Regulation on Money Changing Business

Regulation Number: 92R2024/

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Office of the President Bodu Thakurufaanu Magu Malé, Maldives Phone: 3336211 Mobile: 7242885 Website: www.mv.gov.gazette Volume: 53 Number: 164 Date: 28 Rabeeul Awal 1446 – 1 October 2024 Tuesday

Regulation on Money Changing Business

Volume: 53 Number: 164 Regulation Number: 92R2024/ Government of Maldives Gazette i

Maldives Monetary Authority Malé Maldives

Regulation on Money Changing Business

Table of Contents

First Chapter ................................................................................................................................................. 1 Introduction ......................................................................................................................................................... 1

1. Definition and Name .................................................................................................................................. 1
2. Commencement and Repeal of Regulation ...................................................................................... 1
3. Exempted Institutions ........................................................................................................................... 1
4. Types of Money Changing Licenses ...................................................................................................... 1
5. Interpretation ........................................................................................................................................ 1

Second Chapter ................................................................................................................................................... 3 Tier 1 License and Matters Related to Buying and Selling Foreign Currency Business ............................................................. 3 6. Prohibition of Buying and Selling Foreign Currency Business Without License ................................................................ 3 7. Prohibition on Use of Name ................................................................................................................ 4 8. General Requirements for Issuance of Tier 1 Money Changing License and License Duration ............... 4 9. Application for Tier 1 Money Changing License .............................................................................. 5 10. Application for Renewal of Tier 1 Money Changing License ............................................................... 7 11. Application Fee ................................................................................................................................ 8 12. Conditions of Tier 1 Money Changing License ....................................................................................... 8 13. Maintenance and Cancellation of Tier 1 Money Changing License ................................................................. 10 14. Annual Fee ....................................................................................................................................... 11 15. Maintenance of License and Signboard .................................................................................... 11 16. Limit on Transactions in Local Currency ....................................................................................... 11 17. Immediate Execution of Foreign Currency Purchase and Sale Transactions ................................................................................ 11 18. Issuance of Receipt .............................................................................................................................. 11

Volume: 53 Number: 164 Regulation Number: 92R2024/ Government of Maldives Gazette ii 19. Change of Major Shareholders, Directors, and Compliance Officer ................................................... 12 20. Preparation and Audit of Financial Statements .............................................................................................. 12

Third Chapter .............................................................................................................................................. 13 Tier 2 License and Matters Related to Selling Foreign Currency Business ...................................................................... 13 21. Prohibition of Selling Foreign Currency Business Without License ....................................................................... 13 22. General Requirements for Issuance of Tier 2 Money Changing License and License Duration ............. 13 23. Application for Tier 2 Money Changing License ............................................................................ 14 24. Application for Renewal of Tier 2 Money Changing License ............................................................. 15 25. Application Fee .............................................................................................................................. 15 26. Conditions of Tier 2 Money Changing License ..................................................................................... 16 27. Maintenance and Cancellation of Tier 2 Money Changing License ............................................................ 17 28. Annual Fee ....................................................................................................................................... 18 29. Conducting Foreign Currency Sale Transactions Solely Through Banks ............................................................ 18 30. Immediate Execution of Foreign Currency Purchase and Sale Transactions ................................................................................ 18 31. Issuance of Receipt .............................................................................................................................. 19

Fourth Chapter ............................................................................................................................................ 19 Matters to be Complied with by Licensed Entities ................................................................................... 19 32. Security Deposit ......................................................................................................................... 19 33. Criteria for Determining Suitability ............................................................................................ 19 34. Maintenance of Records and Establishment of Electronic System for Monitoring Transactions ...................................... 20

Fifth Chapter ............................................................................................................................................. 22 Supervision ........................................................................................................................................ 22 35. Submission of Information and Reports and Supervision ................................................................................... 22 36. Remedial Measures Taken .......................................................................................................... 22

Sixth Chapter ................................................................................................................................................. 23 Other Matters ....................................................................................................................................... 23 37. Foreign Currency Purchase and Sale Rate ................................................................................................ 23 38. Application for License Under This Regulation by Licensed Entities at the Time of Commencement of This Regulation 23 ..................................................................................................................................................

Volume: 53 Number: 164 Regulation Number: 92R2024/ Government of Maldives Gazette 1

Regulation on Money Changing Business

First Chapter Introduction

1. Definition and Name (a) This is a Regulation determining the issuance of licenses for conducting Money Changing Business, regulating this business, supervising it, and other matters related to this business. (b) This Regulation has been drafted under Article 29 and Article 38 of Law Number 6/81 (Maldives Monetary Authority Act 1981). (c) This Regulation shall be known as the "Regulation on Money Changing Business".

