First Amendment to the Maldives Banking Act (2015)

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Law No: 3/2015 First Amendment to Law No. 24/2010 (Banking Act of Maldives)

Volume: 44 Number: 4 Date: 14 Rabeeul Awal 1436 - 5 January 2015 Tuesday

On Tuesday, 42nd day of December 4102, during the 49th session of the 3rd term of the People's Majlis, the "Bill for the Zeroth Amendment to Law No. 42/4101 (Banking Act of Maldives)" was passed. On Tuesday, 5 January 4102 (02 Rabeeul Awal 0236 AH), the President of the Republic signed this bill into law. This law was published in the Government Gazette of the Republic of Maldives today.

Volume: 44 Number: 4 Government Gazette of the Republic of Maldives 3

Law No: 3/1025 First Amendment to Law No. 02/0202 (Banking Act of Maldives)

Amendments to Law No. 14/1020 (Banking Act of Maldives).

1. Section 1, paragraphs (h) and (4) of the aforementioned law are amended as follows:
   1. Financial crimes are abolished.
   2. Section 4, paragraph (h) and (3) of the aforementioned law are amended as follows: 3. Domestic banks or foreign banks' branches or subsidiaries are opened in the Maldives.
   3. Section 6, paragraph (h) of the aforementioned law is amended as follows: 6. The date from which all information required to be submitted by the applicant for a license to the Monetary Authority of Maldives (MAM) is received, within 3 (three) working days, the MAM shall issue or refuse the license. Within this period, the MAM shall notify the party accordingly. The manner of calculating this period and implementation shall be determined by regulations made by the MAM under this law.
   4. Section 6, paragraph (b) is added to the aforementioned law as follows: 6. (b) If the MAM determines that the application for a license submitted within the 3 (three) working day period under paragraph (h) of this section is incomplete or cannot be processed, it shall be deemed that the license was not issued.
   5. Section 12 of the aforementioned law is amended as follows: 12. (h) The maximum limit of credit exposure to be treated as such by the bank shall be determined by regulations made by the MAM under this law. Such regulations may also determine other limits. (2) Related parties or parties connected as determined by regulations made by the MAM under this law; the maximum limit of credit exposure to be treated as such;

