Exchange Control (Amendment) Law A LAW TO AMEND THE EXCHANGE CONTROL ACT. BE it enacted by the National State Assembly of the Republic of Sri Lanka as follows: - Short title. 1. This Law may be cited as the Exchange Control (Amendment) Law, No. 39 of 1973. Amendment of section 5 of Chapter 423. 2. Section 5 of the Exchange Control Act, herein-after referred to as the " principal Act ", is hereby amended by the repeal of subsection (1) of that section and the substitution therefor, of the following new subsection: - " (1) Except with the permission of the bank- (a) no person. other than an authorized 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 authorized dealer, and (b) no person resident in Sri Lanka, other than an authorized 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 authorized 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,", Replacement of section 7 of the principal Act. 3. Section 7 of the principal Act is hereby repealed and the following new section substituted therefor: - " Payment in Sri Lanka 7. 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.". Amendment of section 22 of the principal Act. 4. Section 22 of the principal Act is hereby amended as follows:- (1) by the repeal of subsections (3) and (4) of that section, and the substitution therefor, of the following new subsections: - '(3) The Minister may by Order published in the (Gazette provide that no goods shall except with the permission of the bank, be exported from Sri Lanka to any destination specified in the Order, (4) In granting permission under subsection (3) in respect of the exportation of goods for the purposes of sale, the bank shall satisfy itself (a) that payment for the goods has been made to person resident in Sri Lanka by such means and in such manner as may be prescribed in relation to goods of that class or description exported to the destination, or is to be so made not later than six months after the date of exportation; and (b) that the amount of the payment that has been made or is to be made represents such a return for the goods as is in all the circumstances satisfactory in the national interest: Provided that the bank may direct that, in cases to which the direction applies, paragraph (a) of this subsection shall have effect as if for the reference to six months there were substituted a reference to such longer or shorter period as may be specified in the direction, or as if the word " or is to be so made not later than six months after the date of exposition " were omitted " and (2) by the repeal of subsection (7) of that section. Insertion of new sections 29A, 29B and 29C in the principal Act. 5. The following new sections are hereby inserted immediately after section 29, and shall have effect as sections 29a, 29b and 29c, of the principal Act: - "Tourist services, shipping agencies and airline agencies. 29A. No person shall operate or maintain any tourist, airline or shipping service or carry on business as shipping agent or airline agent except in accordance with such conditions and requirements as may be imposed from time to time by the bank. Prescribed services to be performed in performed in accordance with conditions and requirement imposes by the bank. 29B. No person in, or resident in, Sri Lanka shall perform any prescribed service for a person resident outside Sri Lanka except in accordance with such conditions and requirements as may be imposed by the bank by Notification published in the Gazette. Restriction of appointment of certain-companies and firms as agents or technical advisers in Sri Lanka 29C. Notwithstanding anything contained in any other provision of this Act, a company (other than a banking company) which is not incorporated under any law' in force in Sri Lanka or which is controlled directly or indirectly by any person or persons resident outside Sri Lanka, or any branch or office of any such company in Sri Lanka, or a firm consisting wholly or in part, of persons resident outside Sri Lanka, shall not accept appointment as- (a) agent in Sri Lanka of any person, company or firm in the trading or commercial transactions thereof; or (b) technical or management adviser in Sri Lanka of any person, company or firm, except with the general or special permission of the bank; and where such appointment is accepted without such permission, it shall be void.". Replacement of section 30 of the principal Act. 6. Section 30 of the principal Act is hereby repealed and the following new section substituted therefor: - ' Certain provisions relating to foreign companies. 30. (1) Where there is served on any person resident in Sri Lanka a notice in writing that the bank wishes any such requirements as are hereinafter mentioned to be complied with by any foreign company, and that person can by doing or refraining from doing any act- (a) cause the foreign company to comply with any of the requirements; or (b) remove any obstacle to the foreign company complying with any of the requirements; or (c) render it in any respect more probable that the foreign company will comply with any of the requirements, then, except so far as permission to the contrary may be given by the bank, that person shall do or, as the case may be, refrain from doing that act. (2) The requirements with respect to which a notice under subsection (1) may be given are as follows, that is to say, the foreign company shall- (a) furnish to the bank such particulars relating to the assets and business of such company as may be mentioned in the notice; (b) sell or procure the sale to an authorized dealer of any foreign exchange mentioned in the notice, being foreign exchange which it is entitled to sell or to which it is entitled to procure the sale; (c) declare and pay such dividends as may be mentioned in the notice; (d) realize any of its assets mentioned in the notice in such manner as may be so mentioned; (e) refrain from selling, or transferring, or doing anything which affects its rights or powers in relation to, any such instrument or securities as may be mentioned in the notice. (3) Except with the general or special permission of the bank, no person resident in Sri Lanka shall do any act whereby any business