Exchange Law No. 3/96 of January 4

Within the framework of the reorganization of the financial system, various legislation has been approved that, alongside innovative measures, aims to update principles and norms that have become outdated and to adapt the functioning of credit institutions to the current phase of economic and social development of our country.

CHAPTER I

Objectives and Scope of Application

ARTICLE 1

(OBJECTIVES) The following are subject to this law: acts, transactions, transfers, and operations of any kind carried out between residents and non-residents that result or may result in payments or receipts from abroad.

ARTICLE 2

(SCOPE OF APPLICATION) This law governs:

1. The carrying out by residents of foreign exchange operations regarding: a) Goods or assets located within the national territory or rights over such goods or assets; b) Goods, assets, or rights acquired, generated, or located abroad over which there is a legal obligation to repatriate.

2. The carrying out of foreign exchange operations by non-resident individuals or legal entities, when such operations concern goods or assets located within the national territory and rights over such goods or assets, or refer to activities exercised during the same period.

3. For the purposes of the preceding paragraph, activities exercised within the national territory are considered to include services provided, the transfer of rights, and goods encumbered or alienated when located, produced, used, or exploited in the country.

CHAPTER II

Definitions

ARTICLE 3

(QUALITY OF RESIDENT) For the purposes of this law, the following are considered residents within the national territory, with respect to foreign exchange or economic assets:

a) Individuals with habitual residence within the national territory; b) Legal entities with headquarters within the national territory; c) Funds, institutes, and public bodies endowed with financial and administrative autonomy, headquartered within the national territory; d) Branches, agencies, delegations, subsidiaries, or any other form of representation of non-resident legal entities, legally recognized within the national territory; e) National citizens who are diplomats, consular representatives, or equivalent, exercising functions abroad, as well as members of their respective families; f) National individuals whose absence abroad, for a period exceeding ninety days, is due to health reasons, studies, or determined by the exercise of public or private functions that imply residence abroad.

ARTICLE 4

(QUALITY OF NON-RESIDENT) For the purposes of this law, the following are considered non-residents within the national territory, with respect to foreign exchange or economic assets:

a) Individuals residing abroad and legal entities with headquarters abroad; b) Foreign diplomats, consular representatives, or equivalent, exercising functions within the national territory, as well as members of their respective families; c) Diplomatic and consular representations, international organizations, and other forms of governmental representation legally recognized within the national territory.

ARTICLE 5

(FOREIGN CURRENCY) For the purposes of this law and its regulatory instruments and complementary legislation, foreign currency is understood as banknotes and metallic coins with legal tender in the countries of issue and any other means of payment abroad expressed in currencies or units of account used in international compensation or payments.

ARTICLE 6

(FOREIGN EXCHANGE OPERATIONS)

1. The following are considered foreign exchange operations subject to registration and authorized under regulations issued by the Bank of Mozambique: a) The acquisition or alienation of gold or silver, coined, in bars, ingots, or other unworked forms, as well as platinum and other precious metals; b) The acquisition or alienation of foreign currency; c) The opening and management of accounts for non-residents in national currency; d) The opening and management of accounts for residents in foreign currency or in units of account used in international compensation or payments; e) Participation in bills of exchange, promissory notes, checks, credit cards, and invoice statements, expressed or payable in foreign currency or whenever rights or obligations of residents towards non-residents are constituted; f) The granting of credit by discounting bills of exchange, promissory notes, and invoice statements, expressed or payable in foreign currency or national currency, when non-residents intervene in these instruments as drawers, acceptors, endorsers, guarantors, whether as subscribers or issuers; g) The acquisition or alienation of coupons of foreign credit instruments; h) Operations expressed in national currency or foreign currency or units of account that involve or may involve the total or partial settlement of transactions of goods, current invisibles, or capital between residents and non-residents.

2. The following are also considered foreign exchange operations for the purposes of this law: the import or re-export of: a) Gold or silver, coined, in bars, ingots, or in any other unworked form, as well as platinum and other precious metals; b) National or foreign banknotes or metallic coins and other external means of payment; c) Bills of exchange, promissory notes, and invoice statements, shares or bonds, whether national or foreign, or coupons, as well as public debt instruments.

3. The public is exempted from presenting the Foreign Exchange Form for the purchase of foreign banknotes and coins, travel checks, and credit cards up to the amounts of the limits fixed by the Bank of Mozambique, for the following purposes: a) Travel abroad; b) Studies abroad; c) Expenses related to fairs and other exhibitions; d) Film rentals; e) Contributions to international organizations; f) Subscriptions to magazines, newspapers, and other publications; g) Acquisition of written materials and others for scientific work.

