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 :

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

Minimum Capital Requirement (Rs.)

(On calendar year basis)

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 total shareholding of the company), ultimate beneficial owners and management (persons who are in 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 fit and proper of the directors, substantive shareholders, ultimate beneficial owners and management, the matters specified in the 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 specification 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 MCs - 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 an immediate effect from such change.
    4. Proposed place of business - by new companies, along with their applications for engaging in money changing business.

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 PAYE tax, they may be treated as income tax payers.

3. Annual Turnover :

                                                      Table 2: Annual Turnover

Period

(On calendar year basis)

Minimum annual turnover requirement per outlet (USD)

for purchasing

for selling*

Initial 2 years (first year on pro rata basis)

In Shopping Malls, Star Class Hotels and International Airports

500,000

3,000,000

Any other places

1,000,000

3rd & 4th years

1,500,000

4,000,000

From 5th year onwards

2,000,000

7,000,000

*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 :

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.

6.Bank Accounts :

A separate bank account should be opened with a commercial bank to surrender foreign currency purchased by them during the course of their business activities within a period of five working days.

7. Automation / Computerization:

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.

8. Other Requirements/terms and conditions

8.1  Fit and Proper of the directors, substantive shareholders, ultimate beneficial owners and management

Where the Director of the Department of Foreign Exchange, having regard to the matters specified under 2.1 above, is satisfied at any time that a person appointed or continued is not fit and proper as a director, substantive shareholder, ultimate beneficial owner and management for continuation, may determine that the person is not fit and proper to be any position of a money changing company.

8.2 Automation / Computerization :

  1. 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.
  2. The stated capital of the company may be used to meet expenses of the installation of the CCTV monitoring system and automation/computerization process.
  3. The installation of CCTV and readiness of computerization will be checked prior to issue of the permit.

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

B. 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. 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 last three years of the company (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 three years of operations including the target turnover (amount of foreign currency deposits with banks) together with the basis of such projections.

2. Licensed Finance Companies (LFCs)/ Specialized Leasing Establishments (SLEs)

Criteria

  1. Registration with the Central Bank of Sri Lanka:LFCs and SLEs should have been registered with the Central Bank of Sri Lanka under the Business Finance Act, No. 42 of 2011 (Formerly, Finance Companies Act, No. 78 of 1988) and Finance Leasing Act No. 56 of 2000, respectively. 

 

  • 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. Financial Statements of the company for last 3 years.
  2. Copy of the receipt for the payment of annual license fee.
  3. Board resolution that one of the primary objectives of the company is carrying on money changing business.
  4. List of existing branches of the company along with their addresses & branch codes with three digits.
  5. Details of the banker where the company is going to open foreign currency accounts along with the foreign currency type.

3. Hotels

Criteria

Registration with the Sri Lanka Tourism Development Authority: 

  1. Money changing business should be conducted only a limited company which is a registered proprietor of a hotel that is registered as a tourist hotel with 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 to 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 in to a Business Foreign Currency Account (BFCA) or sold to Licensed Commercial Bank) together with confirmation obtained from the bankers the balances of the accounts as at end of preceding month .
  4. Details of payment of Income Tax made by the company for 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.