EXCHANGE CONTROL ACT

Arrangement of Sections

1. Short title.

2. Administration of Act by Central Bank.

3. Exercise of powers under this Act.

PART I

Gold and Foreign Currency

4. Authorised dealers in gold or foreign currency.

5. Dealings in gold and foreign currency.

6. Surrender of gold and of specified foreign exchange.

6A. Possession of foreign currency.

PART IA

Control of Foreign Assets

6AA. Accounts in foreign banks.

6AB. Foreign assets.

PART II

Payments

7. Payments in Sri Lanka.

8. Payments outside Sri Lanka.

9. Compensation deals.

PART III

Securities

10. Issue of securities.

11. Transfer of securities and coupons.

12. Issue of bearer certificates and coupons.

13. Substitution of securities and certificates outside Sri Lanka.

14. Payment of capital money outside Sri Lanka.

15. Duties of persons keeping registers.

16. Additional provisions as to nominee holdings

17. Special provisions as to dealings in prescribed securities.

18. Validation of certain transfers.

19. Application of Part III to secondary securities.

20. Interpretation of Part III.

PART IV

Import and Export

21. Restriction on import.

22. Restriction on export.

23. Application of Customs Ordinance and Post Office Ordinance.

PART V

Miscellaneous

24. Duty to collect certain debts.

25. Duty not to delay sale or importation of goods.

26. Property obtained by infringement of Act.

27. Provisions supplemental to preceding provisions of part V.

28. Transfer of policies of assurance.

29. Settlements.

29A. Tourist services, shipping agencies and airline agencies.

29B. Prescribed services to be performed in accordance with conditions and requirements imposed by the bank.

29C. Restriction of appointment of certain companies and firms as agents or technical advisers in Sri Lanka.

30. Certain provisions relating to foreign companies.

PART VA

[Rep by S 2 of Law 13 of 1977.]

30A. Repealed.

30B. Repealed.

30C. Repealed.

30D. Repealed.

30E. Repealed.

30F. Repealed.

30G. Repealed.

30H. Repealed.

PART VI

Supplemental

31. Blocked accounts.

32. Branches.

33. Contracts.

34. Obligations under other written laws.

35. Legal proceedings.

36. Persons leaving Sri Lanka.

37. Determination of residence.

38. Directions to bankers, authorised dealers.

39. Furnishing of information and production of documents.

40. Search of premises.

41. Retention of seized articles.

42. Destruction of documents, and false statements.

43. Application to state.

44. Exemptions.

45. Decisions of bank.

46. Appeals.

47. Finality of decisions.

48. Provisions relating to permission, consent or authority.

49. Burden of proof of permission.

49A. Presumption relating to foreign currency.

49B. Admissibility of certain documents.

50. Indemnity for acts done in good faith.

50A. Duty of officers and servants to maintain secrecy.

51. Offences.

52. Imposition of penalties by the bank.

53. Regulations.

54. Interpretation.

14 of 1972,

39 of 1973,

4 of 1977,

13 of 1977,

24 of 1953,

35 of 1956,

47 of 1957,

17 of 1971.

AN ACT to make provisions conferring powers, and imposing duties and restrictions, in relation to gold, currency, payments, securities, debts, and the import, export, transfer and settlement of property, to authorise the central bank to administer the provisions aforesaid, and to provide for matters connected therewith.

[Date of Commencement: 15th August, 1953]

1. Short title.

This Act may be cited as the Exchange Control Act.

2. Administration of Act by Central Bank.

(1) The Central Bank of Ceylon shall, as agent of the Government, be responsible for carrying out the provisions of this Act, and it shall be the duty of the Monetary Board to cause those provisions to be carried out in accordance with such directions as may from time to time be issued in that behalf by the Minister.

(2) The Monetary Board shall establish for the purposes of this Act a Department of Exchange Control of the Central Bank to which the board shall have the power to appoint or assign such officers and servants as the board may consider necessary for the purpose of carrying out the provisions of this Act; every such officer or servant shall, for the purpose of the application of the provisions of the Monetary Law Act relating to officers and servants, be deemed to be employed for the performance of duties under that Act.

