Financial Penalties for Non-Compliance: The Central Bank of Sri Lanka Cracks Down

The Central Bank of Sri Lanka (CBSL) imposed penalties on several financial institutions and designated non-finance businesses (DNFBs) for non-compliance with the Financial Transactions Reporting Act (FTRA) of 2006. Here’s what you need to know about this development.

The Imposed Penalties

According to reports, the penalties were imposed based on the nature and gravity of the non-compliance cases. The Central Bank of Sri Lanka has the authority to levy financial penalties on institutions under Sections 19 (1) and 19 (2) of the FTRA. The penalties vary based on the extent of the non-compliance.

Institutions Held Accountable

During the years 2019 and 2020, the Financial Intelligence Unit (FIU) at the Central Bank of Sri Lanka enforced these penalties on several financial institutions and DNFBs. The Central Bank of Sri Lanka’s move to impose penalties is part of its commitment to strengthen financial regulations and ensure the integrity of the financial system in Sri Lanka.

Previous Penalties and Their Consequences

• Financial institutions and DNFBs that fail to comply with the FTRA can face severe consequences.
• Reporting suspected transactions involving money laundering and terrorist financing is a responsibility under the act.
• Failure to adhere to these reporting requirements can endorse reputational damage, penalties, and potential legal consequences.

Importance of Compliance

The penalties serve as a deterrent for institutions to uphold their responsibilities under the FTRA. Non-compliance can lead to:

1. Fines
2. Regulatory sanctions
3. Public scrutiny

Stay tuned for further updates as the Central Bank of Sri Lanka continues to enforce regulations aimed at maintaining a strong and transparent financial system.