Sri Lanka

New Documents

The Central Bank of Sri Lanka issued a circular urging regulated entities to be vigilant concerning new money laundering and terrorist financing risks emerging during the COVID-19 Pandemic, including increased hacking and other cyber incidents.

The Central Bank of Sri Lanka issued a guidance addressed to chief executive officers and managing officials of all financial institutions and designated non-finance businesses advising on newly adopted customer due diligence rules concerning the identification of politically exposed persons.

Enforcement Actions

The Central Bank of Sri Lanka outlined that it imposed Rs6 million in fines against five financial institutions between July 2019 and May 2020 for failing to comply with anti-money laundering and counterterrorist financing requirements.


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 : 25/146
Score : 7.15/10

TRANSPARENCY INTERNATIONAL i

Rank : 93/180
Score : 38/100

Tax Justice Network i

Rank : 39/133
Score : 72/100