CBSL initiates robust reforms in anti-money laundering and counter-terrorist financing framework

• Plans to introduce amendments to three key legislations on AML/CFT this year
• Gears up for third mutual evaluation on anti-AML/CFT framework scheduled in March 2025
• AML/CFT task force to come live this month and be functional following completion of mutual evaluation in July 2026

The Central Bank announced yesterday that the Financial Intelligence Unit (FIU) is in the process of introducing amendments to three key pieces of legislation concerning money laundering and countering the financing of terrorism (AML/CFT). 

The legislation in focus includes the prevention of Money Laundering Act, No. 5 of 2006 (PMLA), Financial Transactions Reporting Act, No. 6 of 2006 (FTRA), and Convention on the Suppression of Terrorist Financing Act, No. 25 of 2005 (CSTFA). 

“These amendments aim to strengthen the legal framework, aligning it with international standards. The amendments are anticipated to be enacted in 2024,” Central Bank Governor Dr. Nandalal Weerasinghe said outlining the ‘Annual Policy Statement’ yesterday.

As part of these changes, the AML/CFT National Coordinating Committee will also be formalised within the statutory provisions through an amendment to the FTRA.

“Responding to a request from the FIU, the Sri Lanka Police has established a specialised unit dedicated to investigating diverse scams, prohibited pyramid schemes and unauthorised deposit-taking activities. The FIU remains vigilant in identifying various unlawful activities and alerting relevant authorities,” he added. Sri Lanka is gearing up for its third mutual evaluation on the anti-AML/CFT framework, scheduled to commence in March 2025. Coordinated by the Asia Pacific Group on Money Laundering (APG), this evaluation aims to assess the country’s measures against money laundering and terrorist financing. Sri Lanka’s compliance with the 40 Recommendations of the Financial Action Task Force (FATF) and the effectiveness of its AML/CFT framework under the FATF 11 immediate outcomes will be scrutinised.

Following the recent conclusion of the 2021/22 National Risk Assessment on Money Laundering and Terrorist Financing, gaps and deficiencies in Sri Lanka’s AML/CFT framework have been identified. The Cabinet of Ministers have approved institution-wise action plans to rectify these gaps and these plans are communicated to respective stakeholders for effective implementation. 

An AML/CFT task force will be established this month, with the Financial Intelligence Unit (FIU) serving as the Secretariat of this task force. 

In addition, steps will be taken to establish an inter-regulatory body under the AML/CFT National Coordinating Committee to enhance collaboration and information sharing among various regulatory authorities, focusing on AML/CFT efforts.

Meanwhile, the FIU aims to initiate strategic analysis through the ‘goAML’ online reporting and analysing system, with efforts to enhance the coverage of reporting institutions. To further strengthen the compliance of reporting entities with the legal and regulatory framework relating to AML/CFT, on-site examinations/off-site reviews of financial institutions and designated non-finance businesses and professions (DNFBPs) are to be conducted with a risk-based approach.