ECONOMYNEXT – Sri Lanka’s Parliament, in a historic step aimed at combating systemic corruption and enhancing the rule of law, passed the Proceeds of Crime Act unanimously this week, a move that could be used to fast track unresolved and dragged past corrupt deals.
This landmark legislation enables the government to identify, seize, and recover illicit assets acquired through criminal conduct.
The Act, analysts say, marks a new chapter in Sri Lanka’s anti-corruption drive after riddled with long delays amid political concerns.
“One of the serious demands put forwarded by the people during the last decade is that there should be some law to deal with corruption and misappropriation,” Lakmali Hemachandra, a ruling National People’s Power legislator said after tabling the Bill.
“Especially this was strongly surfaced after the 2022 and people demanded the recovery of stolen assets.”
The necessity for the law has been building for years. For decades, Sri Lanka has struggled with high-profile corruption cases involving politicians, bureaucrats, and business tycoons.
Although institutions such as the Commission to Investigate Allegations of Bribery or Corruption (CIABOC) existed, their powers were limited—particularly in asset recovery.
Investigations would often stall, and even when convictions occurred, the state found itself unable to reclaim stolen public wealth.
International watchdogs like Transparency International repeatedly flagged the island nation for weak enforcement and poor asset-tracing mechanisms.
Sri Lanka’s international partners, including the International Monetary Fund (IMF) and the World Bank, also pressed for more robust financial crime laws, especially after the 2022 economic crisis.
These institutions made anti-corruption reform a prerequisite for financial assistance. A Proceeds of Crime law, aligned with global standards, was seen as essential to restoring investor confidence and ensuring aid money wasn’t siphoned off through corrupt channels.
Despite these pressures, successive governments delayed passing the legislation.
Critics argue that the political class was reluctant to create a legal mechanism that could be turned against them. Some insiders even acknowledged that earlier drafts were watered down or shelved under pressure from influential figures worried about retrospective investigations.
The new law was to be enacted last year under former President Ranil Wickremesinghe, but was dragged for a number of reasons, including political, analysts say.
The newly elected government led by Anura Kumara Dissanayake, riding on a wave of public anger over economic mismanagement and widespread corruption, had little room to maneuver.
With a fragile economy, stalled foreign investments, and ongoing IMF negotiations, the administration was compelled to act swiftly. Within months of taking office, the government reintroduced the Proceeds of Crime Bill, fast-tracking it through Cabinet and parliamentary approval.
Activists and opposition MPs have raised several red flags. Chief among their concerns is the potential for abuse. The broad powers granted to enforcement agencies, including provisions for civil forfeiture without prior conviction, sparked fears of political witch hunts.
Some legal experts warned that without independent oversight, the law could be used to target political opponents or dissenters under the guise of anti-corruption.
Ajith Perera, an opposition legislator, said the act is retrospective and it is against the country’s current constitution.
“There is a possibility of police officials sending notices on asset screening on a personal agenda or otherwise, “ Perera said.
“The notice to assess the assets should be sent after a probe by a court. But the powers are now given to police. There are a lot of differences in Sinhala and English translation of the Act. This could lead to many conflicts in the future.”
Transparency advocates have stressed the need for strict procedural safeguards, judicial oversight, and protections for whistleblowers—areas where the Act was seen as vague or underdeveloped.
The Proceeds of Crime Act is a much-needed foundation for Sri Lanka’s broader governance reform, many governance-related activists say.
If implemented with integrity and independence, it has the potential to recover billions in looted wealth, deter future corruption, and rebuild public trust in state institutions, they say. (Colombo/April 09/2025)
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