Up to MVR 1M fine for black market USD trading at inflated rates

The Parliament’s Public Accounts Committee, on Wednesday has amended the Foreign Currency Bill to introduce fines of up to MVR 1 million for parties involved in black-market foreign currency transactions conducted at inflated rates.

Provisions added to the amendment by ruling PNC’s Funadhoo MP Mohamed Mamdhooh Yoonus requires all foreign currency purchase and sale transactions to be conducted at rates, or within bands, established by the relevant authorities.

Mamdhooh proposed that any party found trading foreign currency outside the officially established rates be subject to fines ranging from MVR 25,000 to MVR 1 million. The Committee, where the ruling party holds majority, approved the proposal.

Commenting on the proposal, main opposition MDP’s Hanimadhoo MP Abdul Gafoor Moosa, argued that fines should not exceed the actual value of the currency exchanged. He stressed the need for a consistent and equitable standard for determining penalties based on the severity of the offense.

Additionally, Mamdhooh proposed prohibiting the advertising of foreign currency exchange rates above the official rate or designated band, to cover the publication, dissemination, repetition, or transmission of such information through digital media or platforms for the purpose of advertising, promoting, or disseminating information about such rates.

Under the amendment, individuals or entities found engaging in such activities would be subject to fines ranging between MVR 25,000 and MVR 500,000.

A provision was also proposed by PNC’s Holhudhoo MP Abdulla Sattar Mohamed, requiring would require "Category A" establishments, including resorts and private islands, to exchange 20 percent of their total monthly foreign currency revenue.

Under the current regulations, resorts may either exchange 20 percent of their monthly revenue or exchange a fixed amount of USD 500 per tourist. If Sattar’s amendment is enacted, resorts would instead be required to exchange 20 percent of their total monthly revenue.

Notably, the amendment was submitted for the final floor on Tuesday. However, it was sent back the Committee for further deliberations and review.