MMA Restructures Currency Exchange Market, Tightens Regulatory Framework

The Maldives Monetary Authority (MMA) has announced that, under the Regulation on Money Changing Business, a specialized company must be established for the exchange of foreign currency when interested parties apply for a license.

During a recent programme on state media PSM, MMA’s Assistant Executive Director, Aishath Asnaa, revealed that approximately 200 parties currently hold permits for conducting money exchange operations. Under the revised regulations, these parties are required to operate within specific areas designated for exchange activities. The changes stipulate that all money exchange transactions must be conducted through a specialised company established to handle these services, marking a significant shift in the country’s foreign exchange framework.

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Register with the MMA via our FX Registration portal: https://t.co/JKV2v7Vw1G pic.twitter.com/05w9v6jRnn— MMA (@MMA_Maldives) October 29, 2024

The updated regulations also require entities engaged in money exchange to obtain a licence, accompanied by a mandatory USD 50,000 deposit. This policy change aims to ensure that only stable and credible operators are licensed to participate in the currency exchange sector, enhancing the overall integrity of the market.

The amendments to the foreign exchange regulations, which were originally implemented in 1987, reflect a modernised approach to managing currency exchange. Under the new framework, licences will be issued in two categories: the first category will cover the buying and selling of foreign currency, while the second will permit only the sale of foreign currency. Notably, tourism facilities will be exempt from the licensing requirement, as these entities often handle currency exchange as an ancillary service for international travellers.

These regulatory adjustments are expected to have several implications for the Maldivian economy and the currency exchange sector. By requiring higher deposits and setting defined operational areas, MMA is establishing a more controlled environment, which may improve compliance and transparency across the sector. The specialised company will also enable closer monitoring, providing a consolidated view of exchange operations that could be instrumental in curbing illegal currency practices.

Furthermore, the licensing requirements may encourage smaller, unregulated operators to consolidate or partner with larger entities, potentially leading to a more streamlined market with fewer but more reliable participants. For consumers, the reforms could provide a more secure and standardised currency exchange experience, reducing the risks associated with unregulated transactions.

MMA has also called upon all licensed currency exchange operators to reapply and register under the revised regulations by the end of this month. This step is expected to facilitate a comprehensive update of licensed entities, ensuring that only those meeting the new regulatory standards remain operational.

These changes reflect MMA’s commitment to strengthening the financial infrastructure of the Maldives, focusing on improved management, transparency, and efficiency within the currency exchange sector.