regulations aimed at ensuring the financial and operational soundness of the payment systems as well as any other legislation furthering this mandate
   • Processes licensing for payment service providers and authorises a person to operate a payment, clearing or settlement system
   • Processes applications for administrators
   • Conducts offsite and onsite supervision of the payment systems in accordance with relevant legislation to ensure adherence to those legislation
   • Oversees and conducts risk analyses of the FMIs
   • Assists with the design and implementation of national strategies to modernise the national payments system, including its vision and mission
   • Coordinates publication of the division’s Payments System annual report