Sri Lanka has taken a significant step toward improving its Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) framework by restructuring its High-Level Task Force. This move comes as the country prepares for its third Mutual Evaluation by the Asia Pacific Group on Money Laundering (APG), a process that will assess compliance with the Financial Action Task Force’s (FATF) 40 Recommendations.
This Mutual Evaluation is a critical assessment that will determine the effectiveness of Sri Lanka’s measures to combat financial crimes, including money laundering and terrorist financing. The evaluation process requires the country to demonstrate both technical compliance with FATF’s 40 Recommendations and the practical effectiveness of implementation through 11 Immediate Outcomes.
To ensure full compliance, the Sri Lankan government has approved and communicated an Action Plan to key stakeholder institutions. These entities play an essential role in rectifying gaps within the country’s AML/CFT framework and strengthening financial security.
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Key Institutions Involved in the AML/CFT Compliance Efforts
Sri Lanka’s financial crime compliance efforts require a multi-agency approach. The following institutions have been identified as critical stakeholders in the implementation of the government’s Action Plan:
- Attorney General’s Department
- Sri Lanka Police
- Sri Lanka Customs
- Commission to Investigate Allegations of Bribery or Corruption
- Ministry of Justice
- Ministry of Defence
- Ministry of Foreign Affairs
- Ministry of Finance
- Department of the Registrar of Companies
- Inland Revenue Department
- Department of Excise
- Legal Draftsman’s Department
- Registrar General’s Department
- Securities and Exchange Commission of Sri Lanka
- Insurance Regulatory Commission of Sri Lanka
- Construction Industry Development Authority
- National Gem and Jewellery Authority
- National Secretariat for Non-Governmental Organizations
- Department of Import and Export Control
The involvement of these institutions reflects a comprehensive approach to strengthening Sri Lanka’s AML/CFT defenses and improving regulatory compliance ahead of the APG evaluation.
Reconstitution of the High-Level AML/CFT Task Force
Originally established in 2023, Sri Lanka’s AML/CFT Task Force was created with the concurrence of the Cabinet of Ministers to oversee the implementation of the country’s AML/CFT framework. Now, the Task Force has been reconstituted with high-level ministerial representation under the directive of the President. This restructuring aims to enhance government support and ensure coordinated efforts in fighting financial crime.
The newly formed Task Force includes:
- Hon. Justice Buwaneka Aluwihare, PC – Retired Judge of the Supreme Court (Chairman)
- Hon. Harshana Nanayakkara – Minister of Justice
- Hon. (Prof.) Anil Jayantha Fernando – Minister of Labour and Deputy Minister of Economic Development
- Hon. (Dr.) Harshana Suriyapperuma – Deputy Minister of Finance and Planning
- Mrs. Nelumani Daulagala – Senior Deputy Governor, Central Bank of Sri Lanka
- Mr. A. K. D. D. D. Arandara – Additional Director General, Ministry of Finance, Planning, and Economic Development
At its inaugural meeting on January 29, 2025, the Task Force emphasized the strategic importance of the Mutual Evaluation and urged all stakeholder institutions to provide full cooperation and coordinated assistance. This united effort is vital for Sri Lanka to navigate the assessment successfully and avoid potential reputational and economic risks.
The Importance of Mutual Evaluation for Sri Lanka’s Financial Stability
The Mutual Evaluation process is not just a regulatory formality; it carries substantial economic and financial implications. Countries that fail to meet FATF standards may face enhanced monitoring or even be placed on the FATF grey list, a designation that signals deficiencies in AML/CFT measures. Such an outcome could lead to increased scrutiny from international financial institutions, reduced investor confidence, and difficulties in cross-border transactions.
Sri Lanka has previously been on the FATF grey list, which resulted in heightened monitoring and economic consequences. The government’s latest efforts demonstrate a strong commitment to avoiding a repeat scenario by strengthening regulatory frameworks and institutional cooperation.
Conclusion: A United Front Against Financial Crime
With the reconstituted High-Level AML/CFT Task Force and a clear Action Plan in place, Sri Lanka is making a concerted effort to ensure compliance with global AML/CFT standards. As the Mutual Evaluation process approaches, the country must continue to work collaboratively to address remaining gaps and enhance its financial crime prevention measures.
A successful evaluation will not only bolster Sri Lanka’s reputation in global financial circles but also contribute to a more secure and transparent financial ecosystem. The full cooperation of all stakeholders will be essential in demonstrating the effectiveness of Sri Lanka’s AML/CFT framework and reinforcing its commitment to combating money laundering and terrorist financing.
Related Links
- Financial Action Task Force (FATF) Official Site
- Asia Pacific Group on Money Laundering (APG)
- Sri Lanka’s Financial Intelligence Unit (FIU)
- World Bank: Anti-Money Laundering Initiatives
- Sri Lanka Central Bank AML/CFT Guidelines
Other FinCrime Central News Stories about Sri Lanka
- Sri Lanka’s Renewed Focus on AML/CFT Measures to Avoid Financial Blacklisting
- Sri Lanka’s Central Bank’s New MOU on Money Laundering
Source: Newswire
