7 unlicensed currency traders sold $76 million on black market in 9 months: Ihusaan

Seven unlicensed foreign currency exchange operations sold USD 76 million on the black market over the past nine months, Minister of Homeland Security and Technology Ali Ihusaan said on Monday.

Speaking at a press conference at the President’s Office on the foreign exchange situation, Ihusaan provided details of operations conducted by law enforcement agencies and the Maldives Monetary Authority (MMA) to identify businesses operating outside the regulated foreign exchange market.

According to Ihusaan, 63 entities are registered with the MMA to conduct foreign currency exchange transactions. However, he said a number of individuals and businesses continue to operate without the permits required by law.

“Conducting money exchange without a permit is a criminal offence. Under current Maldivian law, using money obtained through this criminal offence for personal use, for business purposes, or to generate profit constitutes money laundering,” Ihusaan said.

The minister said authorities had investigated the sources of foreign currency supplied to unlicensed traders, as those operating such businesses do not themselves generate foreign currency income.

“These individuals can only exchange foreign currency if someone provides it to them. We investigated who provides them with foreign exchange for conversion purposes. Upon investigation, we found that this includes entities that earn dollar income within the Maldives,” Ihusaan said.

He said the investigation had identified resort chains among businesses supplying foreign currency to the parallel market.

“Unfortunately, we have identified prominent, well-known resort chains among them. One of these parties [a resort chain] exchanged USD 4 million on the black market over the past nine months,” he said.

Ihusaan did not identify the resort chain.

The minister said some businesses report that they do not have sufficient dollars when required to exchange foreign currency through the regulated system, while authorities have found that dollars from the same businesses are entering the parallel market.

He said the government considers operating an unlicensed foreign exchange business a criminal offence and warned that parties supplying foreign currency to such operations could also face legal consequences.

Ihusaan added that the issue was not limited to businesses. Individuals who receive salaries in US dollars and sell the currency through the black market are also participating in transactions outside the regulated foreign exchange system, he said.

The remarks come as the government moves to increase the amount of foreign currency entering the banking system.

MMA Governor Ahmed Munawar announced on Monday that the government plans to amend the Foreign Currency Act to require resorts to exchange 40 per cent of their foreign currency revenue through Maldivian banks, doubling the proposed 20 per cent requirement. The government also plans to shorten the conversion period from three months to one month.