3. Exercise of powers under this Act.

Wherever by any provision of this Act any power, duty or function is authorised or required to be exercised or performed by the bank, such power, duty or function shall be exercised or performed, subject to the direction and control of the Governor of the bank, by the officer designated as the head of the Department of Exchange Control or on his behalf by any other officer designated as an assistant to him:

Provided, however, that any permission, which by any such provision is authorised to be granted by the bank, may be granted on behalf of the head of the department by an authorised dealer, if he is for the time being empowered, by directions issued by the head of the department, to grant such permission, Any directions given by the head of the department under this section may specify the circumstances in which and the conditions and restrictions subject to which an authorised dealer may grant the permission to which the directions relate.

PART I

Gold and Foreign Currency

4. Authorised dealers in gold or foreign currency.

The Minister may authorise any commercial bank to act for the purposes of this Act as an authorised dealer in relation to gold or any foreign currency.

5. Dealings in gold and foreign currency.

(1) Except with the permission of the Bank—

(a) no person, other than an authorised dealer, shall in Sri Lanka buy, borrow or accept any gold or foreign currency from, or sell or lend any gold or foreign currency to, or exchange any foreign currency with, any person other than an authorised dealer, and

(b) no person resident in Sri Lanka, other than an authorised dealer, shall, outside Sri Lanka, buy or borrow any gold or foreign currency from, or sell or lend any gold or foreign currency to, any person other than an authorised dealer:

Provided that the preceding provisions of this subsection shall not prohibit the sale and purchase at any post office in Sri Lanka, in accordance with such directions as may be given by the bank in regard thereto, of any foreign currency in the form of postal orders or money orders.

[S 5(1) subs by s 2 of Law 39 of 1973.]

(2) Except with the previous general or special permission of the bank, no person, whether an authorised dealer or not, shall enter into any transaction which involves the conversion of Sri Lanka currency into foreign currency or foreign currency into Sri Lanka currency at rates of exchange other than the rates for the time being authorised by subsection (3) of section 76 of the Monetary Law Act.

6. Surrender of gold and of specified foreign exchange.

(1) The foreign exchange to which this section applies is such foreign exchange (hereafter in this Act referred to as the "specified foreign exchange”) as may be prescribed.

[S 6(1) subs by s 2(1) of Act 17 of 1971.]

(2) The bank may require any person in, or resident in, Sri Lanka—

(a) who owns or holds any specified foreign exchange to offer it or cause it to be offered for sale to an authorised dealer at a price determined by the Monetary Board, or

(b) who is entitled to assign any right to receive any specified foreign exchange to transfer such right to the Deputy Secretary to the Treasury on payment of such consideration as the Monetary Board may fix, unless the bank consents to his retention and use of such foreign exchange or he disposes of such foreign exchange to any person with the permission of the bank.

[S 6(2) subs by s 2(2) of Act 17 of 1971.]

(3) If a person who has obtained the consent of the bank to his retention and use of any gold or any specified foreign exchange and has stated in an application for the consent that he requires it for a particular purpose, no longer requires that gold or exchange for that purpose, subsection (2) shall thereupon apply to him in relation to that gold or exchange as if the bank had revoked the consent.

[S 6(3) am by s 2(3) of Act 17 of 1971.]

(4) A person who acquires any gold or any specified foreign exchange from an authorised dealer shall be treated for the purposes of this section as if the bank had consented to the retention and use by him of that gold or exchange, "and as if any statement made by him in an application for that gold or exchange as to the purpose for which he requires it had been made by him in an application for the consent of the bank to his retention and use thereof.

[S 6(4) am by s 2(4) of Act 17 of 1971.]

(5) Where a person has become bound under this section to offer or cause to be offered any gold or any specified foreign exchange for sale to an authorised dealer he shall not be deemed to comply with that obligation by any offer made or caused to be made by him, if the offer is an offer to sell at a price exceeding that authorised by the Monetary Board, or without payment of any usual and proper charges of the authorised dealer, or otherwise on any unusual terms.

[S 6(5) am by s 2(5) of Act 17 of 1971.]

(6) Where a person has become bound under this section to offer or cause to be offered any gold or any specified foreign exchange for sale to an authorised dealer and has not complied with that obligation, the Secretary to the Treasury may direct that gold or exchange shall vest in the Deputy Secretary to the Treasury, and where the Secretary to the Treasury so directs, it shall vest in the Deputy Secretary to the Treasury free from any mortgage, pledge, or charge, and the Deputy Secretary to the Treasury shall deal with or dispose of it in such manner as the Minister may direct, but the Deputy Secretary to the Treasury or any officer authorised in that behalf by such Deputy Secretary shall pay to that person such sum as he would have received for that gold or exchange if he had sold it to an authorised dealer in pursuance of an offer made under this section at the time when the vesting occurred. Any money required for any payment under this subsection is hereby charged upon the Consolidated Fund.

