Financial Crime World

Title: FIU Imposes Rs. 5.5 Million in Penalties on Sri Lankan Financial Institutions for AML/CFT Non-compliance

Colombo, Sri Lanka

Between 17 November 2022 and 31 March 2023, the Financial Intelligence Unit (FIU) of Sri Lanka imposed financial penalties totaling Rs. 5.5 million on 17 financial institutions for their non-compliance with the provisions of the Financial Transactions Reporting Act (FTRA) No. 6 of 2006.

Penalties for Non-compliance

Under the powers granted by sections 19(1) and (2) of the FTRA, these penalties were imposed for significant and extensive non-compliance issues:

  1. Amounts and Recipients: The financial institutions failed to report all cash transactions exceeding Rs. 500,000 and all international transactions exceeding Rs. 5 million as required by the FTRA.
  2. Customer Due Diligence: The institutions failed to adhere to customer due diligence procedures needed to identify and verify the identity of clients and, in some instances, their beneficiaries.

Upholding AML/CFT Compliance

The FIU, responsible for combating Money Laundering and Terrorist Financing (ML/TF) in Sri Lanka, imposed these penalties to fortify the country’s anti-money laundering and countering the financing of terrorism (AML/CFT) regime. The collected funds have been credited to the Consolidated Fund.

Reporting Requirements under FTRA

The FTRA sets out detailed reporting requirements for financial transactions, mandating financial institutions to report:

  • All cash transactions exceeding Rs. 500,000
  • All international transactions exceeding Rs. 5 million

Additionally, institutions must adhere to customer due diligence procedures to identify and verify clients’ identities and, as necessary, their beneficiaries.

Encouraging Institutional Responsibility and Compliance

An FIU official declared, “Penalties are a means to compel institutions to uphold their responsibilities for AML/CFT compliance. Our ultimate objective is to create a financially secure and integrity-driven financial sector.”

The FIU continually monitors financial institutions’ compliance with the FTRA and collaborates with them to resolve any issues faced in adhering to the regulatory framework. It also offers education and training programs to help institutional staff better understand their obligations under the FTRA.

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