2. Commencement and Repeal of Regulation (a) This Regulation shall come into effect on 1 October 2024. (b) With the commencement of this Regulation, the "Rules for Conducting Business by Entities Holding Licenses for Buying and Selling Foreign Currency" dated 1 March 1987 is repealed.

3. Exempted Institutions This Regulation shall not apply to banks operating in the Maldives.

4. Types of Money Changing Licenses Under this Regulation, the Authority shall issue:

• Tier 1 Money Changing License (License for conducting business of buying and selling foreign currency);
• Tier 2 Money Changing License (License for conducting business of selling foreign currency).

5. Interpretation Unless otherwise specified in this Regulation, the following terms and expressions shall have the meanings given below in connection with them:

(a) "Ultimate Beneficial Owner" means any individual who, directly or indirectly, ultimately exercises voting power over 50% (fifty percent) of a legal person.

(b) "Bank" means any entity licensed under Law Number 24/2010 (Banking Act of the Maldives).

(c) "Foreign Currency" means currency of any country other than the Maldives.

(d) "Corporate Group" means any company including the following entities: (1) Other companies holding more than 25% (twenty-five percent) of the shares in that company (subsidiary companies); (2) Any entity holding more than 25% (twenty-five percent) of the shares in that company (owners); (3) Other companies holding more than 25% (twenty-five percent) of the shares in entities specified in item (2) of this clause (sister companies); and (4) Other companies holding more than 25% (twenty-five percent) of the shares in companies specified in item (3) of this clause (subsidiary companies of sister companies).

(e) "Authority" means the Maldives Monetary Authority established under Law Number 6/81 (Maldives Monetary Authority Act 1981).

(f) "Money Changing Business" means the business of buying and selling foreign currency and the business of selling foreign currency.

(g) "Major Shareholder" means any entity that directly or indirectly holds at least 25% (twenty-five percent) of the capital or voting power of a specific legal person, or any entity that has influence over such person in any other manner accepted by the Authority.

(h) "Maldives Monetary Authority Act" means Law Number 6/81 (Maldives Monetary Authority Act 1981).

(i) "Person" includes natural persons and legal persons.

(j) "Licensed Entities" means entities holding Tier 1 Money Changing Licenses issued by the Authority and entities holding Tier 2 Money Changing Licenses issued by the Authority.

(k) "Tier 1 Money Changing License" means the license issued by the Authority for conducting the business of buying and selling foreign currency.

(l) "Tier 1 Money Changing License Holder" means an entity holding the license issued by the Authority for conducting the business of buying and selling foreign currency.

(m) "Tier 2 Money Changing License" means the license issued by the Authority for conducting the business of selling foreign currency.

(n) "Tier 2 Money Changing License Holder" means an entity holding the license issued by the Authority for conducting the business of selling foreign currency.

(o) "Tourists" means foreigners holding tourist visas entering the Maldives.

Second Chapter Tier 1 License and Matters Related to Buying and Selling Foreign Currency Business

6. Prohibition of Buying and Selling Foreign Currency Business Without License (a) Except for banks operating in the Maldives, no entity shall conduct the business of buying and selling foreign currency in the Maldives unless it holds a Tier 1 Money Changing Business License issued by the Authority under the Maldives Monetary Authority Act. (b) Except for banks operating in the Maldives and Tier 1 Money Changing License Holders, no entity shall claim or advertise that it is conducting the business of buying and selling foreign currency. (c) Notwithstanding clause (a), it is permitted for establishments registered under Law Number 2/99 (Tourism Act of the Maldives) to buy foreign currency from tourists or sell foreign currency to tourists without a license, provided they provide services to tourists.

7. Prohibition on Use of Name Except for banks operating in the Maldives and Tier 1 Money Changing License Holders, no entity shall use the phrases "License Holder for Business of Buying and Selling Foreign Currency", "Money Changer", "Currency Exchange", or any related words or phrases in English or any other language, as part of the name of their business or service, without obtaining permission from the Authority.

8. General Requirements for Issuance of Tier 1 Money Changing License and License Duration (a) A Tier 1 Money Changing License may be issued to a company established under Law Number 7/2023 (Companies Act) for the purpose of conducting the business of buying and selling foreign currency. The Ultimate Beneficial Owner of such a company must be a Maldivian, except for companies where the Government holds 50% (fifty percent) or more. (b) A Tier 1 Money Changing License may be issued if the application meets the requirements listed below and any additional requirements determined by the Authority. (1) The company applying for the license has not had its financial business license revoked at any time by that entity. This includes entities that voluntarily had their license revoked and entities whose Money Changing License was revoked more than 3 (three) months ago. (2) The Major Shareholders, Ultimate Beneficial Owners, Board of Directors, and Compliance Officer of that entity are suitable persons as per Article 33 of this Regulation. (c) A Tier 1 Money Changing License may be issued to one company within a Corporate Group. However, companies belonging to a Corporate Group owned by the Government are exempted from this. (d) A Tier 1 Money Changing License may be issued to conduct the activities of the business of buying and selling foreign currency at a specific location established in the Maldives. (e) A Tier 1 Money Changing License is not transferable to other entities. (f) The duration of a Tier 1 Money Changing License is 5 (five) years.

