On 1 October 2024, the Regulation on Money Changing Businesses¹(the “Regulation”) was published by the Maldives Monetary Authority (the “MMA”), coming into immediate effect. The Regulation repeals the previous regulation² (the “Repealed Regulation”) and updates the rules and criteria applicable to the issuance of money changing licences.

Under the Regulation, only the following entities may provide money changing services without a money changing licence issued by the MMA:

1. Banks operating in the Maldives; and
2. Parties registered under the Maldives Tourism Act³ (the “Tourism Act”) that provide services to tourists, to the extent that foreign currency is being bought and/or sold to tourists.

Save for the exceptions specified above, only entities with a money changing licence issued by the MMA may provide money changing services.These licences are split into two types.

Types of Money Changing Licences

Summarised breakdown of the types of money changing licences:

	Tier 1 Money Changing Licence	Tier 2 Money Changing Licence
Eligibility	Companies established for buying and selling foreign currency under the Companies Act (at least 50% of the voting rights of the company must be held by a Maldivian individual)4	Companies licensed to operate tourist resorts under the Tourism Act
Function	Can buy and sell foreign currency	Can only sell foreign currency
Application Fee (Existing Licence Holders)	MVR 10,000	MVR 10,000
Application Fee (New Applicants)	MVR 20,000	USD 1,300
Annual Fee	MVR 24,000	USD 1,800
Renewal Fee	MVR 10,000	USD 650
Security Deposit	USD 50,000 placed in MMA at all times
Term of Validity	5 years	For the duration of the licence to operate the tourist resort under the Tourism Act
Cash transactions	Limited to MVR 50,000 or its equivalent in foreign currency per customer per day (does not include transactions with a licensed bank)	Cash transactions are not permitted5

Implications for Tourist Establishments

Pursuant to the Regulation, parties registered under the Tourism Act can carry out foreign currency exchange operations under any of the following routes:

1. Buy and sell foreign currencies to and from tourists without obtaining a licence; and/or
2. Operators of tourist resorts can sell foreign currencies to the public after obtaining a Tier 2 Money Changing Licence.

Compliance Officer

The businesses issued a money changing licence under the Regulation must assign a compliance officer to ensure they are acting in accordance with the rules established in the Prevention of Money Laundering and Terrorism Financing Act and other relevant laws and regulations.

Existing Licenced Entities

Entities currently conducting money changing businesses in the Maldives under a licence issued by the MMA pursuant to the Repealed Regulation must apply for a Tier 1 or Tier 2 Money Changing Licence within 2 months from the date that the Regulation becomes effective (i.e. before 1 December 2024). Failure to apply for a licence under the new Regulation within this period will result in the automatic cancellation of their existing licences upon expiry of this period.

The businesses licensed under the Repealed Regulation can continue operations under their old licence after applying for new licences under the Regulation. The validity of the old licence will expire once the MMA makes a decision on the application for the new licence.

New Licences

On 2 October 2024, MMA published an announcement⁶ with regards to the application for licences under the Regulation. As per said announcement, only 50 entities will be issued new licences to conduct money changing businesses. The deadline for entities seeking to obtain new licences is 30 November 2024.

Compliance Requirements

The Regulation further introduces extensive compliance requirements and reporting obligations for licensed money changers.

Directors of the licensed money changers are required to meet competency requirements stipulated by the MMA.

Penalties

Where the MMA has determined foreign exchange rates with respect to a foreign currency, the MMA is empowered to impose the following penalties to any parties buying or selling such foreign currency at a different rate or gaining any benefits or commissions from such transactions.

• A fine amount between MVR 10,000 to MVR 1,000,000; or
• A fine amount between MVR 10,000 and up to 5x the transaction amount.

Effective Date

The Regulation is effective from 1 October 2024.