Financial Crime World

Title: Money Laundering and Terrorist Financing in Focus: An Overview of Sri Lanka’s AML/CFT Legislation

Money laundering and terrorist financing have become significant global concerns, with countries around the world implementing stringent measures to prevent these illicit activities. In this context, let’s delve into the anti-money laundering (AML) and countering the financing of terrorism (CFT) laws and regulations in Sri Lanka.

Understanding Money Laundering

Money laundering refers to the process of disguising proceeds from illegal activities to make them appear legitimate. Here is a brief overview of the different stages of money laundering:

  • Placement: Criminals introduce their illicit funds into the financial system.
  • Layering: Criminals transfer or convert funds into other financial instruments to further distance them from their criminal origins.
  • Integration: Criminals acquire assets such as real estate, securities, cars, gems and jewelry, and other luxury goods using these funds.

What is Terrorist Financing?

Terrorist financing is the process of providing financial support for terrorism or those who engage in planning or encouraging terrorism.

The Role of the Financial Intelligence Unit (FIU)

The Financial Intelligence Unit (FIU) in Sri Lanka serves as the national agency for collecting and analyzing suspicious transaction reports and other information related to money laundering, terrorist financing, and other predicate offenses.

Sri Lanka’s AML/CFT Legislation

Sri Lanka’s AML and CFT regime encompasses several pieces of legislation:

  • The Conventions on the Suppression of Terrorist Financing Act No 25 of 2005 (CSTFA) and its amendments.
  • The Prevention of Money Laundering Act No. 05 of 2006 (PMLA) and its amendments.
  • The Financial Transactions Reporting Act No. 06 of 2006 (FTRA).

Unlawful Activities

An “unlawful activity” in Sri Lanka includes offenses under various laws, such as:

  • Drug-related offenses
  • Terrorism-related offenses
  • Bribery
  • Firearms possession
  • Customs offenses
  • And 32 other categories of offenses

Penalties for Money Laundering

Those found guilty of money laundering offenses face severe penalties. These penalties include:

  • Fines: not less than the value of the property involved in money laundering.
  • Imprisonment.
  • Forfeiture of assets.

The value of the fine is not less than the value of the property involved in money laundering and can be up to three times that value.

Additional Resources

To learn more about the Financial Action Task Force (FATF) and the Asia Pacific Group on Money Laundering (APG), please refer to our subsequent articles. Stay tuned for more updates on AML/CFT developments in Sri Lanka.