Existing MMA Act already penalises unauthorised forex transactions

Existing legislation already provides for penalties against unauthorised foreign exchange transactions, even as parliament considers new amendments introducing additional fines for violations related to foreign currency trading.

The issue has drawn attention following the Parliamentary Public Accounts Committee's approval of amendments to the Foreign Exchange Bill on Wednesday.

The committee approved provisions that would impose fines of up to MVR 1 million for selling foreign currency outside rates or bands established by the Maldives Monetary Authority (MMA).

The amendments also introduce penalties for promoting, advertising or disseminating information relating to foreign currency transactions conducted outside rates set by the central bank.

However, provisions governing foreign exchange transactions already exist under Section 24 of the Maldives Monetary Authority Act.

Under the Act, the President, in consultation with the MMA, determines the country's exchange rate system, while the MMA is responsible for formulating and implementing exchange rate and foreign exchange policies.

Section 24 further states that where specific buying and selling rates have been established for a foreign currency under the exchange rate system, buying or selling that currency at any other rate is prohibited.

The law also prohibits receiving commissions or other benefits from such transactions without authorisation from the MMA.

According to the Act, violations may result in fines ranging from MVR 10,000 to MVR 1 million.

Alternatively, the MMA may impose a fine of up to five times the value involved in the transaction.

Following the committee's latest amendments, some stakeholders have argued that the issue lies not in the absence of legal provisions but in the enforcement of existing laws.

Under the proposed amendments to the Foreign Exchange Bill, selling or attempting to sell foreign currency outside official rates or approved trading bands would remain an offence punishable by fines ranging from MVR 25,000 to MVR 1 million, depending on the nature of the violation.

The committee also approved provisions making it an offence to promote or advertise foreign currency transactions conducted outside MMA-approved rates.

The amendment defines promotion and advertising as publicly disclosing, publishing, disseminating or repeatedly sharing information about foreign currency buying and selling at rates outside those established by the MMA, including through digital platforms.

Individuals found in violation could face fines ranging from MVR 25,000 to MVR 500,000.

Where such information is published by a company or registered business, proposed fines range from MVR 100,000 to MVR 5 million.

The amendments are being considered amid continued concern over foreign currency availability and the gap between official and unofficial exchange rates.

The US dollar remains the most widely traded foreign currency in the Maldives.

While the official exchange rate remains at MVR 15.42 per US dollar, transactions in the parallel market have recently been reported at rates exceeding MVR 22 per dollar.

The Foreign Exchange Bill is expected to return to parliament for further consideration following the committee's review.