New Foreign Exchange Management Act makes cross-border transactions easier: PABC official

Sri Lankans living both locally and abroad should use the relaxation of foreign transactions through the new Foreign Exchange Management Act for investment and financing requirements, a banker said recently.

“Now it’s easier to do inward and outward foreign exchange transactions for both individuals and companies. Previously, some were put off by the requirements to get permission from the Central Bank for foreign transactions but it’s more relaxed now,” Pan Asia Banking Corporation PLC (PABC) Private Banking and Wealth Management Chief Manager Thilani Peiris said. 

She said that many Sri Lankans in the past had attempted to find other means of remitting funds out since they were scared of running afoul of the Exchange Control Department but with the new Foreign Exchange Management Act, seeking to facilitate foreign transactions instead of controlling them, most payment methods are now regulated.

“For Sri Lankan migrants who hold permanent residency in other countries, initially, they did not allow you to take loans from Sri Lanka because you’re overseas employees. Now they have allowed permanent resident holders and dual citizenship holders to obtain foreign currency loans from Sri Lanka by showing your foreign income,” she said.

Financing residential property both abroad and in Sri Lanka has become easier for Sri Lankan migrants due to the new laws, she said, adding that PABC’s Private Banking and Wealth Management would help to manage portfolio, property and direct investments in Sri Lanka for botha migrants and foreigners.The 20 foreign currency account types, which were available previously, have been rationalized to five account types to promote simplicity, Peiris added.

Sri Lankans who have identified portfolio investments abroad could invest up to US $ 200,000 per annum on an individual capacity, while the limit is US $ 300,000 for partnerships, US $ 500,000 for unlisted companies and US $ 2 million for listed companies, while a company or partnership could invest US $ 300,000 per annum to open overseas offices.

“This law came into effect in November but many people are not aware of the opportunities the new act provides,” Peiris said.

Parents of students studying abroad could also remit funds in an easy and legal manner, she added.
The Central Bank has delegated the responsibility of monitoring the legality of transactions through know your customer (KYC) and other procedures, Peiris said.