Sri Lanka

New Documents

The Asia/Pacific Group on Money Laundering published a fifth follow-up report on Sri Lanka’s anti-money laundering and counterterrorist financing regime, highlighting that the country’s efforts have resulted in re-rating Sri Lanka on its compliance.

The Central Bank of Sri Lanka published new guidelines for non face-to-face customer identification and verification, and the use of electronic interface as provided by the Department for Registration of Persons.

Enforcement Actions

The Financial Intelligence Unit of the Central Bank of Sri Lanka penalized the Colombo, Sri Lanka-based financial institution for the breach of the Financial Transaction Reporting Act, No. 06 of 2006.

The Financial Intelligence Unit of the Central Bank of Sri Lanka issued a financial penalty against the Colombo, Sri Lanka-based financial institution for its violation of the Financial Transaction Reporting Act in relation to anti-money laundering and counterterrorist financing compliance.


Important Facts

  • The U.S. State Department labels Sri Lanka as a monitored jurisdiction. Sri Lanka is not a preferred center for money laundering. However, the lack of transparent tender mechanisms in government projects, past experience with terrorism, tax evasion and a large informal economy make the country vulnerable to money laundering and terrorist financing. Corruption and drug-related proceeds present the highest money laundering risks and local authorities report that drug trafficking, primarily of heroin, is becoming an increasing problem. Yet, terrorism financing activity has diminished significantly since the end of Sri Lanka's civil war in 2009. Legal remittance flows through the formal banking system have increased considerably in recent years, reaching $7 billion in 2014. Remittances originated primarily from Sri Lanka's substantial overseas workforce. According to local authorities, these funds are processed largely through the banking system and do not pose serious money laundering concerns.
  • KYC Covered Entities: Banks, registered finance companies, insurance companies, securities companies and brokers, money changers, casinos, real estate agents, dealers in precious metals and stones, lawyers, and trust or company service providers
  • STR Covered Entities: Banks, registered finance companies, insurance companies, securities companies and brokers, money changers, casinos, real estate agents, dealers in precious metals and stones, lawyers, accountants, and trust or company service providers
  • Enhanced Due Diligence Procedures for PEPs: Foreign: Yes; Domestic: Yes
  • Money Laundering Criminal Prosecutions/Convictions: Prosecutions: 7 (2014); Convictions: N/A
Source: 2016 International Narcotics Control Strategy Report (INCSR)

Rankings

FATF i | 2013 Methodology

Technical Effectiveness
Compliant : 7 High : 0
Largely Compliant : 24 Substantial : 1
Partially Compliant : 7 Moderate : 1
Non-Compliant : 2 Low : 9

No longer a "graylisted" country as of Oct. 18, 2019. Sri Lanka's technical compliance was most recently re-rated in a Oct. 1, 2019 follow-up report

BASEL i

Rank : 23/141
Score : 6.52/10

TRANSPARENCY INTERNATIONAL i

Rank : 93/180
Score : 38/100

Tax Justice Network i

Rank : 39/133
Score : 72/100