Effective Date: 1 October 2024

The Maldives has introduced significant changes to the money changing regulations, impacting businesses involved in the buying and selling of foreign currency. The new regulatory framework, Regulation number 2024/R-92 on Money Changing Business regulation aims to enhance transparency and accountability within the sector, making it essential for stakeholders to understand these changes to ensure compliance. Here’s what businesses need to know to comply with the new framework

Licensing Structure

Tier 1 Money Changing License

1. This license is required for businesses engaging in currency exchange. Notably banks are exempt from this requirement. However, tourist establishments under the Tourism Act can buy and sell foreign currency to tourists without requiring a license. Importantly, only one company within a corporate group can hold this license, a rule that does not apply to state-owned enterprises.
2. To qualify for a Tier 1 license, businesses must meet certain ownership requirements. Specifically, if the government owns less than 50% of the business, at least 50% of the voting rights of that business must be held by a Maldivian citizen. This license is valid for five years, with renewal applications due three months before expiration; late applications may incur additional fees.
3. Licensees are required to have its money buying and exchange activities performed in a place established in the Maldives. Moreover, all the staffs working in the tier 1 licensee should be Maldivians.
4. Licensees are required to prominently display “Licensed Money-Changer” at their premises and are permitted to conduct cash transactions up to MVR 50,000 (or its foreign currency equivalent), except for those transactions done with the bank. Transactions exceeding this limit must be processed through registered bank accounts.
5.  Additionally, any major changes in shareholders or the appointment of board members and compliance officers will require prior approval from the Maldives Monetary Authority (MMA).
6. Furthermore, annual audited financial reports must be submitted to the MMA within four months of the fiscal year-end, conducted by an independent auditor.

Tier 2 Money Changing License    

7. This license is available for companies operating Tourist Resorts under the Tourism Act. This license is valid for the duration of the Tourist Resort’s operating license but allows only the sale of foreign currency. Unlike Tier 1 license holders, Tier 2 entities must conduct all transactions through bank channels, with cash transactions permitted only with Tier 1 license holders or transactions with the bank.

General Requirements for License Holders

8. All license holders must adhere to the following requirements:

1. Invoicing: After each transaction, an invoice must be issued that includes customer details, the type of exchanged currency, and the exchange rate.
2. Credit Transactions: License holders cannot perform any transactions on credit. Payments made later in the day do not constitute credit transactions under this regulation.
3. Compliance Officer: Each license holder must appoint a Compliance Officer to ensure compliance with the Prevention of Money Laundering and Financing of Terrorism Act (Law No. 10/2014) and other MMA regulations.
4. Security Deposit: All license holders must maintain a security deposit of USD 50,000 with the MMA and keep financial records for a minimum of five years.
5. Monitoring Requirements: Tier 1 license holders must implement an electronic monitoring system for currency transactions and publicly display their currency exchange rates. Tier 2 holders must display their sales rates.
6. Price Regulations: License holders are prohibited from exceeding prices set by the MMA for currency transactions. Violations can lead to fines ranging from MVR 10,000 to MVR 1,000,000 or up to five times the transaction amount.

Transitional Provisions

9. Transitional provisions have been established for existing license holders, allowing them to continue operations until their new applications are processed. However, they must submit their applications under the new regulation within two months of the effective date; otherwise, their current licenses will become invalid.

Fee Chart

Conclusion

These new regulations mark a significant overhaul of the money changing framework in the Maldives. It is crucial for all businesses involved in currency exchange to understand and comply with these requirements by the effective date. By doing so, they can ensure a smooth transition and continued lawful operation within this evolving regulatory landscape. For further information, businesses are encouraged to consult the Maldives Monetary Authority and review the full Regulation.