Obtaining a Money Changing Permit as a Restricted Dealer under Section 4(2)(a) & 4(2)(b) of the Foreign Exchange Act, No. 12 of 2017

1. Companies incorporated as Limited Companies (other than Licensed Commercial Banks, Licensed Specialized Banks, Licensed Finance Companies/ Specialized Leasing Establishments and Hotels)

A. Criteria to be appointed as a Money Changer to engage in money changing business under the Foreign Exchange Act no. 12 of 2017

1. Minimum Capital Requirement :

1.1   The money changing business should be conducted only by a company incorporated in Sri Lanka with a minimum stated capital as indicated below:

                                                         Table 1: Minimum Capital

Place of Business

Annual Minimum Capital Requirement (Rs.)

Shopping Malls, Star Class Hotels and International Airports

5 million

Any other places

15 million

1.2   If a Money Changer wishes to have branches, two branches may be opened without additional capital, provided that one branch is established outside the Western Province.

1.3   More than two branches may be permitted subject to a further contribution of Rs. 5 Mn for the capital of each new branch.

2.Directors, substantive shareholders (persons who hold more than 10% of the total shareholding of the company), ultimate beneficial owners and management (persons who hold managerial positions of the company):

2.1   Assessment of the Fitness and Propriety

  1. The directors, substantive shareholders, ultimate beneficial owners and management of the money changing company should be fit and proper persons to conduct money changing activities. In assessing the fitness and propriety of such persons, the matters specified in Annex I shall be considered by the Director of the Department of Foreign Exchange. The respective directors, substantive shareholders, ultimate beneficial owners and management shall submit affidavits as per the format given in Annex II.

  2. Police clearance certificates shall be submitted to the Director of the Department of Foreign Exchange as follows;

    1. Directors, substantive shareholders, ultimate beneficial owners and management of new companies - at the time of submitting their applications for engaging in money changing business.
    2. Directors, substantive shareholders, ultimate beneficial owners and management of existing Money Changers - annually at the time of submitting requests for new money changing permits for the following year.
    3. At any subsequent change of a director/substantive shareholder/ultimate beneficial owner/management of a Money Changer - with immediate effect from such change.

2.2   Tax Requirement

Two directors of the company should be income tax payers, paying tax of not less than Rs. 60,000 each per annum and documentary evidence confirming their latest tax payments should be produced along with the application. In the event the directors are paying APIT tax, they may be treated as income tax payers.

3. Annual Turnover :

                                                      Table 2: Annual Turnover

Period in the Business

Minimum annual turnover requirement per outlet (US$ mn)

 

permitted only for buying & exchanging

permitted for buying, exchanging & selling *

 

Within the Western Province

Outside the Western Province

Within the Western Province

Outside the Western Province

Initial 2 years (on prorata basis)

-    For new money changing outlets at Shopping malls, Star Class Hotels and International Airport

-    Other MCOs

 

0.75

 

 1.5 

 

0.5

 

 1 

 

3.5 

 

 4 

 

 3 

 

3 

3rd & 4th Year

2.25 

1.5

5 

4

 

From 5th Year onwards

3

2 

8 

7

 

*Subject to a limit of US$ 5,000 per transaction

If the company fails to raise respective income, a new permit will not be granted for the following year on the expiration of the validity of the existing permit.

4. Business :

Carrying on money changing business should be one of the primary objectives of the company.

5. Place of business :

i. The place of business should be conducive for money changing business and operations relating to money changing business should be carried out at a separate counter which is used exclusively for the said business and physically separated from all other businesses. This business should not be integrated with any other business of the business place.

ii. By new companies and for establishing new branches of existing Money Changers, a police clearance should be submitted along with their applications for engaging in money changing business at the proposed location.

6.Bank Accounts :

A separate bank account should be opened with a Licensed Commercial Bank to surrender the foreign currency purchased by the Money Changer during the course of their business activities, within a period of five working days.

7. Automation / Computerization:

i. All Money Changers are required to implement automated systems by installing suitable operating software for conducting their business processes including the printing of customer receipts, maintaining the daily balance statements and the purchase register and preparing monthly statements of transactions and deposits.

ii. The money changing activities will be monitored by the Department of Foreign Exchange through a Closed-Circuit Television System (CCTV) installed at the proposed place of business as per the specification given by the Department of Foreign Exchange.

a. The stated capital of the company may be used to meet expenses relating to installation of the CCTV monitoring system and automation/computerization process.

b. The installation of CCTV and readiness of computerization will be checked prior to issuing the permit.

