ECONOMYNEXT – Sri Lanka has appointed a high-level task force on Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) and Preparations for the island nation’s Third Mutual Evaluation which is to begin in the near future by the Asia Pacific Group (APG), the Central Bank said.
The AML/CFT task force includes Retired Supreme Court Judge Buwaneka Aluwihare (Chairman), Justice Minister Harshana Nanayakkara, Deputy Economic Development Minister Anil Jayantha Fernando, Deputy Finance Minister Harshana Suriyapperuma, Senior Central Bank Deputy Governor Nelumani Daulagala, and Finance Ministry’s Additional Director General A K D D D Arandara.
The reconstituted task force comes as Sri Lanka is facing a risk of falling into the grey list for a third time if it fails to implement strong AML/CFT measures recommended by the global body Financial Action Task Force (FATF). Such failure could dent the island nation’s economic recovery from sovereign debt default, analysts have said.
“During this upcoming Mutual Evaluation, Sri Lanka is required to demonstrate Technical Compliance with the 40 Recommendations of the Financial Action Task Force (the global policy setter on AML/CFT) and their effective implementation through 11 Immediate Outcomes,” the Central Bank said in a statement.
The Central Bank said the actions to rectify the remaining gaps in the AML/CFT framework for effective implementation of the action plans have been communicated relevant stakeholder institutions which include Attorney General’s Department, Police, Sri Lanka Customs, Commission to Investigate Allegations of Bribery or Corruption (CIABOC), Ministry of Justice, Ministry of Defence, Ministry of Foreign Affairs, and Ministry of Finance.
The stakeholder list also includes Department of the Registrar of Companies, Inland Revenue Department, Department of Excise, Legal Draftsman’s Department, Registrar General’s Department, Securities and Exchange Commission of Sri Lanka, Insurance Regulatory Commission of Sri Lanka, Construction Industry Development Authority, National Gem and Jewellery Authority, National Secretariat for Non-Governmental Organizations, and Department of Import and Export Control.
The initial AML/CFT Task Force established in 2023 to monitor and follow-up the implementation of the Institution wise action plans has been reconstituted now with high-level ministerial representation under President Anura Kumara Disanayake, the Central Bank said.
Sri Lanka’s third evaluation on AML/CFT framework, which is to assess the country’s efforts to combat money laundering and the financing of terrorism,” has already been postponed by one-year and rescheduled to commence in March 2026 due to the two national elections held last year.
The Central Bank has planned to further strengthen the conduct of risk-based AML/CFT examinations of banks in terms of the Financial Transactions Reporting Act (FTRA) and the recommendations of the Financial Action Task Force (FATF).
The country is obliged to fulfill a raft of measures including passing new laws to comply with preventing AML/CFT laws before the next evaluation.
When a country is placed on the Financial Action Task Force (FATF) grey list, it faces several financial, economic, and reputational challenges including reduced access to global financial markets, decline in foreign direct investment (FDI), increased compliance costs, and risks of rating downgrading.
In 2019, Sri Lanka was removed for the second time from the grey list of FATF, a global anti-money laundering body, after the Central Bank took some actions mandated by the FATF.
Sri Lanka is at risk of falling into the grey list again if it fails to take stern actions against possible money laundering and terrorism financing loopholes in the country.
The IMF has urged Sri Lanka to comply with the latest international Anti- AML/CFT Compliance Obligations in return to its $3 billion bailout package.
Sri Lanka has already fallen to the grey list twice in the past 14 year with money laundering and terrorism financing posing serious risks to the domestic and global financial system, peace, and development.
The new measures include amendments to the Companies Act on beneficial ownership requirements.
The IMF’s loan programme has emphasized the need of addressing bribery and corruption and Sri Lanka is required to fulfill a raft of obligations under the AML/CFT pillar, the central bank has said.
A failure will result in Sri Lanka being identified as a country with strategic deficiencies in its AML/CFT Framework and will be designated as a grey-listed/ blacklisted country. (Colombo/February 10/2025)
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