CB action plan to fulfil global anti-money laundering requirements
Sri Lanka will be implementing an action plan to receive the “green light” by October this year from a global anti-money laundering body, from the “amber light” signalled to Sri Lanka, Central Bank (CB) Governor Dr. Indrajit Coomaraswamy said.
CB Governor
Answering a question raised by a Business Times journalist at the CB’s monetary policy review media conference, he ruled out any involvement or aiding and abetting of local finance companies in money laundering activities.
But he noted that the Financial Action Task Force (FATF) which is the global standard anti-money laundering body has placed Sri Lanka under monitoring status, or a grey list last year alleging that there were some shortcomings.
The CB has worked with the regional body, Asia Pacific Group (APG) to devise an action plan to get out of this grey list, he disclosed.
Dr. Coomaraswamy noted that the Prime Minister and the Cabinet of ministers had been informed of the urgent need of enacting legislation and initiating action to fulfill the necessary requirements.
“In a grey list (monitoring status), you are put on notice. At present we have not seen any direct impact but then if you slip down to the blacklist, it has dramatic repercussions,” he claimed.
Sri Lanka is working on a time-bound action plan and is introducing laws and supervision of non-bank firms like casinos and the gem industries, Deputy Governor C.P.J. Siriwardene revealed at the media conference.
The country has been given time till March 2019 to fulfil the necessary requirements, he added.
The FATF 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, he disclosed.
Sri Lanka was subjected to its first Mutual Evaluation (ME) by APG in 2006 and the second ME during 2014/15.
The second 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.
Based on the progress made, APG upgraded further nine recommendations, initially rated as partially compliant to largely compliant level, bringing the total number of compliant/largely compliant recommendations to 21, Mr. Siriwardena said.
In a media release, the CB said that in October 2016, the FATF said 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 four 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”.