Cabinet extends controls on forex outflow by 6 months

Friday, 26 June 2020 00:55 - - {{hitsCtrl.values.hits}}

Decides to amend Gazette allowing Special Deposit Accounts to fall in line with forex laws after concerns raised on money laundering
SL was only delisted from FATF “grey list” in Oct. 2019

Cabinet has approved extending limits on outflow of foreign exchange for another six months and has also backed amending the Gazette to set up Special Deposit Accounts so that it falls in line with the Foreign Exchange Act No. 12 of 2017 and minimises dangers of money laundering.

The Cabinet approved a proposal presented by Prime Minister Mahinda Rajapaksa as the Finance Minister to extend the period of the Gazette Notification issued in early April to limit remittances out of Sri Lanka. The decision at the time was made to protect reserves and limit currency pressure caused by COVID-19. The earlier Gazette was to become void from 2 July. In the same month the Government set up Special Deposit Accounts at preferential interest rates to attract foreign exchange that were exempt from laws to prevent money laundering and terrorism activities. However, due to the discrepancy this caused the Gazette will now be amended to fall in line with the Foreign Exchange Act No. 12 of 2017.

The Gazette, released by the Finance, Eco-nomic and Policy Development Ministry under Prime Minister Mahinda Raja-paksa in April, exempted Special Deposit Accounts from following any procedural requirements specified in the Foreign Exchange (Classes of Capital Transactions in Foreign Exchange Carried on by Authorised Dealers) Regulations No. 1 of 2017 published in the Gazette Extraordinary Notification No. 2045/56 dated 17 November 2017.

However, the Financial Action Task Force (FATF), the global policy setter on Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT), only delisted Sri Lanka from its Compliance Document, which is more commonly identified as the “Grey List” in October 2019.