Intelligence failures leading to terror attacks may be connected to Constitutional crisis: PSC

A year after crisis, PSC says President’s actions led to failure in security apparatus 

Breakdown of communication between the President and PM had direct bearing on security structures and systems in place

From left: Special PSC member MP Nalinda Jayatissa, MP M.A. Sumanthiran, City Planning, Water Supply and Higher Education Minister Rauff Hakeem and PSC Chairman Ananda Kumarasiri at the media briefing 

– Pic by Chamila Karunarathne

By Chandani Kirinde

As the country marks a year since the constitutional crisis today, the findings by the Parliament Select Committee (PSC) that probed the Easter Day attacks shows that its repercussion included security lapses that resulted in the tragedy that cost close to 300 lives and injured scores of others.

“The political fallout of the constitutional crisis and the bitter fight between the country’s leaders had contributed to the decline of the security apparatus in the country, which in turn resulted in the vital intelligence information relating to April’s terrorist attacks not getting the necessary attention,” the Committee said in its report.

In a separate section dedicated to the Constitutional Crisis in October 2018, the PSC noted that the crisis had a direct bearing on the governance and security situation in Sri Lanka and gave a timeline of the events that unfolded, starting on 26 October 2018 with the removal of Ranil Wickremesinghe from the post of Prime Minister and appointment of Mahinda Rajapaksa in his place. It ended on 16 December with the reappointment of Wickremesinghe to his post.

“The testimony received by the PSC indicates that since October 2018, the Prime Minister was deliberately kept out of meetings and not provided any information. This can be attributed to the political fissures in government but is not an excuse and is a serious failure. 

Whilst the President can be blamed for much of these failures, responsibility also lies with senior officials who should have insisted on the Prime Minister being briefed,” the Committee said.

It added that breakdown of communication between the President and the Prime Minister had a direct bearing on the security structures and systems in place.

The last meeting of the National Security Council (NSC) attended by the Prime Minister and State Minister for Defence Ruwan Wijewardena was on 7 October 2018. The constitutional crisis commenced on 26 October 2018 and both were subsequently not invited to NSC meetings, the Committee said.

It added that President Maithripala Sirisena gazetted the Police under the Minister for Defence in 2018, a direct result of the constitutional crisis during October-December of that year and noted that this is a direct breach of the 19th Amendment to the Constitution and has wide constitutional implications.

Loopholes in financial system let Easter Sunday terror outfit’s transactions go undetected: PSC

• Participants in financial system failed to trace and report suspicious transactions promptly
• Regulators did not fulfil their regulatory responsibilities
• Proposes setting up New Commercial Intelligence Unit (CIU) to keep ‘watchful eye’ on suspicious transfers
• Says transactions happening through digital media must be monitored as well

The Parliamentary Select Committee (PSC) that probed the Easter Sunday terror attacks has recommended the establishment of an enhanced financial supervisory mechanism for the country after it found that lack of proper checks and balances in the financial system helped organisations to carry out transactions “unnoticed or undetected”, thereby facilitating terrorist activities in Sri Lanka.The Committee which questioned top officials from the Central Bank (CBSL) and its Financial Investigations Unit (FIU) found that participants in the financial system had failed to trace and report suspicious transaction promptly and regulators have not fulfilled their regulatory responsibilities.

The Committee said that a system is needed where suspicious transactions can be detected through an early warning stage which not only acts promptly to detect and report similar financial transactions but also establishes close coordination between the financial system and law enforcement agencies, largely through an enhanced and integrated ICT platform.

“As Sri Lanka has been identified as an end destination for terrorist financing for a long time, the vulnerable points or escape routes must be permanently closed. 

Loopholes...

The terrorist financiering is ever-evolving, and the monitoring system designed to trace such activities should be upgraded periodically to tackle the innovation and tactics used by the terrorists to circumvent detection through existing controls in the Sri Lankan Financial Markets,” the report submitted to Parliament on 23 October said. 

The regulatory system in the financial market should ensure that no one (individuals, companies or unincorporated entities), will be able to use the financial system to make payments for any actions encouraging or directly related to terrorist activities as provided by law, it said.

The Committee said the objective of the control system is not to over-regulate but to ensure that no financial transactions are allowed to take place in the financial system that lead to terrorist activities as provided by law.

It said that banks should monitor excessive online transactions and liaise with the law enforcement authorities on a regular basis by special checks into credit card accounts/payments done through inward remittances directly, etc. “Regulation is required to monitor and regulate transaction happening through digital media as well, such as PayPal, Bitcoin or eZ Cash. This would need to be done in accordance with the law.” 

The Committee also said that CBSL and commercial banks need to play a more prescribed role rather than a passive monitoring role and engage on a real-time basis to verify that the financial system participants are discharging their duties as per the stipulated regulation.

The Committee proposed the establishment of a New Commercial Intelligence Unit (CIU) to continue to facilitate and enhance foreign currency receipts to Sri Lanka whilst maintaining a ‘watchful eye’ on suspicious transfers.

An integrated accounting system together with the newly proposed integrated ICT platform should be implemented immediately among the financial system participants so as to facilitate proper communication between the reporting systems of commercial banks, Central Bank, Department of Inland Revenue, and other highlighted stakeholders of the New Commercial Intelligence Unit (CIU), it said.