Customs seek international help to beat tax evasion
View(s):The Customs Department, in a bid to weed out Trade Based Money Laundering (TBML), is entering into partnerships with similar counterparts in other countries to strike out this menace.
TBML is the manipulation of trade transactions, such as invoicing, to disguise the true source of funds and make them appear legitimate.
A senior Customs official told the Business Times that the Customs Department had signed a Memorandum of Understanding (MoU) with India recently to exchange information, detect money launderers, and tax evasion.
TBML can take various forms, such as over-invoicing or under-invoicing goods, misclassifying goods to avoid customs duties, and using false shipping documents.
According to the official, a treaty to detect TBML was signed with Australia recently. Cabinet approval has been given to sign similar treaties with Maldives and Russia. “We are negotiating with the UK, the US with regards to information sharing and detections,” the official said. He said the department is also seeking international assistance and cooperation on gold smuggling, which has been big over the past few years.
Gem and jewellery dealers are considered Designated Non-Financial Businesses and Professions (DNFBPs) under the Financial Transactions Reporting Act, No. 6 of 2006 (FTRA). The money laundering terrorist financing (ML / TF) risk assessment conducted for the country in 2021/22 confirmed the gem and jewellery sector’s medium exposure to ML/TF risks which is a combination of medium threat level, and medium level vulnerability of the sector, Dr. Ayesh Ariyasinghe, Additional Director Financial Investigations Unit (FIU) said at a recent seminar conducted by the unit.
He also emphasised that the sector’s risk level has decreased from medium-high in 2014 to medium, primarily due to the measures implemented by the FIU since 2018 to address Anti-Money Laundering / Countering the Financing of Terrorism (AML/CFT) supervision for the registered gem and jewellery dealers.
He also encouraged the sector to ensure proper Customer Due Diligence (CDD) is conducted for cash transactions on or above a value of US$ 15,000. The stakeholders were informed about the importance of adequately preparing for the Mutual Evaluation of Sri Lanka, scheduled to take place in March 2025.
From the Customs Special Revenue Task Force raids, the department collected Rs. 1.1 billion within the first six months compared to Rs. 1.1 billion for the entire year in 2022.
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