Financial Crime World

Anti-Money Laundering Regulations in Sri Lanka: A Comprehensive Overview

Introduction

Sri Lanka has implemented a robust anti-money laundering (AML) framework to combat financial crimes and safeguard its economy. This comprehensive overview provides insight into the country’s AML regulations, highlighting key Acts, institutions, and international recognition.

The AML Framework

Sri Lanka’s AML framework is based on three key Acts:

  • Prevention of Money Laundering Act No. 5 of 2006: This Act sets out provisions for the prevention of money laundering in Sri Lanka.
  • Financial Transaction Reporting Act No. 6 of 2006: This Act requires financial institutions to report suspicious transactions and maintain records.
  • Convention on the Suppression of Terrorist Financing Act No. 25 of 2005: This Act prohibits terrorist financing and related activities.

The Financial Intelligence Unit (FIU)

At the heart of Sri Lanka’s AML regulations is the FIU, an independent institution within the Central Bank of Sri Lanka. The FIU:

  • Collects information relating to suspicious financial transactions.
  • Issues guidelines for all financial institutions to maintain records of transactions and correspondence for a period of six years from the date of transaction.

Reporting Requirements

Financial institutions in Sri Lanka are required to report any transaction exceeding Sri Lankan Rupees 1,000,000 to the FIU. The FIU then reports to the Governor of the Central Bank, who handles reported transactions independently with law enforcement agencies (LEAs).

International Recognition

Sri Lanka’s AML efforts have earned recognition from international organizations:

  • White List: Sri Lanka is now categorized as a White List country by the Financial Action Task Force of the European Union.
  • Asia Pacific Group on Money Laundering: Sri Lanka is a member of this FATF-style regional body, demonstrating its commitment to AML regulations.
  • Egmont Group of FIUs: Sri Lanka’s FIU is a member of this international organization, further solidifying its position in the global fight against money laundering.

Global Standards and International Agreements

Sri Lanka has signed and ratified all important international agreements, including:

  • Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances
  • United Nations Convention Against Corruption

In line with FATF recommendations, Sri Lanka requires countries to provide mutual legal assistance in relation to money laundering investigations, prosecutions, and possible extraditions. The country’s domestic legal instruments provide a sound basis for assistance and extradition.

Conclusion

Sri Lanka’s commitment to AML regulations has earned recognition from international organizations, demonstrating its efforts to combat financial crimes and protect its economy. The country continues to implement robust measures to ensure the integrity of its financial system and maintain its position as a global leader in AML compliance.