The Central Bank of Sri Lanka (CBSL) has announced that it will assume regulatory and supervisory authority over Money or Value Transfer Service (MVTS) providers in the country, effective June 3, 2024. This move aims to enhance the stability and security of the financial system.
Currently, money transfer services in Sri Lanka, including those provided by banks and non-bank financial institutions, are regulated by the CBSL or other relevant authorities. However, some entities offering similar services operate outside the formal regulatory framework, potentially disrupting the system and evading Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) regulations, CBSL stated.
To address these issues, the Minister of Finance, Economic Stabilization, and National Policies has issued the Money or Value Transfer Service (MVTS) Providers Regulations, No. 1 of 2024, under the Payment and Settlement Systems Act, No. 28 of 2005. These new regulations, effective June 3, 2024, mandate that all MVTS providers must be registered and monitored, providing a pathway for unregistered or unlicensed operators to formalize their services.
Under the new regulations, MVTS is defined as financial services involving the acceptance of cash, cheques, or other monetary instruments and the corresponding payment to a beneficiary via communication or transfer methods within, to, or from Sri Lanka or other countries. Transactions may involve multiple intermediaries and final payments to third parties.
According to CBSL, only those with a Certificate of Registration from the CBSL can legally operate as MVTS providers. Entities currently operating under other licenses, permits, or authorizations issued by CBSL or other regulatory bodies are exempt from this new requirement. However, existing unlicensed MVTS providers must apply for registration within one year of the regulations' effective date, by June 3, 2025.
This regulatory step by CBSL is expected to ensure that all MVTS operations in Sri Lanka are conducted through formal, regulated channels, enhancing the integrity and security of financial transactions.
