CBSL Warns Against Misleading Overseas Property Investments, Threatens Legal Action

The Central Bank of Sri Lanka (CBSL) has issued a stern warning to the public regarding misleading advertisements promoting overseas investments in immovable properties and offering guidance on obtaining foreign financing for such ventures. The CBSL emphasizes that many of these advertised activities contravene the country’s foreign exchange regulations and has signaled its intent to pursue legal action against those involved.

The CBSL’s alert comes after observing a rise in such promotions across both print and social media platforms targeting Sri Lankan resident individuals. The bank has clarified the strict regulations under the Foreign Exchange Act, No. 12 of 2017 (FEA), which govern such transactions:

• Resident individuals are not permitted to make payments to acquire or invest in overseas property except where payments for such investments are made from the Personal Foreign Currency Accounts (PFCAs) up to the limit of USD 20,000 or equivalent in any other designated foreign currency. 
• Payments for overseas property investments from Business Foreign Currency Accounts (BFCAs) maintained by resident entities/individuals are not permitted.  
• Further, resident individuals are not permitted to obtain foreign loans or raise financing from non-residents for any purpose including overseas property investments.

In light of these regulations, the CBSL strongly advises the public not to be misled by advertisements promoting overseas property investments, particularly those that also offer guidance on securing foreign financing for such purposes.

The Central Bank underscored its commitment to enforcing the FEA, stating that “Legal action shall be initiated under FEA against any person involved in or facilitating such unauthorized foreign exchange transactions.”