8. The Central Bank of Sri Lanka reserves the right to impose any other terms and conditions other than those mentioned above

9. Documents required to be furnished

  1. A letter expressing the willingness of the company to abide by the criteria mentioned above if the application to engage in money changing business is successful.
  2. A letter addressed to the Director, Department of Foreign Exchange obtained from the banker/s of the company providing their opinion of the company’s relationship with the bank and the status of maintaining accounts, together with details of all bank accounts held by the company and a confirmation of respective account balances as at the end of the preceding month. If the company does not maintain accounts with Licensed Commercial Bank/s, the same should be submitted in respect of the directors of the company.
  3. A detailed description as to the location of the proposed place/s of money changing business.
  4. A detailed account of educational, professional and business background of the directors, substantive shareholders, ultimate beneficial owners of the company and employees to be deployed in the money changing business.
  5. A full and complete description of the assets (movable and immovable) and liabilities of the company giving the value of such assets and liabilities (Applicable only for newly incorporated companies).
  6. Audited Accounts/Financial statements of the company for the last three years (Not applicable for newly incorporated companies).
  7. Receipts in respect of latest Income Tax payments made by at least two directors of the company.
  8. Certified copies of the documents related to the incorporation of the company [Certificate of Incorporation, Form 1, Form 6, Articles of Association, Form 20 (if applicable), Form 13 (if applicable), etc.].
  9. Confirmation from the company’s secretaries regarding the stated capital of the company along with the shareholding structure.
  10. A certified copy of a Board Resolution confirming that one of the primary objectives of the company is engaging in money changing business and the certified copy of form 39 to the same effect (if applicable).
  11. Details of the automated system of the company.
  12. Business projections at least for the first 3 years of operations including the target turnover (amount of foreign currency deposits with banks) together with the basis of such projections.

2. Eligibility Criteria for being appointed as a Restricted Dealer to engage in Money Changing Business under the Foreign Exchange Act No. 12 of 2017 for Licensed Finance Companies (LFCs)

Registered as an LFC with the Central Bank of Sri Lanka under the Finance Business Act, No. 42 of 2011. 

Documents required to be furnished

  1. Audited accounts/financial statements for last 3 years of the company.
  2. Copy of the receipt for the payment of annual license fee.
  3. A certified extract of the Board resolution that one of the primary objectives is carrying on money changing business.
  4. List of existing branches, their addresses and branch codes with 4 digits.
  5. Details of the bank/s where the company is going to open foreign currency accounts and the foreign currency types.

3. Eligibility Criteria for being appointed as a Restricted Dealer to engage in Money Changing Business under the Foreign Exchange Act No. 12 of 2017 for Tourist Hotels 

The hotel should be a limited liability company registered as a tourist hotel with the Sri Lanka Tourism Development Authority (SLTDA).

Other Requirements

  1. Stated capital of the company should be at least Rs. 10 Mn.
  2. Place of business should be conducive for money changing business and operations relating to money changing business should be carried out at a counter which is used exclusively for the said business, physically separated from all other businesses. Money changing business should not integrate with any other business of the hotel premises.
  3. Central Bank of Sri Lanka reserves the right to impose any other terms and conditions other than that are mentioned above.

Documents required to be furnished

  1. A letter expressing the willingness of the company to abide by the criteria mentioned above if your application to engage in money changing business is successful.
  2. A letter addressed to the Director/ Department of Foreign Exchange obtained from the banker/s of the company of their opinion of the company’s relationship with the bank and the status of maintaining accounts, together with details of all bank accounts held by the company and a confirmation of respective account balances as at the end of the preceding month. (If the company does not maintain accounts with Licensed Commercial Bank/s, the same should be submitted in respect of the directors of the company).
  3. Details of all bank accounts held by the hotel which will be used to deposit foreign currencies (foreign currency purchased by the hotel shall be deposited into a Business Foreign Currency Account (BFCA) or sold to a Licensed Commercial Bank) together with the confirmation obtained from the bankers on the balances of the accounts as at the end of the preceding month.
  4. Details of payment of Income Tax made by the company for the last 3 years.
  5. A detailed description as to the location of the proposed place/s of money changing business.
  6. Certified copies of the Certificate of Incorporation and Articles of Association of the company.
  7. Certified copies of Form 1, Form 6, Form 15 and Form 20 (if applicable), Form 13 (if applicable), etc., in terms of the Companies Act No.07 of 2007.
  8. Certified copies of the Certificate of Registration and License issued by SLTDA.
  9. Confirmation from the company’s secretaries regarding the stated capital of the company.
  10. Audited Accounts/Financial Statements of the last three years of the company.