Financial Times

Banks keep tab on transactions to prevent money laundering
By Duruthu Edirimuni
International banks with branches here have advised account holders that they may investigate any communication and information sent or received by customers in a bid to prevent money laundering. Many in the industry complain that the Anti Money Laundering Act the Central Bank had promised has been delayed.

They said it is crucial at this time because the risk of terrorism and drug money being laundered through legal channels such as banks has become widespread in many parts of the world.

At the same time, money laundering risk for a global bank is very high. "It is an international requirement on money laundering compliance to monitor inward or outward remittances by customers and this has become mandatory for the HSBC group," Sarath Piyaratne, Deputy CEO, HSBC said.

Piyaratne said at the time of a customer remitting or receiving money, it is international practice for banks to make inquiries. "Since the HSBC group offices decided to adopt it as a policy, we in Sri Lanka followed suit," he added.

He said most countries want banks to comply with the money-laundering legislation and since Sri Lanka has not drafted a law yet, the need is all the greater. If funds are identified as black money, the bank will not credit the money to the customer and will take steps to send it back, while notifying the channels through which it came.

Kushantha Jeerasinghe, Manager, Marketing at HSBC said: "Essentially the bank is not liable for a loss incurred by a customer, but we will take steps to minimise it." He said 'minimising' the loss will depend on the type of customer (corporate or personal) and the amount involved.

Kapila Jayawardena, Country Head, CitiBank, said no actual money laundering incident has taken place so far in Sri Lanka, but nevertheless the bank has inbuilt policies to prevent such activities. "We follow the 'know your customer' (KYC) norms," he added.

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