ECONOMYNEXT – Sri Lanka residents who have worked abroad and earned money, individuals or firms which provide services to foreigners have been allowed to open accounts in foreign banks under regulations issued under the Foreign Exchange Act.
Money earned before Sri Lanka’s 2017 Foreign Exchange Act was enacted or before could be held in such accounts.
In regulations that went into effect on March 22, persons who go abroad temporarily for business, medical or education purposes are also allowed to open foreign account without prior permission but any remaining proceeds have to be remitted back after the task is completed.
In addition a person who had invested abroad, requires a bank account to be opened to get a visa, to make a permitted investment abroad are also allowed to open accounts.
Exporters are also allowed to open foreign accounts but proceeds have to be remitted to Sri Lanka one month after the purpose for which it was opened had been completed.
Students who fail to get visa also have to remit the money back.
The regulation are effective from March 22.
Separately Sri Lankans have been allowed to retain up to 15,000 US dollars in their possession after their return from abroad in a relaxation of earlier more draconian legal tender laws.
Sri Lanka is expected to allow foreign money to be brought back to Sri Lanka on the payment of a 1 percent fee.
The regulation are reproduced below:
Persons permitted to open, maintain and operate an account with a regulated financial institution outside Sri Lanka
1. Following persons are permitted to open, maintain and operate foreign currency accounts with a regulated financial institution outside Sri Lanka –
(a) a person resident in Sri Lanka who has proceeded outside Sri Lanka temporarily for business, education or medical purposes;
(b) a person resident in Sri Lanka who has at any time prior to or after this Act coming into effect, been a resident outside Sri Lanka and earned or otherwise acquired foreign exchange outside Sri Lanka not involving the conversion of Sri Lanka Rupees into foreign exchange;
(c) an individual, a company or a firm registered in Sri Lanka which provides professional or vocational services outside Sri Lanka and receives payment in foreign exchange for such services from a person resident outside Sri Lanka;
(d) an individual, a company or a firm registered in Sri Lanka which has been granted general or special permission under the provisions of the Act, to invest outside Sri Lanka, provided such person is required to open an account outside Sri Lanka as a requirement of the said investment;
(e) an exporter of merchandise goods;
(f) a person who holds permanent residency in another country;
(g) a dual citizen;
(h) a person resident in Sri Lanka who intends to proceed outside Sri Lanka for education in a country
where such person is required by the visa granting authority to open and maintain an account with a
regulated financial institution in such country as a condition to grant visa;
(i) a company incorporated in Sri Lanka which is eligible to borrow from an overseas bank or financial
institution provided such company is required to open an account outside Sri Lanka as a condition of
such loan agreement.
2. (1) Any person specified in paragraph 1 of Heading G of this Schedule, who opened and maintained an
account with a regulated financial institution outside Sri Lanka may close such accounts for the purposes of complying with these regulations.
(2) An account opened by a person specified in paragraph 1 of Heading G of this Schedule may be credited with foreign currency earned, received or acquired legally outside Sri Lanka or obtained in Sri Lanka in the name of such person from an authorised dealer or a restricted dealer under the provisions of the Act.
(3) Funds in the accounts opened by persons specified in paragraph 1 of Heading G of this Schedule may
be utilized towards any foreign exchange transactions of the account holder.
(4) A person who is permitted to open and maintain an account with a financial institution outside Sri Lanka under paragraph 1 of Heading G of this Schedule except for categories specified in subparagraphs (b), (c), (f), (g) and (h) therein shall repatriate to Sri Lanka any balance funds remaining in the accounts opened by such person outside Sri Lanka within one month from the date of fulfillment of purposes for which the account was opened.
(5) Where a person who is permitted to open and maintain an account outside Sri Lanka under the category specified in subparagraph (h) of paragraph 1 of Heading G of this Schedule, has been refused a student visa by such country or decides not to embark on studies after obtaining the student visa, such person shall repatriate all monies lying to the credit of the account opened by such person outside Sri Lanka under this regulation within one month from the date of such decision.