9. Application for Tier 1 Money Changing License (a) An application for a Tier 1 Money Changing License shall be submitted to the Authority after completing the form specified by the Authority upon its announcement. If the Authority has determined a specific number of Tier 1 Money Changing Licenses to be issued, this shall be stated in the announcement. If more entities meeting the conditions apply than the determined number, the procedure for issuing licenses shall also be stated in the announcement. (b) When applying for a Tier 1 Money Changing License, the following information and documents must be submitted along with the application form: (1) Copy of the Memorandum and Articles of Association of the company applying for the license; (2) The name registered or intended to be registered for conducting the business of buying and selling foreign currency; (3) Name, nationality, permanent address, and other information determined by the Authority regarding the Major Shareholders, Ultimate Beneficial Owners, Board of Directors, and Compliance Officer of the company applying for the license; (4) A declaration signed by each Major Shareholder, Ultimate Beneficial Owner, Board Member, and Compliance Officer of the company applying for the license, stating whether any crime has been proven against them in the past 5 (five) years, or if no crime was proven, whether they served as a Board Member or Senior Management of a company declared bankrupt or filed for bankruptcy in the past 5 (five) years; and criminal records of each such person; (5) Details of how foreign currency will be sourced and the detailed plan for conducting the business of buying and selling foreign currency; and (6) Details of the Corporate Group to which the company applying for the license belongs, including a list of all offices where the Major Shareholders and Ultimate Beneficial Owners have an interest and the extent of their interest in those offices. (c) If the Authority requires further clarification or additional documents within a specified time to proceed with the application, the applicant must submit them within that timeframe. Failure to do so may result in the application being rejected by the Authority.

10. Application for Renewal of Tier 1 Money Changing License (a) An application for renewal of a Tier 1 Money Changing License shall be submitted to the Authority in the manner determined by the Authority, along with information and documents specified by the Authority. (b) Licensed entities wishing to renew their license must submit the application to the Authority at least 3 (three) months before the expiration of the license. However, the Authority may consider applications submitted after this period but before expiration for valid reasons. The Authority may also decide to consider such applications with an additional fee. (c) The Authority may decide to renew or not renew the license based on whether the licensed entity meets the conditions or has violations, or neither. (d) The existing license shall remain valid until the Authority makes a decision on the renewal application.

11. Application Fee (a) An application fee of 20,000/- (twenty thousand) Rufiyaa must be paid to the Authority within the timeframe specified by the Authority when applying for a Tier 1 Money Changing License. The application fee is non-refundable, regardless of whether the Authority decides to issue or not issue the license. (b) An application fee of 10,000/- (ten thousand) Rufiyaa must be paid to the Authority within the timeframe specified by the Authority when applying for renewal of a Tier 1 Money Changing License. The application fee is non-refundable, regardless of whether the Authority decides to renew or not renew the license.

12. Conditions of Tier 1 Money Changing License (a) A Tier 1 Money Changing License may be issued with additional conditions beyond those specified in clause (b) of this Article. The Authority may also amend or add conditions to the license after issuance. (b) Licensed entities must comply with the following license conditions at all times: (1) If the license does not specify a period longer than 3 (three) months to commence business, the business must be commenced within 3 (three) months from the date of license issuance. (2) The licensed business must be operated diligently and in accordance with Law Number 10/2014 (Anti-Money Laundering and Counter-Financing of Terrorism Act) and other laws, regulations, and directives issued by the Authority. (3) Appropriate internal controls must be established and implemented, along with appropriate policies and procedures regarding matters that could adversely affect the business. (4) No fraud, deception, theft, money laundering, or financing of terrorism, or any other crime, shall be committed. Nor shall any act be committed that could facilitate such crimes. (5) A dedicated place for providing foreign currency buying and selling services to the public must be established in a populated island in the Maldives. This place must be approved by the Authority. In case of temporary suspension of services or need to change the approved location, an application for permission must be submitted to the Authority. (6) The licensed business must be operated at the location approved by the Authority for conducting the business.

Volume: 53 Number: 164 Regulation Number: 92R2024/ Government of Maldives Gazette 2

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