Sri Lankan Regulatory Authorities Enforce AML/CFT Measures to Avoid FATF Gray and Black List

The Financial Action Task Force (FATF) started cracking down on Sri Lanka’s financial institutes by closing on to add the country to the gray list.

The Financial Intelligence Unit (FIU) is mandating Central Bank Sri Linka (CBSL) to implement rigorous regulations in the AML compliance framework aligned with FATF’s standards, overcoming the risk of getting gray or blacklisted. These frameworks not only prevent money laundering but also combat the financing of mass destruction. Rigid AML systems help to identify suspicious transactions and alert authorities, allowing them to take action against those who attempt to use the financial system for illegal purposes. It will also provide tools for financial institutions to ensure that their operations are secure and compliant with international regulations.

The director of the FIU in the CBSL, Dr. Subhani Keerthiratne, stated in the media, “Money Laundering and Terrorism Financing (ML and TF) pose serious risks to the domestic and global financial system, peace and development, and therefore, it is important for Sri Lanka to have a robust Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) framework in place. FATF calls upon all countries to effectively implement these measures in their national systems. These requirements align with the United Nations Convention and The International Convention for the Suppression of the Financing of Terrorism.”

The director gives these remarks in the workshop conducted for the journalists to spread the message, inform the local financial institutes about risk assessments, and request the general public to help the regulatory authorities clamp down on bad actors involved in illicit activities. The FATF establishes standards worldwide, intending to stop these illegal actions and their harm to society. The FIU must show that these requirements are adequately met to combat money laundering, financing of terrorism, and proliferation.

The FIU is the country’s vital body to ensure financial institutions comply with international standards for CFT/AML derivatives, and the Srilankan FIU is required to implement all 40 FATF recommendations to avoid the black and gray list. The Director added, “If we return to the gray list, Sri Lankan corporations, individuals, and financial institutions could be subject to extra scrutiny. There would be a higher cost of borrowing – Increased interest rates due to additional risk premia. Also, there is the possibility of being downgraded by global credit agencies and the decline of doing business indicators. The Sri Lankan business community would be discouraged from engaging in import/export trade in such a context.”

The FIU must consider a robust AML screening to take adequate action to detect and stop money laundering. It will also assist regulatory authorities to catch the criminals responsible for illegal activity and avoid the restrictions from the FATF. This will not only help to prevent money laundering but also help to maintain a positive reputation for the country and its economy. Furthermore, it will help protect the country’s integrity, security, and stability.

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