Government steps up anti-money laundering efforts

The Sri Lanka government has stepped up anti-money laundering efforts to prevent bank frauds, investment scams and other such suspicious financial transactions and also to crack down on terrorist financing, official sources disclosed.

The Financial Intelligence Unit (FIU) of the Central Bank has directed the country’s Designated Non- Finance Businesses (DNFBs) to report any suspicious financial transactions to the unit.

Casinos, real estate agents, dealers in precious metals, and precious stones, lawyers, notaries, accountants, auditors and company secretaries are among the host of non-finance businesses required to report any suspicious transactions, the FIU said.

Publishing an important notice in newspapers recently, the Director of the FIU informed the DNFBs of their obligation to report any transaction where there is reasonable ground to suspect that the transaction may be related to commission of any unlawful activity or criminal offence.

This notice has been issued under the Designated Non- Finance Business (Customer Due Diligence) Rules, No. 1 of 2018 and Extraordinary Gazette Notification, No. 2015/56 dated April 21, 2017 on ‘ Suspicious Transactions (Format) Regulations of 2017’, in terms of the Financial Transactions Reporting Act, No. 6 of 2006 (FTRA).

DNFBs have been made mandatory to implement proper policies and procedures; under the FTRA in order to prevent the use of such businesses and professions as an avenue to carry out illegal financial activities, a senior Central Bank official said.

According to the newspaper notice, the DNFBs should appoint a compliance officer at the senior management level who will be responsible for ensuring the entity meets the anti- money laundering/countering financing of terrorism (AML/CFT) requirements in terms of the FTRA and other related rules.

The identification and verification of customer identity should be carried out using a ‘reliable source’, at the point of entering into a business relationship, the CB notice revealed.

When the DNFB has reasonable grounds to suspect that any transaction may be related to the commission of any unlawful activity under the FTRA, it must submit a suspicious transaction report ( STR) to the FIU, allowing it to carry out further investigations.

Further, records of transactions, correspondence relating to transactions and all reports furnished to the FIU should be retained for a period of six years from the date of transaction, correspondence and furnishing of the report.

Records of identity obtained should also be retained for six years from the date of closure of the business relationship. Where any record is subject to an on- going investigation, such records should be retained until such time the institution is informed by the relevant authority.