Central Bank strikes down on foreign currency possession

• Holding foreign currency in excess of US$ 10,000 made illegal 

Making good on an earlier warning against holding foreign currency, the Central Bank this weekend said the amount of foreign currency one can hold in one’s possession had been brought down to US$ 10,000 from an earlier threshold of US$ 15,000 or equivalent of any other foreign currency. 

To this effect, the Finance Minister has already issued an order under Section 8 of the Foreign Exchange Act No. 12 of 2017, bringing down the threshold and granting an amnesty of 14 working days effective from June 16 when the said order had originally been issued. 

During the amnesty period, persons in or resident in Sri Lanka who hold foreign currency in excess of the new threshold can either deposit them into a personal foreign currency account or into a business foreign currency account. 

Alternatively they can also sell them to an authorised dealer which is either a licensed commercial or a specialised bank. 

The Central Bank warned against those who fail to comply with the new rule as they claim they have the right to raid on tip-offs with the support of the law enforcement agencies and confiscate the entirety of such foreign currency kept in violation of the law. 

The Central Bank on May 19 gave forewarnings against the impending changes to the law to crack down on foreign currency hoarding.

People are said to be keeping foreign exchange in currency form without converting them to rupees with the expectation of further weakness in the rupee to make larger conversion profits by selling in the black market. 
The Central Bank began to crack down on the black market with the imposition of restrictions on open accounts payment terms or consignment account terms, so far with limited success. 

The move was aimed at limiting or at best closing the demand for foreign currency from grey market channels which will put a damper on supply of foreign currency and thereby significantly reduce the premium between the official and unofficial channels of foreign exchange.