Parliament passes fines of up to MVR 1 million for forex sales above MMA rates

Parliament on Wednesday passed amendments to the Foreign Exchange Act introducing fines of up to MVR 1 million for selling or attempting to sell foreign currency at rates outside those set by the Maldives Monetary Authority (MMA).

The bill, including changes made during the committee stage and amendments submitted on the Parliament floor, was passed with 47 votes in favour and 12 against.

The legislation was initially submitted on behalf of the government by Holhudhoo MP Abdul Sattar Mohamed to change foreign currency conversion requirements for resorts.

The original bill sought to remove the option allowing resorts to meet their conversion obligation by exchanging USD 500 per tourist and replace it with a requirement to convert 20% of foreign currency revenue.

After completing committee review, the bill was recommitted for further amendments. The legislation passed on Wednesday increases the conversion requirement for resorts to 40% of monthly foreign currency revenue.

The bill also introduces provisions governing foreign currency transactions outside rates authorised by the central bank.

Under an amendment approved by Parliament’s Public Accounts Committee, selling or attempting to sell foreign currency through any medium at a rate or price outside the rate or band set by the MMA will constitute an offence.

The offence will carry a fine ranging from MVR 25,000 to MVR 1 million, depending on the violation.

Existing provisions under the Maldives Monetary Authority Act already prohibit buying or selling foreign currency outside rates set under the central bank’s exchange rate system. The Act also prohibits taking a commission or other benefit from such transactions without MMA authorisation.

Penalties under the MMA Act range from MVR 10,000 to MVR 1 million, with other penalty provisions also available under the law.

The Foreign Exchange Act amendments also prohibit specified forms of advertising and promotion relating to foreign currency transactions conducted outside rates or bands set by the MMA.

The legislation defines such activity to include publishing, broadcasting, disseminating or repeatedly providing information through digital channels or other public means about foreign currency buying or selling rates outside those authorised by the MMA, where the information is used to advertise, encourage or promote such transactions.

Individuals found in breach of the provision could face fines ranging from MVR 25,000 to MVR 500,000.

Where the violation is committed by a legal entity or registered business, fines will range from MVR 100,000 to MVR 5 million.

The legislation also provides that where conduct prohibited under the Foreign Exchange Act constitutes a criminal offence under another law, administrative penalties under the Act may be imposed in addition to criminal proceedings.

The amendments form part of changes being introduced by the government as the parallel market rate for the US dollar remains above the official exchange rate and authorities seek to increase the amount of foreign currency entering the banking system.