MMA Overhauls Banking Laws to Capture Billions in Tourism Foreign Exchange

The Maldives Monetary Authority (MMA) has launched a comprehensive legislative overhaul of the nation’s banking laws to strengthen the domestic financial system and capture a larger share of the country's tourism earnings. Speaking at a press conference in the President’s Office, MMA Governor Ahmed Munawwar revealed that approximately USD 5 billion in annual tourism revenue currently bypasses the local financial system. He emphasized that these reforms are critical to ensuring that a greater portion of these funds remains within the Maldives to fuel domestic growth. While previous post-pandemic adjustments to foreign-exchange regulations increased the proportion of US-dollar receipts processed through Maldivian banks from 10 percent to 21 percent, Governor Munawwar noted that a significant volume of capital remains parked in offshore accounts. Central to this strategy is a step-by-step structural framework, including the recent amendment of the Payment System Act and a pending bill regarding the 'Destination Principle' currently before the Majlis (the Maldivian Parliament). These measures aim to mandate that more transactions occur within the local jurisdiction. The Governor also highlighted a critical gap in the current system: local banks are prohibited from extending loans for resort development. This restriction not only limits the growth of the tourism sector but also prevents the banking system from utilizing available capital more effectively. Financial leakages remain a primary concern for the regulator. Despite domestic banks reporting a profit of USD 356 million last year, approximately 11 percent—roughly USD 38 million—was transferred abroad. Over the last five years, this has resulted in a cumulative outflow of USD 200 million through foreign-bank branches operating in the country. The MMA’s reform agenda is designed to expand domestic banking capacity and increase liquidity. By encouraging the settlement of local transactions in Maldivian rufiyaa and reducing reliance on offshore channels, the authority aims to build a more resilient and self-sufficient financial sector.