which is controlled by persons resident in Sri Lanka ceases to be so controlled. (4) Notwithstanding anything contained in any other law, no transfer of any interest in any business in Sri Lanka made by a person resident outside Sri Lanka to any person also resident outside Sri Lanka shall be valid unless such transfer is confirmed by the bank on an application made to it for such confirmation by the transferor or the transferee. The preceding provisions of this subsection shall not apply to the transfer of any share in a company. (5) Except with the general or special permission of the bank, no person resident in Sri Lanka shall transfer any interest in any business in Sri Lanka, or create any interest in any such business, to or in favour of a citizen of a foreign State. (6) Except with the general or special permission of the bank, no person resident in Sri Lanka shall give a guarantee in respect of any debt or any other obligation or liability of a person resident outside Sri Lanka. (7) Except with the general or special permission of the bank, no person resident in Sri Lanka shall lend any money either to any firm or company (other than a banking company) which is controlled directly or indirectly by persons resident outside Sri Lanka. (8) In this section, foreign company " means a company not incorporated under any law in force in Sri Lanka and in the case of which any of the following conditions is fulfilled: - (a) that the company is by any means controlled (directly or indirectly) by any person or persons resident in Sri Lanka; or (b) that more than half of the sums which, on a liquidation thereof, would be receivable by holders of share or loan capital, would be receivable directly or indirectly by, or for the benefit of, persons resident in Sri Lanka; or (c) that more than one-half of the assets which, on a liquidation thereof, would be available for distribution after the payment of creditors would be receivable directly or indirectly by, or for the benefit of, any person or persons resident in Sri Lanka; or (d) that more than, one-half- (i) of the interest payable on its loans and loan, capital, if any, or (ii) of the dividends payable on its preference share capital, if any, or (iii) of the dividends payable on its share capital, if any not being preference share capital, is receivable directly or indirectly by, or for the benefit of, any person or persons resident in Sri Lanka. For the purposes of this subsection, where the identity of the person or persons by whom or for whose benefit, any sum, assets, interest or dividends are directly or indirectly receivable depends on the exercise by any person resident in Sri Lanka of a power vested in him in that behalf, the sum, assets, interest or dividends shall be deemed to be receivable directly or indirectly by, or for the benefit of, any person or persons resident in Sri Lanka'.. Amendment of section 81 of the principal Act. 7. Section 31 of the principal Act is hereby amended as follows: - (1) by the repeal of subsection (1) of that section and the substitution therefor, of the following new subsection: - " (1) Where any person applies for the permission of the bank for the making of a payment, or the placing of any sum, to the credit of any person resident outside Sri Lanka, the bank may direct that the sum payable or to be credited shall be paid or credited to a blocked account only. Where such direction is given by the bank such person shall pay or credit such sum to a blocked account."; (2) by the repeal of subsection (2) of that section. and the substitution therefor, of the following new subsection: - (2) Where the bank directs that a payment shall be made to a blocked account only, (a) the manner in which the payment may be made shall be either- (i) in the banker, with a direction that the payment shall be credited to a blocked account of the person to whose credit the payment is made, which direction may, in the case of a payment by means of a cheque or warrant, be made by marking the cheque or warrant with the words " blocked account of " (naming that person) or words to the same effect, or (ii) by a crossed cheque or warrant drawn in favour of that person, marked with the words " payable only to blocked account of payee " or words to the same effect; and (b) the sum collected shall be credited by the banker to a blocked account of that person.". (3) by the repeal of subsection (3) of that section; and (4) by the omission of the proviso to subsection (4) of that section Amendment of section 39 of the principal 8. Section 39 of the principal Act is herby amended as follows: - (1) by the repeal of subsection (1) of that section end the subsection therefor of the following new subsection: - "(1) Without prejudice to any other provisions of this Act, the bank may give to any person in. or resident in Sri Lanka directions requiring him- (a) to furnish, within such time and in such manner as may be specified in such directions, to the bank or to any person designated in such directions as a person authorized to require it any information in his possession which the bank or the person so authorized, as the case may be, may require for the purpose of securing compliance with, or detecting evasion of the provisions of this Act, or where such person does not nave the information in his possession, to obtain such information from any such person in Sri Lanka or abroad as may be specified in such directions and to furnish such information to the bank or to the person authorized; or (b) to attend in person before any officer specified in such directions at such place, at such date and at such time as may be specified therein so that he may be examined on any such matter or matters as may be specified in such directions."; (2) by the insertion, immediately after subsection (1) that section, of the following new subsection: - " (1A) Any person examined under the provisions of subsection (1) (b) shall answer truly all questions put to him by the officer examining him." ; and (3) by the insertion, immediately after subsection (4) of that section, of the following new subsection: - (5) In this section, " bank " includes any officer of the Department of Inland Revenue or Department of Customs generally or specially authorized by the Monetary Board to exercise the powers conferred by this section.'