In Brief: Maldives New Regulation on Foreign Currency Exchange Business
The central bank of the Maldives, Maldives Monetary Authority (MMA) has introduced a new regulation governing foreign currency exchange businesses in the Maldives, effective October 1, 2024. This new regulation, "Regulation on Foreign Currency Exchange Business in the Maldives," replaces the Monetary Regulation of March 1, 1987, and aims to modernize and strengthen the regulatory framework for foreign currency exchange operations.
Two-tier licensing system
The MMA will now issue two types of licenses:
Tier 1: Authorizes the buying and selling of foreign currency. These licenses are exclusively available to companies with 100% Maldivian ownership, operating solely in foreign currency exchange, and with all employees being Maldivian nationals.
Tier 2: Permits only the selling of foreign currency. These licenses are specifically for tourist resorts licensed under the Maldives Tourism Act.
Licensing requirements
Tier 1 licenses have a five-year tenure with an application fee of MVR 20,000 and an annual fee of MVR 24,000.
Tier 2 licenses require an application fee of USD 1,300 and an annual fee of USD 1,800.
Transaction limits
Tier 1 licensees are subject to a maximum cash transaction limit of MVR 50,000 or its foreign currency equivalent per customer per day.
Compliance obligations
Both Tier 1 and Tier 2 licensees must appoint a qualified compliance officer to ensure adherence to anti-money laundering and counter-terrorism financing regulations. They must also maintain detailed records of all transactions for five years and implement an electronic system to record currency exchange activities.
Security deposit
Each licensee is required to maintain a security deposit of USD 50,000 with the MMA.
Transition period
Existing currency exchange businesses have two months from October 1, 2024, to apply for new licenses under this regulation. They can continue operations under their current licenses during this period.
Other Important considerations
The regulation does not apply to banks operating in the Maldives.
Tourist establishments are permitted to buy foreign currency from tourists and sell foreign currency to tourists without a license under the Maldives Tourism Act.
The MMA has the authority to cancel or suspend licenses under various circumstances, including submission of false information, non-compliance with regulations, and failure to commence business within three months of licensing.
Licensees are prohibited from charging commissions without MMA approval and must adhere to the MMA's fixed exchange rate band.
Penalties for non-compliance
Non-compliance with the new foreign currency exchange regulation can result in severe penalties, including fines ranging from MVR 10,000 to MVR 1,000,000. In some cases, the MMA may impose a fine of up to five times the amount of money involved in the illicit transaction.
How we can help?
Our firm possesses extensive expertise in navigating the regulatory landscape in the Maldives. We can assist your business with:
License applications: Preparing and submitting applications for Tier 1 and Tier 2 licenses.
Compliance: Developing and implementing compliance programs to meet the requirements of the new regulation.
Due diligence: Conducting customer due diligence and ensuring compliance with anti-money laundering and counter-terrorism financing regulations.
Regulatory advice: Providing ongoing advice and support on all aspects of the new regulation.
If you require any assistance or have questions regarding the new foreign currency exchange regulation, please do not hesitate to contact our team of experts. We are committed to helping your business navigate these changes and ensure compliance with the new regulatory framework.