[S 6(6) am by s 2(6) of Act 17 of 1971.]

(7) In any proceedings in respect of a failure to comply with the provisions of this section, it shall be presumed, until the contrary is proved, that the gold or exchange in question has not been offered for sale to an authorised dealer.

[S 6(7) am by s 2(7) of Act 17 of 1971.]

6A. Possession of foreign currency.

Except with the permission of the bank, no person shall have in his possession any foreign currency.

[S 6A ins by s 3 of Act 17 of 1971.]

PART IA

Control of Foreign Assets

[Ins by s 4 of Act 17 of 1971.]

6AA. Accounts in foreign banks.

(1) No person in, or resident in Sri Lanka shall, except with the permission of the bank—

(a) open an account with any bank or institution doing any kind of banking business outside Sri Lanka (hereinafter referred to as a "foreign bank”);

(b) continue to maintain, or operate on, an account which has already been opened in any foreign bank; or

(c) close an account with any foreign bank.

(2) Where an account maintained by a person in, or resident in, Sri Lanka with any foreign bank is closed, such person shall not dispose of the funds to his credit at such foreign bank at the time of closing of such account, except in accordance with such directions as may from time to time be given to him by the Central Bank.

[S 6AA ins by s 4 of Act 17 of 1971.]

6AB. Foreign assets.

Every person in, or resident in, Sri Lanka who, on the date of commencement of this Act, holds, or who, after such date, acquires by way of purchase, gift, testamentary disposition or otherwise, any foreign assets—

(a) shall, within one month of the commencement of this Act or the acquisition of the assets, as the case may be, render to the bank a return in such manner and giving such particulars with respect to the assets as may be prescribed; and

(b) shall not dispose of such assets or part thereof in any manner whatsoever except in accordance with such directions as may be given to him by the bank.

[S 6AB ins by s 4 of Act 17 of 1971.]

PART II

Payments

7. Payments in Sri Lanka.

Except with the permission of the bank no person shall in Sri Lanka—

(a) make any payment to or for the credit of a person resident outside Sri Lanka, or

(b) make any payment to or for the credit of a person resident in Sri Lanka by order or on behalf of a person resident outside Sri Lanka, or

(c) place or hold any sum to the credit of any person resident outside Sri Lanka; Provided that where a person resident outside Sri Lanka has paid a sum in or towards the satisfaction of a debt due from him, paragraph (c) of this section shall not prohibit the acknowledgment or recording of the payment.

[S 7 subs by s 3 of Law 39 of 1973.]

8. Payments outside Sri Lanka.

(1) Except with the permission of the bank, no person resident in Sri Lanka shall, subject to the provisions of this section, make any payment outside Sri Lanka to or for the credit of a person resident outside Sri Lanka.

(2) Nothing in this section shall prohibit the doing of anything otherwise lawful by any person with any foreign currency obtained by him in accordance with the provisions of Part I of this Act or retained by him with the consent of the bank.

9. Compensation deals.

(1) Except with the permission of the bank no person shall in Sri Lanka, and no person resident in Sri Lanka shall outside Sri Lanka, make any payment to or for the credit of a person resident in Sri Lanka as consideration for or in association with—

(a) the receipt by any person of a payment made outside Sri Lanka, or the acquisition by any person of property which is outside Sri Lanka, or

(b) the transfer to any person, or the creation in favour of any person, of a right (whether present or future, and whether vested or contingent) to receive a payment outside Sri Lanka or to acquire property which is outside Sri Lanka.

(2) Nothing in this section shall prohibit the making of any payment in accordance with the terms of a permission or consent granted under this Act.

PART III

Securities

10. Issue of securities.

(1) Except with the permission of the bank, no person shall in Sri Lanka issue any security or, whether in Sri Lanka or elsewhere, issue any security which is registered or to be registered in Sri Lanka, unless the following requirements are fulfilled—

(a) neither the person to whom the security is to be issued nor the person, if any, for whom he is to be a nominee is resident outside Sri Lanka, and

(b) the prescribed evidence is produced to the person issuing the security as to the residence of the person to whom it is to be issued and that of the person, if any, for whom he is to be a nominee.