. Amendment of section 30A of the principal Act. 9. Section 30a of the principal Act. inserted therein by Law No. 14 of 1972, is hereby amended, in paragraph (6) thereof, by the substitution, for the. words vehicle or vessel",. of the words " vehicle,. aircraft or vessel ". Replacement of section 40 of the principal Act. 10. Section 40 of the principal Act is hereby repealed and the following new section substituted therefor: - "Search of premises. 40. (1) If the Head of the Department of Exchange Control or any such officer who is designated as an Assistant to him or any such slate officer not below the rank of Assistant to the Head of a Department of State, as may be authorized by the Head of the Department of Exchange Control to act for the purposes of this section is satisfied- (a) that there is reasonable ground for suspecting that an offence under this Act has been or is being committed and that evidence of the commission of the offence is to be found at any premises or in any vessel, vehicle or air. craft or with any person; or (b) that any books, accounts or other documents which ought to have been produced under section 39 and have not been so produced are to be found at such premises or in any such vehicle, vessel or aircraft or with such person; or (c) that any foreign currency is to be found at any such premises or in any such vehicle, vessel or aircraft or with any such person. the Head of the Department of Exchange Control or such officer may enter such premises or, as the case may be, any premises upon which the vehicle, vessel or aircraft or person may be. and search such premises, or as the ease may be such vehicle, vessel, aircraft or person. (2) The Head of the Department of Exchange Control or such officer, as the case may be, may seize any article which is found in the premises or in the vehicle, vessel or aircraft aft or with the person and which he has reasonable grounds for believing to be evidence of the commission of any offence under this Act, or any books, accounts or documents which he has reasonable grounds for believing ought to have been produced under section: 39: Provided that no female shall, in pursuance of a search under this section. be searched except by a female. (3) Where by virtue of this section a person has any power to enter into any premises, he may use such force as is reasonably necessary for the purpose of exercising that power. Where by virtue of this section, an officer has power to search a person, such officer may examine such person, and such person shall answer truly all questions put to him by the officer examining him. (4) No person shall obstruct any other person in the exercise of any powers conferred on that other person by virtue of the preceding provisions of this section. (5) Any person empowered to do any act under this section may, if he thinks fit so to do, obtain the assistance of a peace officer for doing such act". Insertion of new section 49 in the principal Act. 11. The following new section is hereby inserted immediately after section 49a, and shall have effect as section 49b of the principal Act: - " Admissibility of certain documents 49B. In any legal proceedings in respect of any offence under this Act, any of the following documents may be produced in court and given in evidence against any accused and shall be prima facie evidence of the matters, transactions or accounts therein contained: - (a) a certified copy of a banker's book or of any extract thereof obtained from the manager or principal accountant of the bank; (b) a certified copy of any book or other record required by law to be maintained by a company or a certified copy of any extract thereof, obtained from a director or secretary of the company and (c) a certified copy of any document or of an extract thereof in the proper custody of an officer of a foreign Government, and obtained from such officer". Amendment of section 50A of the principal Act. 12. Section 50a of the principal Act is hereby amended by the insertion, immediately after subsection (2) of that section, of the following new subsection:- " (3) For the purposes of this section any officer authorized by the Monetary Board under subsection (5) of section 39 shall be deemed to be an officer of the Department of Exchange Control of the Central Bank ". Amendment of section 51 of the principal Act. 13. Section 51 of the principal Act is hereby amended as follows:- (1) by the repeal of subsection (1) thereof, and the substitution therefor, of the following subsection: - " (1) Any person in or resident in Sri Lanka who contravenes any provision of this Act or of any regulation made under this Act or fails to comply with any direction given or condition or requirement imposed under this Act shall be guilty of an offence, not withstanding that the offence may, by virtue of Part IV of this Act, be also punishable under the provisions of the Customs Ordinance."; (2) by the repeal of subsection (4) thereof, and the substitution therefor, of the following subsection: " (4) Any person who commits an offence under this Act shall- (a) on conviction after summary trial before a Magistrate, be liable to imprisonment of either description for a term not exceeding eighteen months, or to both such imprisonment and a fine: or (b) on conviction before a District Court, be liable to imprisonment of either description for a term not exceeding five years, or to both such imprisonment and a fine; and where the offence is concerned with any gold, currency, security, goods or other property, the court may, if it thinks fit so to do, order the gold, currency, security, goods, or property to be forfeited; and any gold, currency, security, goods or property forfeited under this subsection shall be dealt with or disposed of in such manner as the Minister may direct"; and (3) by the insertion, immediately after subsection (6) thereof, of the following new subsections: - "(7) No prosecution in respect of any offence under this Act may be commenced except at the instance of, or with the sanction of, the bank: