Business

CBSL’s Financial Intelligence Unit battling to keep Sri Lanka away from ‘black and grey’ lists

Published

2 years ago

2023/10/16

By Sanath Nanayakkare

The Next Mutual Evaluation of the Financial Action Task Force (FATF), the global money laundering and terrorist financing watchdog has begun to creep up on Sri Lanka, and the Financial Intelligence Unit (FIU) of the Central Bank of Sri Lanka (CBSL) is busy taking on the gigantic challenge of effectively implementing a compliance framework to convince the FATF that Sri Lanka qualifies to stay away from their black and grey lists.

The framework also needs to include ways to prevent Financing of Proliferation of Weapons of Mass Destruction.

Dr. Subhani Keerthiratne, Additional Director, Financial Intelligence Unit (FIU) of the Central Bank of Sri Lanka told the media recently that Money Laundering and Terrorism Financing (ML and TF) pose serious risks to the domestic and global financial system, peace and development, and therefore, it is important for Sri Lanka to have a robust Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) framework in place. FATF calls upon all countries to effectively implement these measures in their national systems. These requirements are in line with the United Nations Convention and The International Convention for the Suppression of the Financing of Terrorism,” she pointed out.

“The 3rd Mutual Evaluation of Sri Lanka in this regard is scheduled to commence in March 2025 and all stakeholders need to unite with a national spirit to demonstrate that Sri Lanka has strong measures in place to combat money laundering and terrorist financing. The FIU alone can’t achieve this. It has to be a concerted effort of all stakeholders, the media and the general public. Responsible parties need to apply enhanced due diligence to apply counter-measures to protect the international financial system from the risks that could emanate from our country,”

The Additional Director of the FIU made these remarks at a workshop conducted for journalists with the objective of creating broader awareness of money laundering and terrorist financing risks while asking the media to take the message across to the general public of the country who could effectively support the FIU and the law enforcement authorities to detect and crack down on the culprits engaging in such activities.

FATF sets international standards that aim to prevent such illegal activities and the harm they cause to society and the FIU has to demonstrate its technical compliance of International standards on combatting Money Laundering and Financing of Terrorism and Proliferation.

This means the FIU will have to set standards and promote effective implementation of legal, policy and operational measures to combat ML/TF/PF, both at national and international level.

The FIU, as the focal point of AML/CFT for the country, has the responsibility to ensure that Sri Lanka is compliant with all 40 FATF Recommendations and its AML/CFT framework produces expected results. FIU has played a key role in achieving the current acceptable technical compliance level of Sri Lanka in order to stay away from the Grey List.

The FATF does not require its members to take action on countries listed in the ‘Grey List’. Members are required to take action only against Blacklisted Countries. However, most countries treat Grey Listed countries as of ‘high risk’ and blacklist them. Subsequent to Sri Lanka’s second Grey Listing, the EU included Sri Lanka in its Blacklist. Repercussions of EU Blacklisting led to several banks in the EU region stopping their dealings with Sri Lankan customers/institutions. ‘Handelsbanken’ in Sweden stopped all payments to Sri Lanka both for individual and corporate customers. Sri Lankan exporters (IT exporters, tourism sector) faced difficulties in getting back their export proceeds. Foreign investors raised concerns about real estate sector investments .Reluctance for new correspondent banking relationships could also result in from such a situation,” she said.

She pointed out that J P Morgan visited FIU-Sri Lanka as the country was treated as of high-risk and subjected to enhanced due diligence for correspondent banking. Western Union and Danske Bank expressed the same sentiments.

“If we go back to grey list, Sri Lankan corporations, individuals, financial institutions could be subject to extra scrutiny. There would be higher cost of borrowing– Increased interest rates due to additional risk premia. Also, there is the possibility of being downgraded by global credit agencies and the decline of doing business indicators. Sri Lankan business community would be discouraged to engage in import/export trade in such a context,” she noted.

She went on to say that the IMF also concerns in this area with regard to the country’s lack of successful corruption-related money laundering investigations, prosecutions, and convictions.

“The IMF is concerned that Sri Lanka has yet to address the deficiencies relating to transparency of beneficial ownership of legal persons in its legal framework,” she said.

“The Mutual Evaluation in March 2025 will assess how effectively Sri Lanka has implemented measures to combat ML/TF. In this process, Sri Lanka is required to submit a technical compliance report with all the relevant material such as laws, regulations, manuals, procedures, circulars, SOPs as evidence of compliance,”

Once a robust FIU framework is in place, it will help the authorities to take effective action to detect and disrupt financial flows that fuel crime, terrorism and corruption and punish those responsible for illegal activity and become a jurisdiction free from constant monitoring by the FATF.

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Business

Rs. 1 million fine proposed on substandard plastic producers

Published

23 hours ago

2026/01/20

Sahan Weerasooriya

Dr. Ravindra Kariyawasam

The government’s proposal to raise fines on manufacturers of substandard plastic products to as much as Rs. 1 million is expected to trigger a major compliance shift within Sri Lanka’s plastics industry, correcting long-standing market distortions caused by weak enforcement.

