CB decides to name and shame non-compliers...
Says such would improve AML/CFT compliance level in country
SL was removed from FATF
‘Grey List’ in October 2019
The Monetary Board of the Central Bank (CB) has decided to publish the names and the penalties imposed on those who noncomply with the provisions of the Financial Transactions Reporting Act, No.06 of 2006 (FTRA), on the basis that such action would improve the anti-money laundering/combating the financing of terrorism (AML/ CFT) compliance level in the country.
While the Financial Intelligence Unit (FIU), the anti-money laundering watchdog of the Central Bank, has been vetting the transactions coming under and imposing penalties based on the level of non-compliance under the FTRA, this is the first time the Monetary Board is going public with the names of the violators and the penalties imposed on them.
Sri Lanka has been ratcheting up its screening process of transactions taking place, mainly international ones, via the banking system, to identify and prevent the country and its financial system being used as a conduit for global money laundering and terrorist financing activities.
Sri Lanka’s standing in the global financial markets as a safe destination for investments, devoid of illegal money activities, could enhance investor confidence, for both short and long-term investments.
Accordingly, the FIU had imposed a total sum of Rs.5.0 million during 2019 and Rs.1.0 million in 2020, up to May 31, on five financial institutions as penalties.
In 2019, the FIU had fined Bank of Ceylon with Rs.3 million and Nations Trust Bank with Rs.1.0 million while the licensed finance company, Commercial Credit & Finance PLC, has been fined with Rs.1 million.
In 2020, up to May 31, Sarvodaya Development Finance Limited and UB Finance Company Limited were fined with Rs.500,000 each.
“Penalties were imposed mainly on the violations of Financial Institutions (Customer Due Diligence) Rules, No. 1 of 2016 in relation to third party deposits, obtaining approval for Politically Exposed Persons (PEPS), sanctions screening and financial transaction reporting under Section 6 of the FTRA,” a Central Bank statement said.
“The penalties may be prescribed taking into consideration the nature and gravity of relevant non-compliance of the Financial Institution or the Designated Nonfinance Business (DNFBS).
By virtue of the powers vested under Section 19 (1) read together with Section 19 (2) of the Financial Transactions Reporting Act, No. 06 of 2006 (FTRA), financial penalties can be imposed on institutions for noncompliance with the provision of the FTRA,” it added.
Sri Lanka was removed from the ‘Grey List’ of the international terror-financing watchdog Financial Action Task Force (FATF) in October 2019, after being on the list for about three years, as the country made significant progress in addressing the strategic AML/CFT deficiencies identified earlier.