Regulatory Alerts2023-06-01
Advisory Notice: Sole Proprietorship Funds Routed through Expatriate Accounts
The Maldives Monetary Authority's Financial Intelligence Unit issued Circular CN/2023/4508 to enforce Regulation No. 2023/R-109, which prohibits sole proprietors from conducting business activities that benefit foreigners. Reporting entities, including banks and remittance service providers, are required to strengthen transaction monitoring and conduct due diligence to detect and report transactions by foreigners that do not align with their declared legitimate income. The Authority advises implementing these risk-based measures to prevent money laundering while ensuring that legitimate businesses and consumers are not excluded from the formal financial system.
بسم الله الرحمن الرحيم
FINANCIAL INTELLIGENCE UNIT MALDIVES MONETARY AUTHORITY
Circular No: CN/2023/4508
1 June 2023
To: Banks and International Money Remittance Service Providers
Advisory Notice: Sole Proprietorship Funds Routed through Expatriate Accounts
The Regulation No. 2023/R-109 (Regulation on Sole Proprietorships), which came into effect on 22 May 2023, has obligations on Banks and International Money Remittance Service Providers (Reporting Entities).
Section 28 of the Regulation prohibits Sole Proprietors to conduct their business activities that directly or indirectly benefits a foreigner. Additionally, Section 30 requires Reporting Entities to prevent the transactions conducted by foreigners that do not commensurate declared legitimate income. The provision further requires Reporting Entities to report to this Unit, where there are reasonable grounds to suspect the transactions (that do not commensurate declared legitimate income) conducted on behalf of Sole Proprietors.
Due to the enforcement of the Regulation, Reporting Entities are advised to conduct appropriate level of due diligence on their customers and the transactions to ensure that transactions are conducted for apparent lawful economic purposes. Reporting Entities are also advised to strengthen their transaction monitoring mechanisms to detect transactions and activities prescribed in Section 30 of the Regulation and report to this Unit as required.
Reporting Entities shall implement the above measures on a risk-based approach and in a manner that does not negatively impact the customer. Banks are further advised that this Unit do not recommend the implementation of anti-money laundering and combatting the financing of terrorism measures that may cause unintended consequence of excluding legitimate businesses and consumers from the formal financial system.
Yours Sincerely,
[Signature]
Abdulla Ashraf Head of Financial Intelligence Unit
Phone: +960 3012139 Email: fiu@mma.gov.mv Website: www.mma.gov.mv Web page: www.mma.gov.mv/#/fiu Maldives Monetary Authority Boduthakurufaanu Magu Male' 20182, Maldives