The Central Bank of Sri Lanka has issued a stern warning that all transactions between residents must be conducted exclusively in Sri Lankan Rupees, unless explicit permission has been granted under the Foreign Exchange Act. Despite this directive, duty-free shops at Colombo’s international airport are reportedly refusing to accept payments in Sri Lankan Rupees, continuing to demand foreign currency from local customers. A reliable source described the situation as “nothing but an open mafia,” highlighting the unusual scenario in a country that legally prohibits transactions in foreign currency without Central Bank authorization.
The Central Bank emphasized that it has not authorized any local traders to convert rupee payments from residents into foreign currencies or to credit them to foreign exchange accounts. This includes transactions made via electronic cards such as debit and credit cards. According to the Central Bank, any resident making payments in foreign currency, or any business accepting such payments without special permission, is committing a punishable offense under the Central Bank of Sri Lanka Act. Convicted individuals may face fines up to twenty-five million rupees or imprisonment for up to three years, or both.
The Central Bank further reminded the public and businesses that, under the Central Bank of Sri Lanka Act No. 16 of 2023 and the Foreign Exchange Act No. 12 of 2017, foreign currency use within Sri Lanka is only permissible under explicit Central Bank authorization. Traders and consumers are urged to comply strictly with these legal provisions to avoid severe penalties, signaling a firm stance against the use of foreign currency in domestic commerce.
