CBSL Issues Caution on Overseas Property Investments and Foreign Financing – LankaPropertyWeb.com News & Blog

The Central Bank of Sri Lanka (CBSL) has issued a strong advisory to the public, warning against unauthorized overseas property investments and misleading advertisements promoting such ventures. The statement comes in response to a growing number of advertisements both in print and on social media that encourage Sri Lankan residents to invest in immovable properties abroad, often with suggestions for obtaining foreign loans.

According to the Foreign Exchange Act No. 12 of 2017 (FEA), CBSL clarified the following key points:

• Resident individuals are not permitted to make payments for overseas property investments unless such payments are made through Personal Foreign Currency Accounts (PFCAs), with a maximum annual limit of USD 20,000 (or equivalent).
• Payments from Business Foreign Currency Accounts (BFCAs) by resident entities or individuals for these investments are strictly prohibited.
• Residents are not allowed to obtain foreign loans or raise external financing from non-residents for any purpose, including property purchases abroad.

The Central Bank strongly advised the public not to be misled by advertisements that promote these investments or offer foreign financing solutions, warning that legal action will be taken under the FEA against those engaging in or facilitating unauthorized foreign exchange transactions. (CBSL, 2025)

How to Ensure Your Foreign Remittances Are Legal and Compliant?

To avoid violations and penalties, Sri Lankans are urged to:

1. Use Authorized Dealers

All foreign exchange transactions must be conducted exclusively through banks or financial institutions that are duly licensed by the Central Bank of Sri Lanka (CBSL) to handle such operations.

2. Declare the Purpose Clearly

Always provide accurate reasons for any foreign transaction when sending or receiving funds.

3. Obtain CBSL Approval Where Necessary

Investments exceeding permitted thresholds or outside allowable categories require prior CBSL approval.

4. Maintain Documentation

Keep records such as bank slips, approval letters, and agreements to prove the legitimacy of your transaction.

5. Adhere to the Annual Foreign Exchange Limits

For Personal Foreign Investments, stay within the annual limit of USD 20,000 via PFCAs unless officially approved.

(According to the guidelines issued by the Central Bank of Sri Lanka, purchasing overseas property is mainly permitted for individuals who have a foreign income source. These individuals can use their Personal Foreign Currency Accounts (PFCAs) to invest abroad, up to an annual limit of USD 20,000.

However, those without a foreign revenue flow are not allowed to use Sri Lankan Rupees (LKR) to buy property overseas. This regulation is intended to prevent the outflow of LKR from the country and protect Sri Lanka’s foreign exchange reserves)

6. Avoid Informal Channels

Do not use illegal remittance networks like hawala or undi systems, as they are unregulated and prosecutable under the FEA.

7. Consult Professionals

Speak with your bank’s foreign exchange department or a licensed financial consultant to ensure regulatory compliance.