MMA can’t mandate $500 exchange, lawyers say
The foreign exchange rule introduced by the Maldives Monetary Authority (MMA) on October 1 is facing questions from the tourism industry and legal experts, who have raised concerns about its legal validity. Lawyers argue that the rule, which imposes a $500 per tourist exchange mandate for tourism businesses like resorts, exceeds the MMA’s statutory authority and conflicts with constitutional principles.
The regulation was introduced under Articles 24 and 28 of the MMA Act to govern foreign exchange transactions. Article 24 authorised the president to establish exchange rate regimes and penalties for violations, while Article 28 empowers the MMA to create rules to implement the provisions of the Act.
However, legal experts contend that these articles do not provide the MMA with the authority to impose obligations on businesses regarding the handling of their foreign exchange income. An anonymous corporate lawyer stated that the constitution mandates all rules affecting citizens to be enacted by parliament. Without explicit legislative backing, the lawyer argued, the MMA lacks the authority to enforce such rules.
Ahmed Ali Sawad, a former Attorney General and Tourism Minister, expressed a similar view. Writing on X, Sawad stated that the MMA Act grants the authority to regulate foreign exchange rates but does not extend to dictating how businesses manage their foreign currency earnings. He further argued that the rule restricts businesses from utilising their earnings for operational needs, which undermines their constitutional rights.
"Resorts and tourism businesses operate legally and fulfil all required payments, including rents, duties, and taxes. They must be afforded the full scope of legal rights to conduct their operations," Sawad wrote.
Ali Hussain, a former member of parliament and lawyer, also described the rule as unconstitutional. He stated that compelling businesses to convert or manage earnings in a specific manner without legislative authority constitutes an overreach by the MMA.
Lawyers argue that the constitution safeguards the rights of individuals and businesses to acquire property, trade, and benefit from their earnings, as long as legal responsibilities are met. The restriction on these rights without proper legal backing, they claim, contradicts constitutional principles.
Furthermore, the constitution prohibits public officials from issuing orders that are not supported by law. This means individuals and businesses are not obligated to comply with unlawful directives, reinforcing the position of those challenging the rule’s validity.
While the MMA has yet to respond to these concerns, the legal challenges to the foreign exchange rule have drawn significant attention within the tourism industry and beyond.