ARTICLE 7

(FOREIGN EXCHANGE RESERVES)

1. Foreign exchange reserves consist of: a) Gold and silver, coined or in bars; b) Fine silver and platinum; c) Special Drawing Rights; d) Foreign banknotes and coins; e) Other assets expressed in foreign currency with assured convertibility in the form of:

   • Credits payable on demand or with a term not exceeding one hundred and eighty days, represented by balances of accounts opened with banks of recognized credit, domiciled abroad and in international monetary institutions and bodies;
   • Checks and payment orders issued by recognized entities with first-order banks domiciled abroad;
   • Bills in portfolio, payable on demand or with a term not exceeding one hundred and eighty days, accepted by first-order banks domiciled abroad;
   • Treasury bills or other analogous obligations of foreign states, maturing or to be sold within one hundred and eighty days.

2. Any other type of asset values abroad that the Bank of Mozambique considers appropriate, in accordance with international norms and after due authorization by the Government, may be included in the foreign exchange reserve.

CHAPTER III

Foreign Exchange Trading

ARTICLE 8

(EXERCISE OF FOREIGN EXCHANGE TRADING)

1. The habitual, for-profit realization, on one's own account or on behalf of others, of foreign exchange operations is considered the exercise of foreign exchange trading.

2. Only the following may exercise foreign exchange trading: a) Commercial banks; b) Exchange houses; c) Other entities or institutions duly authorized by the Bank of Mozambique.

3. The scope and terms under which foreign exchange operations may be carried out by the institutions referred to in the preceding paragraph are defined by the Bank of Mozambique.

ARTICLE 9

(COMPENSATION) Compensation with credits or debits arising from transactions of goods or current invisibles is carried out under the terms defined by the Bank of Mozambique.

ARTICLE 10

(ACCOUNTS IN FOREIGN CURRENCY)

1. Resident individuals or legal entities may hold accounts in foreign currency within the country, under the terms defined by the Bank of Mozambique.

2. Resident individuals or legal entities may hold accounts in foreign currency abroad.

3. Non-resident individuals or legal entities may hold accounts in foreign currency in credit institutions authorized to exercise foreign exchange trading.

ARTICLE 11

(ACCOUNTS IN NATIONAL CURRENCY)

1. Non-resident entities may open and manage accounts in national currency in credit institutions authorized to exercise foreign exchange trading, under the terms defined by the Bank of Mozambique.

2. The balance of accounts constituted under the preceding paragraph is not subject to conversion, nor is it transferable abroad.

ARTICLE 12

(ENTRY AND EXIT OF CURRENCY)

1. The entry into the national territory of foreign currency and other means of payment abroad is free, provided that their values are declared whenever they exceed the limits fixed by the Bank of Mozambique.

2. The exit of foreign currency, as well as other means of payment abroad, is free, up to the limit of the value declared upon entry into the country.

3. The exit of foreign currency, as well as other means of payment abroad, is free for resident entities, upon proof of retention and legitimate possession, issued by credit institutions authorized to exercise foreign exchange trading, within the limits fixed by the Bank of Mozambique.

ARTICLE 13

(ENTRY AND EXIT OF NATIONAL CURRENCY) The entry and exit of national banknotes and metallic coins are subject to the limits fixed by the Bank of Mozambique.

ARTICLE 14

(POSTAL VALUES) The limits on the use of international postal money orders are fixed by the Bank of Mozambique.

CHAPTER IV

Exchange Offenses

ARTICLE 15

(MISDEMEANOR)

1. The following constitute exchange misdemeanors: a) Operations of current invisibles, import, export, or re-export of capital between residents and non-residents, carried out without the registration or respective license of the competent authority, when legally required; b) The settlement of any goods transaction, as well as compensation operations carried out without the registration or respective license or authorization of the competent authority, when legally required; c) Operations that, without observing the provisions of Articles 9 and 14, involve or may involve the acquisition or alienation of means of payment abroad, as well as gold and silver, coined, in bars, or any unworked form, platinum, and other precious metals.

2. Exchange misdemeanors are punishable by a fine calculated between double and quintuple the value of the goods or rights to which the violation relates.

3. Whenever the offense cannot be translated into currency, the fine shall not be less than 5,000,000.00 Meticais nor more than 100,000,000.00 Meticais, with the Council of Ministers responsible for its update, at least once a year.

4. The applicable fine shall be doubled in case of recidivism.

5. Recidivism occurs when the offender commits another offense of the same nature before two years have elapsed, counted from the previous conviction.

ARTICLE 16

(EXCHANGE FRAUD) Anyone who commits exchange fraud, simultaneously carrying out the operations provided for in items a) and b) of paragraph 1 of Article 15, shall be sentenced to imprisonment of not less than six months and a fine calculated under the terms of the same article, without prejudice to additional or more severe penalties determined by other legislation.

ARTICLE 17

(PROVISIONAL PENALTIES)

1. Depending on the severity of the exchange offense, the following accessory penalties shall also be applicable: a) Confiscation of assets in favor of the State; b) Total or partial suspension of authorizations to exercise foreign exchange trading, with or without closure of the establishment; c) Prohibition of carrying out foreign exchange operations, with or without suspension of economic activity, for a period not exceeding the duration of the prohibition.

2. Assets used or obtained in the illegal exercise of foreign exchange operations are always declared forfeited to the State.

