The Maldives Monetary Authority (MMA) is spearheading a broad overhaul of the country’s banking and financial framework, alongside new measures requiring expatriate salaries to be paid directly into local bank accounts, as the government seeks to strengthen domestic banks, increase foreign-exchange liquidity and keep more money circulating within the local economy.
Speaking at a press conference at the President’s Office, MMA Governor Ahmed Munawwar said amendments to the country’s banking laws are being pursued as part of a structural, step-by-step effort to build a more comprehensive financial system.
A key objective of the reforms is to retain a larger share of the approximately USD 5 billion generated annually by the tourism industry, much of which currently bypasses the domestic financial system.
Munawwar said that following post-COVID changes to foreign-exchange regulations, the proportion of US-dollar tourism receipts processed through Maldivian banks has increased from around 10 percent to 21 percent. However, he stressed that a significant portion of the estimated USD 5 billion in tourism earnings continues to remain offshore.
The governor identified the recent amendment to the Payment System Act and the bill on the Destination Principle, which is currently before Parliament, as important elements of the broader reform programme.
He also highlighted restrictions preventing local banks from financing resort development, saying the limitation weakens the ability of the domestic financial sector to support the country’s key economic industry.
“If we can retain dollars locally, that capital stays within our system,” Munawwar said.
The governor noted that domestic banks recorded profits of USD 356 million last year, but around 11 percent of those earnings — approximately USD 38 million — flowed abroad. He said the cumulative outflow through foreign-bank branches has reached about USD 200 million over the past five years.
The MMA’s reform programme is therefore aimed at expanding the capacity of domestic banks, improving liquidity and encouraging local transactions to be settled in Maldivian rufiyaa. The broader objective is to reduce dependence on offshore financial channels and strengthen the resilience of the country’s banking system.
At the same time, the government has introduced a new requirement that all salaries payable to expatriate workers must be deposited directly into bank accounts held in the workers’ own names at financial institutions registered with or licensed by the MMA.
The requirement was introduced through the third amendment to the Regulations on Employment of Foreigners in the Maldives, legally obligating employers to deposit the contracted salaries of foreign workers into locally held accounts.
The move revives and strengthens an earlier policy under which employers were required to deposit expatriate salaries and allowances into Maldivian bank accounts. Although fines had previously been introduced for employers who failed to comply, collection of those penalties was later suspended, partly because undocumented foreign workers faced difficulties opening bank accounts.
The local salary requirement was also originally intended to facilitate collection of the state’s remittance tax on money sent overseas by foreign workers.
The latest regulation, however, forms part of a wider effort to bring expatriate workers into the national legal framework and strengthen protection of their labour rights, while also supporting stability in the local foreign-exchange market.
Authorities have identified disparities in how expatriate workers are paid as one factor contributing to pressure on the currency market. Some workers receive their wages in US dollars, while others are paid in rufiyaa. This has contributed to the illicit sale of US dollars on the black market and left workers paid in rufiyaa having to purchase foreign currency at inflated rates.
The new requirement is expected to channel more expatriate earnings through the formal banking system, improving transparency while potentially reducing reliance on informal foreign-exchange markets.
The Regulation on the Employment of Foreigners, which has been in effect since December last year, establishes procedures governing the recruitment of foreign workers, issuance of residency permits and broader employment standards in line with the Maldives Immigration Act and Employment Act.
Under the regulation, employers must first advertise vacancies through the government’s Job Center portal to establish whether a suitable Maldivian worker is available before recruiting a foreign national.
Once a foreign worker enters the Maldives, the employer must also prepare a formal employment contract, have it signed by both parties and provide a copy to the employee within a maximum of 45 days.
Together, the banking reforms and expatriate salary requirements form part of a wider effort to strengthen the formal financial system, improve foreign-exchange circulation and ensure a greater share of economic activity remains within the Maldivian banking sector.