Environment Deputy Minister Anton Jayakody said the move targets producers who continue to bypass approved standards, undercutting compliant manufacturers and exacerbating environmental damage.

Environment Ministry Advisor Dr. Ravindra Kariyawasam said the initiative represents a structural market correction rather than a purely environmental intervention.

“Non-compliant producers have enjoyed an artificial cost advantage for years, distorting pricing and discouraging legitimate investment,” Kariyawasam told The Island Financial Review. “Meaningful penalties are essential to restore fairness and industry discipline.”

He said the widespread circulation of low-grade plastic products has eroded consumer confidence and delayed the sector’s transition towards higher-value and sustainable manufacturing.

Industry analysts note that a Rs. 1 million fine would significantly alter risk calculations for marginal operators, forcing upgrades in machinery, testing and compliance or pushing weaker players out of the market.

Kariyawasam stressed that the policy is intended to support responsible businesses rather than suppress industry growth.

“Manufacturers investing in recycling, biodegradable alternatives and quality assurance should not be penalised by competing with environmentally damaging, low-cost products,” he said.

The Deputy Minister indicated that tighter enforcement will be paired with policy support for sustainable packaging and circular-economy initiatives, aligning the sector with emerging global trade and environmental standards.

From a business perspective, the proposed regulation is likely to impact pricing, supply chains and capital investment decisions, while improving the long-term credibility of Sri Lanka’s plastics industry in both domestic and export markets.

By Ifham Nizam

Business

First Capital to unveil Sri Lanka’s Economic Outlook and Investment Strategies for 2026

Published

23 hours ago

2026/01/20

Sahan Weerasooriya

First Capital Holdings PLC (the Group), a subsidiary of JXG (Janashakthi Group) and a pioneering force in Sri Lanka’s investment landscape, is set to host the 12th edition of its renowned ‘First Capital Investor Symposium’ on 22 January 2026 at Cinnamon Life Colombo, starting from 5.30 pm onwards.

The 12th Edition will focus on Sri Lanka’s Economic Outlook for 2026, offering attendees a comprehensive analysis of market forecasts, investment strategies and emerging opportunities in the capital markets. The symposium serves as a crucial gathering for investors seeking insights to navigate the evolving economic landscape and make sound, strategic decisions.

As a leading investment institution, First Capital remains committed to promoting informed decision-making through comprehensive research and market analysis. By hosting this annual symposium, the organisation reinforces its role as a trusted partner in Sri Lanka’s capital markets, providing a premier platform for investors, professionals, and industry leaders to exchange knowledge, explore opportunities and build meaningful connections.

A key highlight of this year’s agenda will be First Capital’s presentation on the Economic and Investment Outlook, outlining market conditions and investment strategies for the period ahead. The presentation will be delivered by Ranjan Ranatunga, Assistant Vice President – Research of First Capital Holdings PLC.

Business

Rivers, Rights, Resilience Forum 2026 begins in Colombo

Published

23 hours ago

2026/01/20

Sahan Weerasooriya

Oxfam in Asia commenced the Rivers, Rights, Resilience Forum (RRRF) 2026, a three-day regional forum bringing together water experts, policymakers, civil society, researchers, and community leaders from across South Asia and beyond to strengthen cooperation on shared river systems and climate resilience.

The Forum is part of the Transboundary Rivers of South Asia (TROSA) programme, supported by the Government of Sweden, which works on the Ganges–Brahmaputra–Meghna (GBM) river basins, while also encouraging cross-basin learning at the regional and global levels. This year’s theme is “Building Resilient Communities and Ecosystems.” The Forum is co-organised by Oxfam in Asia and Dev Pro, Sri Lanka.

The forum opened with a welcome address by John Samuel, Regional Director, Oxfam in Asia, who highlighted the deep connection between rivers, politics, climate change, and sustainability. He underlined how rivers shape both environmental and social outcomes across South Asia and called for stronger collaboration between governments and civil society.

“Today building resilience is important in terms of climate and politics, and when civic space is shrinking, we should all work in solidarity,” he said.

Speaking at the Forum, Chamindry Saparamadu, Executive Director of DevPro shared examples of how communities in Sri Lanka have taken actions to ensure equitable access to water resources through catchment protection initiatives, community-based water societies etc. She further highlighted that learning exchanges would be useful to further strengthen inter-provincial water governance in Sri Lanka.

The Chief Guest, Syeda Rizwana Hasan, Advisor, Ministry of Environment, Forest and Climate Change and Ministry of Water Resources, Bangladesh, in her video message, emphasised the need for regional cooperation among South Asian countries beyond the upstream–downstream identity.

“Climate change will make water scarce, so South Asian countries have to come together to work on the common interest of their communities. Rivers are not just ecology but economics as well for communities. Forums like this help us to share our experience and learn from each other,” she said.