3. Temporary suspension, disqualification, closure, or prohibition shall be fixed between a minimum of six months and a maximum of one year.

ARTICLE 18

(FALSE DECLARATIONS) False declarations made and fraudulently accepted with a view to obtaining the necessary authorizations to carry out foreign exchange operations are punished with the same penalty applicable to the consummated offense, without prejudice to additional or more severe penalties determined by other legislation.

ARTICLE 19

(LIABILITY OF LEGAL ENTITIES) Legal entities and companies, even if irregularly constituted, that promote, execute, or in any way favor unauthorized foreign exchange operations shall be punished with a fine equal to ten times the value of the goods or transaction and shall be jointly liable for the fines imposed on their representatives or employees who acted in that capacity, or in the interest of the company, unless it is proven that they acted against the orders of the administration.

ARTICLE 20

(BURDEN OF PROOF) It is presumed that those who act in the name and on behalf of others proceed in accordance with instructions received, regardless of individual responsibility that may arise.

ARTICLE 21

(LIABILITY OF DIRECTORS AND EMPLOYEES) The provisions of Articles 313, 314, 317, 318, and 322 of the Penal Code are applicable, with the necessary adaptations, to directors, officials, or employees of the institutions upon which the authorization to carry out foreign exchange operations depends.

ARTICLE 22

(ACTIVE CORRUPTION) Anyone who commits the acts provided for in Article 321 of the Penal Code, with the objective of corrupting directors or employees who are not public officials, shall be sentenced to the penalty provided for in the cited legal provision.

ARTICLE 23

(STATUTE OF LIMITATIONS FOR MISDEMEANORS)

1. The procedure for exchange misdemeanor prescribes three years after the commission of the offense.

2. Fines and accessory sanctions prescribe within the same period, counted from the date of the final convicting decision.

ARTICLE 24

(PROSECUTION AND INSTRUCTION)

1. It is the responsibility of the entity supervising banking activity to prosecute and proceed with the instruction of processes for exchange offenses provided for in this instrument.

2. Once the process is instituted, the accused shall be personally notified to present their written defense within a period of ten days.

3. Notification shall be made by registered mail with acknowledgment of receipt. When the accused cannot be found or refuses to receive the notification, or if their address is unknown, it shall be made following the rules of citation by edict.

4. Upon conclusion of the process, it shall be forwarded to the competent entity for decision.

5. Workers of the supervising entity entrusted with inspection actions must present themselves duly accredited and enjoy the attributes and powers of State authority agents when exercising their functions.

6. Police authorities and public services must provide all necessary assistance for the correct investigation and instruction of processes.

ARTICLE 25

(SEIZURE OF VALUES)

1. Banknotes, coins, checks, and other instruments, or values that constitute the object of an offense, may be seized, upon proof document, when such seizure is necessary for instruction or in cases where there are indications that the offense results, as an accessory penalty, in the loss of assets to the State.

2. Seized values must be deposited in a banking institution, to the order of the instructing entity, to guarantee the payment of the fine and procedural costs.

ARTICLE 26

(DECISION OF THE PROCESS)

1. It is the competence of the Bank of Mozambique to apply sanctions for exchange misdemeanors.

2. It is the competence of provincial judicial courts to judge crimes of exchange fraud.

ARTICLE 27

(APPEAL) 3. Convicting decisions for exchange misdemeanors are subject to appeal under general terms, to be filed within a period of fifteen days after notification of the convicting decision, to the Provincial Judicial Court where the offense occurred.

4. The appeal shall have suspensive effect when the accused deposits previously, in a banking institution, to the order of the instructing entity, the amount of the fine applied, unless the seized values prove sufficient for this purpose.

ARTICLE 28

(DESTINATION OF FINES) The proceeds of fines revert to the State.

ARTICLE 29

(PENDING PROCESSES) The provisions of this law shall apply to pending processes, provided they are more favorable to the offender.

CHAPTER V

Special Cases

ARTICLE 30

(FOREIGN INVESTMENT) In complement to what is expressly established in specific legislation, this law applies to foreign exchange operations related to foreign investment.

ARTICLE 31

(OTHER CASES) The following foreign exchange operations enjoy special treatment established in specific regulation: a) Transfers of Mozambican emigrants; b) Exchange in border zones; c) Transfer abroad of gains resulting from the practice of games of chance or luck by non-resident players, in premises authorized by the competent entity, under the terms of the law; d) Other special situations defined by the Council of Ministers.

CHAPTER VI

Final Provisions

ARTICLE 32

(REGULATION) The regulation provided for in the law shall be elaborated within a period of one hundred and eighty days counted from the date of its publication.

ARTICLE 33

(REGULATION) All legal provisions contrary to this law are hereby repealed.

Approved by the Assembly of the Republic, on December 6, 1995. The President of the Assembly of the Republic, Eduardo Joaquim Mulémbwé. Promulgated on January 4, 1996. The President of the Republic, Joaquim Aberto Chissano.