Regulation on Money Changing Businesses
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 The Regulation repeals the previous regulation2 (the “Repealed Regulation”) and updates the rules and criteria applicable to the issuance of money changing licences.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:
- Banks operating in the Maldives; and
- 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:
- Buy and sell foreign currencies to and from tourists without obtaining a licence; and/or
- 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.
References
- Regulation Number 2024/R-92
- “Regulation Outlining Arrangements for Money Changers”, which had been in operation since 1987
- Act Number 2/99
- An exception is provided for Government owned entities. A higher foreign shareholding may be permitted for such entities
- Cash transactions are permitted only with a Tier 1 Money Changer or a bank. All other transactions should be carried out through a licensed bank in Maldives
- https://www.mma.gov.mv/partials/pressreleases/IL-2024-9029(English).pdf?v=20241002
