The Maldives has introduced significant changes to its foreign currency regulatory framework through the First Amendment to the Foreign Currency Act (Law No. 32/2024) (the “First Amendment”), ratified on 31 August 2026 and effective from 1 September 2026.
The First Amendment strengthens the regulatory authority of the Maldives Monetary Authority (MMA) over foreign currency transactions, introduces greater controls over the rates at which foreign currency may be bought and sold, and revises the mandatory foreign currency deposit and conversion requirements applicable to tourism establishments and other businesses earning foreign currency.
The original Foreign Currency Act, which came into effect on 1 January 2025, established a framework requiring domestic transactions to generally be conducted in Maldivian Rufiyaa (MVR), while permitting certain transactions to be conducted in foreign currency. It also introduced mandatory registration, deposit and foreign currency conversion requirements for tourism businesses and certain high volume foreign currency earners.
The First Amendment now makes several substantive changes to this framework, particularly in relation to foreign currency transactions, mandatory conversion requirements and the MMA’s regulatory powers.
Greater MMA Authority over Foreign Currency Transactions
The First Amendment expressly grants the MMA authority to establish rules governing the sale and purchase of foreign currency.
Under the amended framework, foreign currency may only be bought or sold at a rate, or within an exchange-rate band, determined and published by the MMA. This introduces a specific statutory requirement governing the rate at which foreign currency may be exchanged.
The First Amendment also strengthens the regulatory framework for businesses engaged in foreign currency exchange by requiring such businesses to operate under a licence issued by the MMA, subject to the applicable regulatory framework.
Approval Required for Certain Foreign Currency Transactions
Under the original Act, certain transactions were permitted to be carried out in foreign currency without obtaining prior approval from the MMA. The First Amendment changes this position by requiring MMA approval for some transactions to be settled in foreign currency.
- Earnings in Foreign Currency: Businesses earning income in foreign currency can perform the below transactions in foreign currency after getting the MMA approval.
- Transactions in Foreign Currency: Payments made to vendors for goods and services supplied
- Dividend Payment: Dividends paid to shareholders, along with other dealings between shareholders and related parties.
- Share, bond and Sukuk transactions: Sale and purchase transactions related to shares, issuance of bonds and Sukuk and transactions between holders of bond or Sukuk.
- Employee Salaries: Salaries and benefits for employees
- Duty-Free Shops
- Obligations due to Court, Tribunal Decision or order
- Any other payment authorised by Regulation
The approval will be granted in accordance with a procedure to be established and published by the MMA.
Accordingly, businesses earning foreign currency should consider whether an intended payment or receipt in foreign currency falls within the transactions requiring MMA approval and ensure that the relevant approval is obtained in accordance with the applicable procedure.
Foreign Currency Deposits to be Held with MMA Licensed Banks
The First Amendment also strengthens the banking requirements applicable to foreign currency earnings.
Foreign currency amounts that are required to be deposited under the Act must now be deposited into a foreign currency account maintained with a bank licensed or authorised by the MMA.
Revised Mandatory Foreign Currency Conversion Requirements
One of the most significant changes introduced by the First Amendment is the revision of the mandatory foreign currency conversion requirements applicable to businesses.
| Business Category | Required MVR Conversion Rate | Key Shift from Initial Act |
| Category A | 40% of monthly gross foreign currency sales | Eliminates the original choice of $500 per tourist/month |
| Category B | USD 25 per tourist OR 20% of monthly gross foreign currency sales | Retains the flexible exchange structures and original benchmarks |
| Additional Category | 40% of monthly gross foreign currency sales | Increased the threshold from 20% of monthly gross foreign currency sales |
| EXCEPTION RULE for Additional Category | 7% of gross foreign currency sales | Introduces a new rule to this category of having to exchange 7% of gross foreign currency sales, instead of 20% if the business is 100% Maldivian Owned Businesses. |
New Controls on Foreign Currency Exchange Rates
The First Amendment introduces specific statutory controls over the rates at which foreign currency may be exchanged.
Foreign currency may only be bought and sold at the rate, or within the exchange-rate band, determined by the MMA.
The amendment also prohibits the sale, attempted sale or advertisement of foreign currency at rates exceeding the rate or band determined by the MMA.
These provisions are intended to strengthen the MMA’s oversight of the foreign exchange market and address transactions taking place outside the rates determined by the Authority.
New Penalties for Breaches of Exchange Rate Requirements
The First Amendment introduces significant penalties for breaches of the new exchange rate requirements.
| Violation | Penalty |
| Sale, attempted sale or advertisement of foreign currency at a rate exceeding the rate or band determined by the MMA (if individual) | Fine between MVR 25,000 to MVR 1 million |
| Sale, attempted sale or advertisement of foreign currency at a rate exceeding the rate or band determined by the MMA (if a Legal Entity) | Fine between MVR 1 million to MVR 5 million |
The sale, attempted sale or advertisement of foreign currency at a rate exceeding the rate or band determined by the MMA may constitute a criminal offence.
The introduction of criminal consequences represents a significant strengthening of the enforcement framework compared with the previous regime.
Leniency for Outstanding Obligations under the Previous Framework
The First Amendment also recognises businesses that remain subject to outstanding foreign currency conversion obligations arising under the previous Act and applicable regulations.
Businesses that were required to convert foreign currency under the previous framework but have not yet fulfilled those obligations may still apply for leniency, subject to the applicable requirements and procedures.
What Businesses Should Do
Based on the changes outlined above, businesses can use the following quick checklist to help assess their obligations, transition to the new requirements and maintain compliance with the amended Foreign Currency Act:
In particular, businesses should:
- determine whether they fall within the revised mandatory deposit and conversion requirements;
- ensure that required foreign currency deposits are maintained with an MMA licensed or authorised bank;
- review the revised monthly conversion requirements;
- note the removal of the USD 500 per tourist option for Category A tourism establishments;
- ensure that Category A establishments are prepared to convert 40% of monthly gross sales;
- determine whether the USD 25 million annual foreign currency income threshold applies to their business;
- assess whether the 7% exception applies to a wholly Maldivian-owned business;
- obtain any required MMA approval before settling applicable transactions in foreign currency;
- ensure that foreign currency purchases and sales are conducted only at rates or within bands determined by the MMA; and
- review any outstanding conversion obligations under the previous framework and consider whether an application for leniency is appropriate.
Effective Date
The First Amendment to the Foreign Currency Act was ratified on 31 August 2026 and comes into force on 1 September 2026.
The amendment represents a significant development in the Maldives’ foreign currency regulatory framework, particularly for tourism establishments, businesses earning substantial foreign currency income and entities involved in foreign currency exchange.
Businesses affected by the amendments should ensure that their internal payment, banking and foreign currency conversion procedures are updated to reflect the new requirements and that they remain compliant with any regulations and procedures subsequently issued by the MMA.
