Cash smuggling peaks with halt in enforcement of remittance regulation

The police say they are facing major challenges in stopping expatriate workers from smuggling bulk amounts of cash out of Maldives following the decision to halt the enforcement of Remittance Regulation.

Remittance Regulation was enacted by Maldives Inland Revenue Authority (MIRA) in 2016 and had set the policies and protocols governing Remittance Tax.

However, the Remittance Tax is scheduled to become null and void once the Income Tax Bill is enacted.

Senior police officials briefed the National Security and Foreign Relations Committee of Parliament regarding current challenges in tackling cash smuggling during a session on Tuesday.

Chief Superintendent of Police, Mohamed Basheer said that the police had previously seized and returned cash caught being smuggled out of Maldives in violation of Remittance Regulation to MIRA, but that the agency was facing challenged with the halt in enforcement of Remittance Regulation.

“The current situation is that, because the regulation doesn’t fit the recommendation of the AG’s Office, because the regulation is no longer in effect, we are unable to act on cash seized in such operations the same manner as before,” said Basheer.

Though Basheer said that MIRA made the decision to table the Remittance Regulation under legal counsel from the Attorney General’s Office, he did not say when the decision was taken.

He said that the value of cash being smuggled out of Maldives was increasing to alarming levels, and that expatriate workers engaged in the illegal activity were currently smuggling out USD 100,000 to USD 1 million per trip.

“Therefore, this needs to be remedied with the immediate establishment of regulations. Failure to do so means the loss of income from remittance to the state, and if Maldives becomes a country where cash can be smuggled out without any restriction or regulation, we believe we face greater issues in our work to counter money laundering,” said Basheer.

CASH SMUGGLING NEEDS TO BE PROHIBITED BY LAW

Basheer said that the first significant case of cash smuggling was reported to the police in November of 2015, and that another bulk shipment of cash was seized in December of 2015. He said that the cash sized in both operations had to be released because Remittance Regulation hadn’t come into effect until 2016.

“We had to return the cash to the parties in both cases because the laws at the time did not accommodate for it to be considered as sufficient evidence to be charged and tried for money laundering, and because there wasn’t a Remittance Regulation,” said Basheer.

He said that the police had successfully handed cash seized in four cash smuggling busts to MIRA since the Remittance Regulation came to effect, while one of the cases is currently on trial.

Basheer said that the police struggled to find sufficient evidence in money laundering cases, and have to release the money when there is often little substantial evidence to be found.

“We want for the Remittance Regulation to be re-established and enforceable. And to establish cash smuggling as a criminal offense, and find a legal remedy to this,” he said.

In response to the comments, chair of National Security and Foreign Relations Committee, Ibrahim Shareef said that current local laws already established such activities as criminal offenses.

“I believe the Maldives Monetary Authority Act, the Remittance Tax Act, and Anti-Money Laundering Act establishes these as crimes,” said Shareef.

He asked the police to make an official request with the Parliament if the three laws proved to be insufficient to counter cash smuggling.