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New Forex Control Act regulations still not gazetted, says Controller
View(s):Despite the Govt designating Nov.1 for the new FEC Act to become operational, regulations related to it have still not been gazetted.
Exchange Controller U.P. Alawattage told the Sunday Times, the full scope of the new FEC Act will only become clear once regulations related to it are gazetted. As it stands now, the FEC Act remains “rather vague and abstract,” Mr Alawattage pointed out. “The regulations are currently with the Legal Draftsman’s Dept. They will also need to be approved by Cabinet, before being gazetted,” he elaborated.
The new FEC Act, No.12 of 2017, will relax Exchange Control by liberalising inward and outward remittances of both local and foreign currencies. The new FEC Act will replace the existing Act.
The Govt earlier cancelled Oct.15 as the date for the new FEC Act to become operational, pushing the date back to Nov.1, as the date of operations, on the orders of Prime Minister and National Policies and Economic Affairs Minister Ranil Wickremesinghe.
While the regulations remain to be gazetted, the new FEC Act nevertheless, differs in several key aspects from the previous one. Most notably, it removes criminal culpability of those found guilty of violating FEC laws, instead imposing a fine of up to Rs1 million .
Accounting firm Ernst & Young (E&Y), which had conducted an assessment of the new FEC Act, soon after it was passed in Parliament, has identified some key changes.
A noteworthy feature of the new FEC Act, according to E&Y, is that, it has introduced an appeals process, where the bank refuses to deal in Foreign Exchange (Forex) for a current transaction. The new FEC Act also provides for a definition of current transactions as follows; “Any international transaction necessitating a transfer of ForEx into or from Sri Lanka and referred to in Article XXX (d) of the International Monetary Fund.”
Where the authorised dealer refuses to deal in ForEx, in relation to a current transaction or, a permitted capital transaction, the aggrieved person can request for the reasons for the refusal in writing.
The aggrieved person can appeal to the Central Bank (CB) within 14 days, after such a decision is communicated to him/her. The CB, after giving such person and the authorised dealer a reasonable opportunity of being heard, can affirm, vary or revoke the decision.
The new FEC Act, furthermore, has provision for an amnesty for inward remittances which were not declared previously, E&Y observes. As per provisions of the FEC Act, any Sri Lankan citizen, resident in Sri Lanka, who remits to Sri Lanka any Forex from an overseas Account which has not been declared to the Commissioner General of Inland Revenue or, to the Head of the Dept of Forex, before the appointed date, is granted amnesty.
The “appointment date” is the date on which the FEC Act comes into operation, as will be published in a Gazette. Therefore, in order to enjoy the amnesty, it is presumed that the Forex will have to be brought in before this “appointed date,” E&Y adds.
Instead of criminal culpability, a financial penalty is imposed on persons who are found to be in violation of the FEC Act. The CB, upon informing the Minister, may impose a penalty not exceeding Rs. 1 million or, to pay a penalty of an amount not exceeding the amount or value of such current transaction or capital transaction, or value of such foreign asset.
Prior to imposing this penalty, the CB must give the person a reasonable opportunity of being heard. Appeals in relation to this can be made to the Board of Inquiry within 30 days, after being communicated of the penalty.