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 Liability Companies (other than Licensed Commercial Banks, Licensed Specialized Banks, Licensed Finance Companies/ Specialized Leasing Establishments and Hotels)

A. Criteria

1. Minimum Capital :

The money changing business should be conducted only by a company incorporated in Sri Lanka with a stated capital of not less than Rs. 15 million. Another two branches may be opened without additional capital, provided that one branch is established outside the Western Province. Further branches may be permitted subject to a contribution of additional Rs. 5 Mn. to the capital for each new branch.

2. Directors, substantive shareholders, ultimate beneficial owners and employees :

  1. The directors, substantive shareholders, ultimate beneficial owners and employees of the company should be fit and proper persons to conduct money changing activities in terms of their educational qualifications, business experience and past record in relation to exchange transactions.

  2. 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 :

Period

(On calendar year basis)

Minimum annual turnover requirement per outlet (US$)

for purchasing

for selling*

Initial 2 years (first year on prorata basis)

1,000,000

3,000,000

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$ 2000 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 Guarantee :

A company or each branch of a company should provide a bank guarantee of Rs. 500,000/= for each outlet to ensure payment of any fine, for any violation reported, in terms of the Foreign Exchange Act.

7. 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.

8. Automation / Computerization :

Automated systems should be implemented by installing suitable operating software for 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

Other Requirements

  1. The money changing activities will be monitored by the Department of Foreign Exchange through a Closed Circuit Television System (CCTV) installed as per the attached specification at your place of business.
  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.
  4. 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 your banker/s of their opinion of your company’s suitability to engage in money changing business.
  3. A detailed description as to the location of the proposed place of business along with evidence with regard to ownership/renting of the premises and the building thereon.
  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. Provide Audited Accounts/Financial statements of the last three years of the company (Not applicable for newly incorporated companies).
  6. 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).
  7. Details of all bank accounts held by the company together with confirmation from the bankers the balances of the account as at the end of preceding month
  8. Receipts in respect of latest income tax payments made by the directors.
  9. 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.].
  10. Confirmation from your company’s secretaries regarding the stated capital of the company along with the shareholding structure.
  11. 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).
  12. A bank guarantee of Rs.  500,000/= for each outlet.
  13. 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. 
  2. Bank Guarantee:A bank guarantee of Rs. 2.5 million should be furnished ensuring the payment of any fine for any violation reported from all branches of such company in terms of the Foreign Exchange Act. (Separate bank guarantee for each branch will not be obtained.) 

Documents required to be furnished

a. Financial Statements of the company for last 3 years.

b. Copy of the receipt for the payment of annual license fee.

c. Bank guarantee of Rs. 2.5 Mn. in favour of the Director-Department of Foreign Exchange (separate bank guarantee for each branch of the company will not be obtained).

d. Board resolution that one of the primary objectives of the company is carrying on money changing business.

e. List of existing branches of the company along with their addresses & branch codes with   three digits.

f. Details of the banker where the company is going to open foreign currency accounts along with the foreign currency type.

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

3. Hotels

Criteria

Registration with the Sri Lanka Tourism Development Authority: 

  1. Money changing business should be conducted only a limited liability 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. A bank guarantee of Rs. 500,000 in favour of Director-Department of Foreign Exchange on a calendar year basis, to ensure payment of any penalty that may be imposed in the event of violation of the provisions of the Foreign Exchange Act.
  4. 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 statement obtained the banker/s of the hotel of their opinion of the hotel’s suitability to engage in money changing business.
  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 of business along with evidence with regard to ownership/renting of the premises and the building thereon.
  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.