Volume: 44 Number: 4 Government Gazette of the Republic of Maldives 4 (1) The maximum limit of credit exposure to be treated as such for a corporate group as defined by regulations made by the MAM under this law; (3) The maximum limit of credit exposure to be treated as such for all debtors defined as large exposure by regulations made by the MAM under this law. (t) Loans provided directly to the Government, or to a Ministry or Agency of the Government, or loans where the principal and interest are guaranteed by the Government, are exempt from the provisions of paragraph (h) of this section. Furthermore, Section 12 of this law is also exempt. (n) For the purposes of this section or for the purposes of regulations made by the MAM, the circumstances under which loans provided to certain parties are considered loans to other parties, or loans provided to certain parties are considered loans provided to other parties, shall be determined by the MAM. These circumstances shall be determined considering the manner in which the debtor utilizes the funds and the manner in which the bank recovers the funds. Furthermore, the circumstances under which loans provided to specific parties are considered bundled shall be determined by the MAM. 6. Section 12 of the aforementioned law is amended as follows: Loans to Related Parties 12. (h) Banks may provide loans to related parties as defined by regulations made by the MAM under this law, provided the following conditions are met: (2) The provision of such loans and the terms thereof must be approved by a majority of the Board of Directors. For foreign banks, such loans shall be approved by the authorized Branch Manager. However, the provisions of paragraph (h) and (3) of this section do not apply to loans provided under the Employee Benefit Scheme. This exemption applies only if the amount of such loans does not exceed the amount determined by regulations made by the MAM. (1) The amount of such loans shall not exceed the limit determined by regulations made by the MAM under this law for loans to related parties. Such regulations made by the MAM shall determine the maximum limit of loans to related parties, the aggregate maximum limit of loans to all related parties, the terms of such loans, repayment schedules, service charges or interest rates, grace periods, and principles and standards related to this matter. Furthermore, the MAM shall determine the distinction between loans provided to related parties and other loans provided by the bank. (3) The terms of such loans shall not be more lenient than the terms of loans provided to the general public. However, under regulations made by the MAM regarding loans to related parties, and with the approval of the Board of Directors, and under the Employee Benefit Scheme applicable to all employees, the service charges or interest rates for loans provided to employees other than Directors may be reduced. This scheme must be a written scheme approved by the MAM. (t) For the purposes of the limits mentioned in this section and regulations made by the MAM, and in specific cases, the MAM may determine that a party is a related party due to its relationship with the bank, or that two parties are connected parties due to their relationship with each other. (n) If it is known that a loan provided violates this section, Section 12 of this law, or regulations made by the MAM, the Director, Officer, or Employee involved, jointly or severally, shall be liable for a penalty of an amount less than the two amounts specified below: (2) For the gain obtained by the bank due to such loan; or (1) For the amount exceeding the limit specified in this section, Section 12 of this law, or regulations made by the MAM under this law for the provision of such loans. Furthermore, all parties who have received such loans and all other parties who have received funds from the bank that should have been repaid, shall be liable for the aforementioned amounts. (r) In calculating the ratios mentioned in Section 24, paragraph (h) of this law, the MAM may require banks to reduce the amount of loans provided to related parties. Furthermore, except for loans to related parties, the MAM may require banks to reduce the entire loan amount if it can be easily traded in the market. Furthermore, in providing such loans, if the interest rate and entire loan amount can be easily traded in the market, banks shall act accordingly under regulations made by the MAM or other means. (b) Related parties shall obtain other services or purchase or lease assets in accordance with regulations made by the MAM. Furthermore, in accordance with paragraph (h) and (2) of this section, the approval of the Board of Directors or the authorized Branch Manager must be obtained before obtaining such services or purchasing, leasing, or entering into such transactions with related parties. Such transactions with related parties shall be conducted in a manner that does not result in a loss to the bank, considering the principles and conditions under which such transactions are conducted with non-related parties. 7. Section 31 of the aforementioned law is amended as follows: Bank Closing Days. 31. Except for bank closing days determined by the MAM, banks must remain open on the days and times determined by the MAM to provide services to the general public. Except for the days and times determined by the MAM, banks may remain open with the permission of the MAM. In such cases, banks must not provide services to the general public on other bank closing days determined by the MAM without such permission. Furthermore, in case of temporary suspension of services by a bank, the MAM may issue a notice or order to the bank to close temporarily and reopen on a date determined by the MAM. 2. Section 33, paragraph (h) of the aforementioned law is added as follows: Suspicious Transactions 33. (h) If the bank, or the bank's Administrator, Officer, or Employee, suspects that any banking transaction conducted by the bank, including funds, or any funds purchased or sold by the bank, are related to prohibited activities or crimes, the bank shall notify the MAM immediately. In such cases, the bank shall not proceed with the transaction or purchase/sell the funds within 5 (five) days from the date of notification, unless the MAM grants permission. However, if the bank fails to obtain necessary information from the MAM, the MAM may extend the period during which the transaction cannot proceed or funds cannot be purchased/sold. Furthermore, the MAM shall notify relevant authorities to take further action regarding such matters. 