Title: Sri Lanka Prepares for Anti-Money Laundering Assessment by FATF Amidst Increasing Scrutiny

Country’s Financial System Faces International Watchdog Evaluation

In a bid to strengthen its financial regulatory framework, Sri Lanka is getting ready for an assessment by the Financial Action Task Force (FATF) beginning from April 25, 2023.The team from the international watchdog will evaluate the country’s regulations, policies, and operational capacities in combating money laundering and countering the financing of terrorism.

International Concerns Amidst Placement on ‘Grey List’ and IMF Suspension

The FATF review comes amidst growing concerns about suspected money laundering activities within Sri Lanka’s financial system. In the recent past, the country has been placed on a ‘grey list’ by the Asia/Pacific Group on Money Laundering (APG), leading to the International Monetary Fund (IMF) suspending its new loan program for Sri Lanka in January 2023.

Government’s Response: New Appointments, Regulation Drafting, and Compliance Inspections

The Sri Lankan government has responded to the international community’s concerns. Notably, it has appointed a new Executive Director of the Financial Intelligence Unit and initiated the drafting of revised regulations for preventing money laundering and terrorism financing. Additionally, the Central Bank of Sri Lanka has been conducting regular inspections to ensure financial institutions’ compliance with relevant regulations.

Calls For A Robust Regulatory Framework and Greater Transparency

However, experts believe that more action is required to effectively tackle money laundering and terrorism financing in Sri Lanka. They argue that the country requires a robust regulatory framework for offshore financial centers and increased transparency within its banking sector.

“While there have been some efforts to strengthen regulations and enhance transparency, it is clear that more needs to be done,” Dr. Razeen Sally, a visiting senior fellow at the Singapore-based Asian Institute of International Financial Relations (AIIFR), stated. “Sri Lanka needs to address issues related to its regulatory framework for offshore financial centers and work towards increasing transparency in its banking sector.”

The Need for Determination Amidst High-Profile Scandals

With recent high-profile money laundering scandals involving politically exposed persons (PEPs) and multinational corporations, there is a pressing need for the Sri Lankan government to exhibit determination in its anti-money laundering efforts. According to a report by the Basel Institute on Governance, Sri Lanka ranks among the top 10 countries worldwide for money laundering and terrorism financing risks.

Optimism Regarding upcoming FATF Assessment

Government officials remain hopeful about the upcoming FATF assessment and believe that it will serve as an important milestone for Sri Lanka’s financial sector, providing an opportunity to demonstrate the Sri Lankan government’s commitment to improving its financial regulatory framework.

“The upcoming FATF assessment represents an essential milestone for Sri Lanka’s financial sector,” Dr. Harsha Cabral, Secretary of the Ministry of Eastern Province Development and an advisor to the President on international financial matters, stated. “We invite the international community to collaborate with us in our journey towards creating a more transparent, accountable, and resilient financial system for the benefit of all Sri Lankans.”