CB slaps Rs. 1.7 m fine on four financial institutions for AML/CFT non-compliance

The Central Bank of Sri Lanka (CBSL) said yesterday it has slapped a Rs. 1.7 million combined fine on four financial institutions for non-compliance of the provisions of the Financial Transactions Reporting Act.

Regulator for Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT), the Financial Intelligence Unit (FIU) collected penalties from Merchant Bank of Sri Lanka and Finance PLC, Vallible Finance PLC, LB Finance PLC and People’s Leasing and Finance PLC amounting to Rs. 1.7 million in total from 1 April to 26 September to enforce compliance on Financial Institutions. The money collected as penalties were credited to the Consolidated Fund.

By virtue of the powers vested under Section 19 (1) read together with section 19 (2) of the Financial Transactions Reporting Act, No. 6 of 2006 (FTRA), financial penalties are imposed on Institutions for non-compliance with the provisions of the FTRA. The penalty may be prescribed taking into consideration the nature and gravity of relevant non-compliance of the Financial Institution.

The administrative penalties were imposed for failure to adhere to FTRA in relation to reporting of financial transactions.

The CBSL in a statement listed the following actions;

1. Merchant Bank of Sri Lanka & Finance PLC

Date of Imposition: 12 July 2023

Amount: Rs. 300,000

Date of Payment: 10 August 2023

Reason for the imposition of the penalty: The company had failed to comply with Section 6 of FTRA by not reporting pawning auction transactions exceeding Rupees One Million (Rs. 1,000,000.00).

2. Vallibel Finance PLC

Date of Imposition: 12 July 2023

Amount: Rs. 200,000

Date of Payment: 14 August 2023

Reason for the imposition of the penalty: The company had failed to adhere to Section 6 of the FTRA by not reporting transactions relating to the granting of gold loan facilities exceeding one million rupees (Rs. 1,000,000.00).

3. LB Finance PLC

Date of Imposition: 9 August 2023

Amount: Rs. 700,000

Date of Payment: 12 September 2023

Reason for the imposition of the penalty: The company had failed to comply with Section 6 of FTRA by not reporting pawning auction transactions exceeding Rupees One Million (Rs. 1,000,000.00) conducted as bulk transactions [consisting of the sum of many individual transactions] or as single transactions.

4. People’s Leasing and Finance PLC

Date of Imposition: 18 August 2023

Amount: Rs. 500,000

Date of Payment: 14 September 2023

Reason for the imposition of the penalty: The company had failed to comply with Section 6 of FTRA by not reporting electronic fund transfer relating to opening of a fixed deposit exceeding Rupees One Million (Rs. 1,000,000.00).