2. Section 35 of the aforementioned law is amended as follows: Dormant Accounts. 35. Accounts opened in banks that have not had transactions for 5 (five) consecutive years shall be considered dormant accounts, and banks shall act accordingly regarding such accounts. However, this section does not prevent banks from determining procedures for accounts with transactions for periods shorter than this duration, provided such procedures do not violate this law. 20. Section 37, paragraph (h) of the aforementioned law is amended as follows: Payment Systems 37. (h) Banks may establish or use corporate systems, payment systems, settlement systems, and clearing systems necessary for exchanging funds between banks and other financial institutions, depositing funds into accounts, withdrawing funds from accounts, and issuing instruments for fund transfer. Regulations and procedures necessary for conducting these activities shall be established by the MAM. Furthermore, if the MAM establishes such a system and requires banks to participate, banks shall participate. If the MAM requires a bank to participate in such a system, the bank shall participate. 22. Section 38 of the aforementioned law is added as follows: Measures Related to Stopping the Provision of Funds for Money Laundering, Corruption, and Terrorist Activities 32. (h) Banks shall establish measures related to stopping the provision of funds for money laundering and terrorist activities, and act accordingly. Such measures shall include the following: (2) Information regarding the identity of the customer and other parties benefiting from transactions conducted with the customer; (1) Information regarding the origin and destination of funds; (3) Information regarding the customer and transactions conducted with such parties; (4) If the bank suspects that any amount of funds or any value of assets is being obtained for criminal purposes or for terrorist activities, the bank shall report such suspicion to the MAM and the National Intelligence Unit within 1 (one) working day; (5) Banks shall maintain information regarding every transaction conducted with customers and the MAM, and submit reports to the National Intelligence Unit as required under Law No. 6/22 (Monetary Authority of Maldives Act 2022); (6) Banks shall determine procedures or measures to act regarding stopping the provision of funds for money laundering and terrorist activities. (t) Details regarding how banks and other financial institutions, and specified financial or business sectors and industries, comply with the matters mentioned in paragraph (h) of this section shall be issued by the MAM in the form of regulations. (n) If banks and other financial institutions, specified financial or business sectors and industries, and other parties violate the matters mentioned in paragraph (h) of this section, the MAM shall determine measures to be taken against such parties and issue regulations accordingly. 21. Section 39 of the aforementioned law is amended as follows: Prohibition of Disclosing Confidential Information Obtained from Customers in Transactions with Customers under General Principles 39. Under laws and regulations related to stopping money laundering and terrorism financing, banks shall not disclose confidential information regarding other parties obtained in various business transactions with customers, or information obtained regarding customers, or various transactions conducted with customers in writing or verbally, to any other party without the permission of the bank, under general principles, except as required by law or under Section 41 of this law regarding bank confidentiality. 23. Section 47 of the aforementioned law is amended as follows: Submission of Reports and Information 47. 24. A letter is added to the end of paragraph (h) of Section 47 of the aforementioned law as follows: 47. (t) In addition to the information mentioned in paragraph (h) of this section, banks may be required by the MAM to submit other information, documents, or reports. Furthermore, the MAM shall determine the manner and time for submitting such information, documents, or reports, and all banks shall submit them accordingly. 25. Section 53, paragraph (t) of the aforementioned law is amended as follows: 53. (t) The MAM shall conduct inspections of banks, which shall not exceed 1 (one) year between two inspections. 26. Section 63 of the aforementioned law is amended as follows: Participation in Deposit Insurance Scheme 63. Banks participating in the deposit insurance scheme conducted in or outside the Maldives, with the permission of the MAM and in accordance with conditions and regulations determined and established by the MAM, may participate. Furthermore, if the MAM or the Government of the Maldives establishes a deposit insurance scheme, banks shall participate if required by the MAM. 27. Two sections are added to the end of Section 63 of the aforementioned law: Fees and Other Charges 64. (h) The MAM may charge appropriate fees or charges for services provided to banks. (t) The MAM may require banks to pay annual fees or license fees. Participation in Financial Sector Projects 65. The MAM has the authority to notify banks of projects initiated or advanced by the MAM to develop and strengthen the financial sector of the Maldives, and to enhance and strengthen financial inclusion in the Maldives. If the MAM notifies such projects, banks shall participate in such projects and in the relevant departments or agencies as determined by the MAM. 22. The definition of "related party" or "related party" in Section 225 of the aforementioned law is deleted. 22. The numbering of sections in this law and the aforementioned law, related to the additional or deleted sections, is adjusted. 10. References to specific sections or parts of sections in the aforementioned law are updated in accordance with the amendments made by this law. 12. This law shall come into force from the date of its publication in the Government Gazette of the Maldives.

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