Provided that this subsection shall not apply to a prosecution commenced by, or at the instance of, the Attorney-General. (8) All offences under this Act snail be cognizable offences for the purposes of the application of the provisions of the Criminal Procedure Code, notwithstanding anything contained in the First Schedule to that Code. (9) Notwithstanding anything in any other law any offence under this Act committed outside Sri Lanka may be tried before a Magistrate baring jurisdiction in the division of Colombo or before the District Court in Colombo." Replacement of section 52 of the principal Act. 14. Section 52 of the principal Act is hereby repealed and the following new section substituted therefor: " Imposition of penalties by the bank. 52. (1) Before the commencement of a prosecution under this Act, the bank may in writing require any person who in its opinion has committed an offence under this Act to pay as a penalty a sum not exceeding two thousand rupees, within such period as may be specified in the notification of such requirement. (2) Where the offence referred to in subsection (1) is concerned with any gold, currency, security, payment, goods or other property, and is not only a failure to give information or produce books, accounts or other documents with respect thereto when required so to do under section 39,- (a) the bank may in writing require such person to pay as a penalty within such period as may be specified in the notification of such requirement an additional sum not exceeding three times the amount or value of the gold, currency, security, payment, goods or property; and (b) the bank may, if it thinks it fit so to do, in writing require gold, currency, security, goods or property to be delivered to the bank. (3) Every requirement for delivery to the bank made under subsection (2) (6) shall be communicated to the person in whose possession the gold, currency, security, goods or property required to be delivered is, and such person shall, upon receipt of such communication, deliver to the bank such gold, currency, security, goods or property. (4) Any gold, currency, goods or property delivered to the bank under this section shall be dealt with or disposed of in such manner as the Minister may direct. (5) Any sum of money imposed as penalty under this section shall be disposed of in the following manner: - (a) one-half of that sum shall be forwarded to the Secretary to the Treasury to be credited to the Consolidated Fund; and (b) the other half of such sum may be divided among any informer or informers who, in the opinion of the bank, supplied such information as led to the detection of the offence referred to in subsection (1), or may be credited to the Consolidated Fund. (6) No person against whom a requirement is made by the bank under this section shall except with the permission of the bank, sell, hypothecate, alienate, transfer or dispose of in any manner whatsoever any immovable property or securities belonging to him until such requirement is complied with or until the expiry of a period of two months from the end of the period specified in such order, whichever is earlier: Provided, however, that where on the failure of such person to comply with such requirement any action is instituted against such person in respect of the offence committed by him in any court before the expiry of the aforesaid period of two months, the court may direct that the prohibition on disposal of property referred to in the preceding provisions of this subsection shall continue for such further period as the court may determine. (7) Any person against whom a requirement is made by the bank under this section may, within twenty-one days after the notification of the requirement to him. appeal therefrom in writing to the Minister. The appeal shall state the grounds of objection to the requirement. (8) On an appeal made under subsection (7), the Minister may confirm. reduce, increase or annul the penalty imposed, or issue such directions in respect of the gold, currency, security, goods or property required to be delivered to the bank as he may think fit. (9) Where any person pays to the bank the penalty imposed under this section, or pays the penalty and delivers to the bank the gold, currency security goods or property required to be delivered to the bank under this section, as the case may be. such person shall not be liable to a prosecution for the offence in respect of' which the penalty was imposed or the requirement made. Amendment of section 54 of the principal Act. 15. Section 54 of the principal Act is hereby-amended as follows: - (1) by the insertion, immediately after the definition of " bank ", of the following new definition: - " banker's book " includes any ledger, day book cash book, account book and any other book used in the ordinary business of a bank; "banking company " has the same meaning as in the Companies Ordinance;' (2) by the insertion, immediately after the definition of "Ceylon currency ", of the following new definition:- "certified copy" of any book record, extract document, means a copy of the book, record, extract or document, together with a certificate written at the foot of such copy that it is a true copy of such book, record, extract or document; and that such book, record. extract or document is still in proper custody, such certificate being dated and subscribed by the person in whose custody it is. with his name and official title: "company " means a company registered under the enactments relating to companies from time to time in force in Sri Lanka or in any other country; (3) by the substitution, for the definition of " securities", of the following new definition: - ' " securities " means shares, stock, bonds, capital in any partnership, notes (other than promissory notes), debentures, debenture stock, units under a unit trust scheme and shares in an oil royalty;'; and (4) by the insertion, immediately after the definition of " specified foreign exchange " of the following new definition: - ' " tourist, airline or shipping service " means service of any class or description prescribed to be a tourist, airline or shipping service for the purposes of this Act;'.