Parliament passes ban on publishing black-market forex rates

Parliament on Wednesday passed amendments to the Foreign Exchange Act that prohibit the publication and dissemination of foreign currency exchange rates outside rates or bands set by the Maldives Monetary Authority (MMA) where such information is used to promote, encourage or inform the public about such transactions.

The bill was passed with 47 MPs voting in favour and 12 against.

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

The original bill sought to remove the option allowing resorts to meet their conversion requirement 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 version passed on Wednesday requires resorts to convert 40% of their monthly foreign currency revenue through banks.

Among the changes introduced by Parliament’s Public Accounts Committee are restrictions on advertising and promoting the buying or selling of foreign currency at rates or within bands outside those set by the MMA.

Under the amendment, advertising and promotion include publishing, broadcasting, disseminating, repeating or otherwise making available information on foreign currency exchange rates or prices outside MMA limits through digital channels or other public media, where the purpose is to promote, encourage or inform the public about such transactions.

The provision would apply to media reporting where publication falls within the activities defined under the Act.

Violations carry fines ranging from MVR 25,000 to MVR 500,000.

Where the information is published or disseminated by a legal entity or registered business, the penalty ranges from MVR 100,000 to MVR 5 million.

The amendments also provide that administrative penalties may be imposed where an act prohibited under the Foreign Exchange Act also constitutes a criminal offence under another law. Criminal proceedings may be initiated in addition to the administrative action.

Parliament also approved penalties for selling or attempting to sell foreign currency at rates outside those authorised by the MMA.

Such violations will carry fines ranging from MVR 25,000 to MVR 1 million, depending on the offence.

The amendments come as the difference between the official and parallel market exchange rates for the US dollar has increased.

The US dollar, the main foreign currency traded in the Maldives, has an official bank exchange rate of MVR 15.42. The rate for purchasing dollars in the parallel market has risen above MVR 22.