Central Bank of Sri Lanka in an announcement states the Financial Action Task Force (FATF), the global policy setter, has introduced 40 recommendations on Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) in order to combat money laundering/ terrorist financing and other related offences globally.
The Asia Pacific Group on Money Laundering (APG) functions as the FATF’s regional affiliated body and monitors the level of compliance with the FATF recommendations in the region. Sri Lanka is also a founding member of the APG.
We reproduce here the announcement released by the Central Bank:
“Sri Lanka listing in the Financial Action Task Force and measures initiated by
Sri Lanka to improve Global AML/CFT Standards
The Financial Action Task Force (FATF), the global policy setter has introduced 40
recommendations on Anti-Money Laundering and Countering the Financing of Terrorism
(AML/CFT) in order to combat money laundering/ terrorist financing and other related
offences globally. The Asia Pacific Group on Money Laundering (APG) functions as the
FATF’s regional affiliated body and monitors the level of compliance with the FATF
recommendations in the region. Sri Lanka is a founding member of the APG.
The FATF evaluates legal, institutional framework and effective implementation of
AML/CFT measures of countries regularly through regional monitoring bodies. Sri Lanka
was subjected to its 1st Mutual Evaluation (ME) by APG in 2006 and the 2nd ME during
2014/15. The 2nd Mutual Evaluation Report (MER) on Sri Lanka which was adopted in
July, 2015, recommended Sri Lanka to initiate a number of actions to rectify the AML/CFT
deficiencies identified during the ME.
Subsequently, Sri Lanka implemented a series of measures to address the deficiencies
including adoption of National AML/CFT Policy, issuance of Customer Due Diligence
Rules for Financial institutions and introduction of risk-based AML/CFT Supervision for
financial institutions. At the same time institution-wise action plan to rectify the
deficiencies highlighted in the ME was adopted with the approval of the Cabinet of
Ministers. Based on the progress made, APG upgraded further 9 Recommendations,
initially rated as partially compliant to largely compliant level, bringing the total number
of compliant/largely compliant Recommendations to 21.
Financial Intelligence Unit
15 February 2018
In October 2016, the FATF informed that Sri Lanka will be subject to a review of the
International Cooperation Review Group (ICRG) of the FATF to assess the progress of
AML/CFT effectiveness. After several discussions and progress reports, the FATF
informed that Sri Lanka has not made sufficient progress in 4 areas, namely International
Cooperation, Supervision, Legal Persons and Arrangements and Targeted Financial
Sanctions on Proliferations (North Korea & Iran). As a result, the FATF at its Plenary held
at Buenos Aires, Argentina in October 2017, listed Sri Lanka as a jurisdiction with strategic
AML/CFT deficiencies in the FATF’s Compliance Document which is more commonly
identified as “the Grey List”. Upon listing, a time bound action plan to address the
strategic deficiencies identified was provided to Sri Lanka.
Since the listing in November 2017, Sri Lankan authorities have taken a number of
measures to enhance AML/CFT compliance such as the issue of Customer Due Diligence
Rule No 1 of 2018 for Designated Non-Finance Businesses and Professions (DNFBPs),
issuance of a regulation for North Korea on targeted financial sanctions on proliferation.
Further, several initiatives are being taken by Sri Lanka including, introducing
amendments to the Trust ordinance & Mutual Assistance in Criminal Matters Act No 25
of 2002 by the Ministry of Justice, introducing amendments to the Companies Act No 7 of
2007 by the Registrar of Companies, issuance and implementation of regulation on
proliferation targeted financial sanctions on Iran by Ministry of Foreign Affairs,
implementation of the regulation issued on North Korea by the Competent Authority
(Ministry of Defence) and the introduction of risked-based AML/CFT supervision for
Designated Non-Finance Businesses and Professions by the Financial Intelligence Unit. In
addition, measures have been taken to strengthen AML/CFT supervision of the Financial
Intelligence Unit by allocating more competent staff to the existing team of supervisors.
Considering the scope of the action plan set out by FATF, a sound framework is now in
place by the National Coordinating Committee the AML/CFT Policy setting body of the
FIU to bring the commitment and coordination of all the stakeholders in the country to
enhance the AML/CFT Standards. Thus, there is no doubt on the successful completion of
the action plan within the given time frame for Sri Lanka improve its compliance and
improve the country rating.