Sri Lanka CB comes up with IMF-urged anti Money Laundering moves; asks lawyers to comply

Sri Lanka Central Bank’s Financial Intelligence Unit, which is pushing for anti-money laundering and countering terrorism financing compliance obligations, has urged lawyers and notaries public to appoint a compliance officer when they are engaging in some activities in line with a request by the International Monetary Fund (IMF).

The IMF has urged Sri Lanka to comply with the latest international Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) Compliance Obligations in return to its $3 billion loan.

The new move comes after the IMF has delayed the disbursement of second tranche of Sri Lanka’s $3 billion loan without the global lender’s Staff Level Agreement.

The IMF has asked the President Ranil Wickremesinghe’s government to boost revenue measures and implement strong anti-corruption measures, government officials who were privy to the meetings with IMF delegation told Economy Next last week.

Sri Lanka is at a risk of falling into Grey List if it does not take stern actions against 

possible money laundering and terrorism financing loopholes in the country.

The country is obliged to fulfil a raft of measures including passing new laws to comply with AML/CFT laws before the next evaluation starts in March 2025.

The central bank in a statement urged both lawyers and notaries public to appoint a compliance officer when they form or manage legal persons or acting as proxy for a company director or secretary, a partner or partnership, providing a registered office, business address or accommodation, correspondence or administrative address for a company or partnership, and acting as a proxy for a trustee.

Sri Lanka has already fallen to grey list twice times in the past 14 years with money laundering and terrorism financing posing serious risks to the domestic and global financial system, peace, and development.

The Financial Intelligence Unit under the central bank has been tasked to ensure the compliance with a robust Anti-Money Launder and Countering Terrorism Financing AMF/CFT Framework in place, with inter-agency coordination.

The IMF’s loan programme has emphasized the need of addressing bribery and corruption and Sri Lanka is required to fulfil a raft of obligations under the AML/CFT pillar, the central bank has said.

Failure to fulfil them will result in Sri Lanka being identified as a country with strategic deficiencies in its AML/CFT Framework and will be designated as a Greylisted/ Blacklisted country.

Sri Lanka was under the Grey List for the first time on February 2010 soon after the landslide election victory of former leader Mahinda Rajapaksa following the island nation’s military winning a 26 year war in the previous year.

However, the government managed to comply with some of the AML obligations and gold delisted in June 2013.

However, Sri Lanka fell under the Grey List again in November 2017 before delisted in October 2019, central bank officials have said.

Though Grey Listing is a warning, most countries treat Grey Listed nations as of ‘high risk’ and blacklist them. The European Union included Sri Lanka in its Blacklist subsequent to Sri Lanka’s second Grey Listing.

The IMF in return to its $3 billion Extended Fund Facility has urged Sri Lanka to implement strong measures to prevent bribery and corruption.

The global lender has urged Sri Lankan authorities to adequately apply preventive measures on private entities to report suspicious transections related to ML and proceeds of corruption, prevent the misuse of legal persons and arrangements for ML and corruption.

It has also urged to investigate ML and corruption offences and to prosecute the offenders subject to effective sanctions.

Lack of strong AML/CFT has been seen as one of the reasons for the island nation’s unprecedented economic crisis last year which later forced out the then leader Gotabaya Rajapaksa to flee the country amid strong public protests.  (Colombo/October 4/2023)




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