Central Bank gets tough on money laundering and remittances through illegal channels

By Raj Moorthy

The Central Bank last week vowed tough measures to deal with money laundering schemes and foreign remittances sent through illegal channels which is jeopardising the country’s annual remittances figure of US$7 billion.

Central Bank Governor Ajith Nivard Cabraal told a media briefing that the banking regulator will immediately prosecute money launderers and those persons sending money through unlawful channels, while emphasising that the bank is providing an incentive of Rs. 10 per each dollar remitted through legal channels.

The Central Bank has monitored some illegal transactions over the past few weeks and will conduct suspicious transactions reports and take immediate action, he added.

While Sri Lanka’s foreign remittance earnings amount to US$ 7 billion annually, he said they have seen a drastic drop in the last two years in remittances due to the pandemic and money coming through illegal channels.

Last month alone, the Central Bank saw a drop of US$ 300 million in foreign remittances, he said. In September 2021, remittances fell to $353 million from $703 million in the same 2020 month while remittances for the nine months to September 2021 recorded a drop of nearly $500 million to $4,577 million from $5,049 million in the 2020 period, according to Central Bank data. Foreign remittances is the highest foreign exchange earning sector.

“A dollar which stands at Rs. 203 today is sold at Rs. 240 or even higher through illegal channels. We don’t want to depreciate the rupee value any further. We want to crack down on these illegal channels and restore what the country has lost from foreign remittances,” noted Mr. Cabraal.

He encouraged people to use lawful channels to send money and noted that migrant remittances through legal channels are entitled to benefits like pensions and insurance schemes in addition to the Rs.10 per dollar incentive.

Mr. Cabraal said that these benefits boost people going abroad. “Around 230,000 people used to go abroad every year and it dropped in the last two years. More than 96,000 workers have left Sri Lanka so far and 20,000 people left last month for foreign employment,” he added.

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