(2) The subscription of the memorandum of association of a company to be formed under the Companies Ordinance by a person resident outside Sri Lanka, or by a nominee for another person so resident, shall, unless he subscribes the memorandum with the permission of the bank, be invalid in so far as it would on registration of the memorandum have the effect of making him a member of the company, so, however, that this subsection shall not render invalid the incorporation of the company, and if by virtue of this subsection the number of the subscribers of the memorandum who on its registration become members of the company is less than the minimum required to subscribe the memorandum, the provisions of the said Ordinance relating to the carrying on of business of a company the number of whose members is reduced below the legal minimum shall apply to the company as if the number of its members had been so reduced.

11. Transfer of securities and coupons.

(1) No person shall, except with permission granted by the bank, transfer any security, either on his own behalf or on coupons behalf of any other person, unless—

(a) the holder of the security and, if the holder is a nominee, the person for whom he is acting as nominee, are resident in Sri Lanka; and

(b) the transferor has produced to the person to whom the security is to be transferred or his agent such evidence of the facts aforesaid as may be prescribed; and no person shall, except with such permission as aforesaid, acquire any security, either on his own behalf or on behalf of any other person, unless such evidence as aforesaid has been produced to him or to his agent.

(2) No person shall, except with permission granted by the bank—

(a) transfer any registered security, either on his own behalf or on behalf of any other person, to any person resident outside Sri Lanka or to any person acting as the nominee of any person so resident, or

(b) transfer any bearer security, either on his own behalf or on behalf of any other person, unless the bank is satisfied that the person to whom the security is to be transferred and, if that person is a nominee, the person for whom he is to act as nominee, are resident in Sri Lanka.

(3) Except with the permission of the bank, no coupon shall be transferred—

(a) in Sri Lanka, if either the transferee or the person, if any, for whom he is a nominee is resident outside Sri Lanka;

(b) outside Sri Lanka, if either the transferor or the transferee, or the person, if any, for whom the transferor or the transferee is or is to be a nominee, is resident in Sri Lanka.

12. Issue of bearer certificates and coupons.

Except with the permission of the bank, no person shall, in Sri Lanka, and no person resident in Sri Lanka shall, outside Sri Lanka, issue any bearer certificate or coupon or so alter any document that it becomes a bearer certificate or coupon.

13. Substitution of securities and certificates outside Sri Lanka.

Except with the permission of the bank, no person in or resident in Sri Lanka shall do any act with intent to secure—

(a) that a security which is—

(i) registered in Sri Lanka, or

(ii) transferable by means of a bearer certificate in Sri Lanka, becomes, or is replaced by, a security registered outside Sri Lanka or a security transferable by means of a bearer certificate outside Sri Lanka, or

(b) that, in substitution for or in addition to any such certificate of title to the first-mentioned security as is in, or is or has been lost or destroyed in, Sri Lanka, a certificate of title to any other security is issued outside Sri Lanka.

14. Payment of capital money outside Sri Lanka.

Except with the permission of the bank, no person resident in Sri Lanka shall do any act with intent to secure that capital moneys payable on a security registered in Sri Lanka are paid outside Sri Lanka, or that, where the certificate of title to a security is in Sri Lanka, capital moneys payable on the security are paid outside Sri Lanka without production of the certificate to the person making the payment.

15. Duties of persons keeping registers.

Except with the permission of the bank, no person concerned with the keeping of any register in Sri Lanka shall—

(a) enter in the register the name of any person in relation to any security unless there has been produced to him the prescribed evidence that the entry does not form part of a transaction which involves the doing of anything prohibited by this Act, or

(b) enter in the register, in respect of any security, an address outside Sri Lanka, except for the purpose of any transaction for which the permission of the bank has been granted with the knowledge that it involves the entry of that address, or

(c) do any such act in relation to the register as recognises or gives effect to any act appearing to him to have been done with the intent mentioned in section 13 or section 14, whether done by a person in or resident in Sri Lanka or not.

16. Additional provisions as to nominee holdings.

(1) Where the holder of a security is a nominee, then, except with the permission of the bank, neither he, if he is resident in Sri Lanka, nor any person resident in Sri Lanka through whose agency the exercise of all or any of the holder's rights in respect of the security is controlled, shall—

(a) do any act whereby he recognises or gives effect to the substitution of another person as the person from whom he directly receives his instructions unless both the persons previously instructing him and the person substituted for that person were, immediately before the substitution, resident in Sri Lanka and not elsewhere, or

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