FATF recommends new initiatives to combat money laundering

The Financial Action Task Force (FATF), the global policy setter has introduced 40 recommendations on Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) in order to combat money laundering and terrorist financing and other related offenses globally.

The Central Bank's, Financial Intelligence Unit (FIU) highlighted the steps taken by the Central Bank to comply with these rules.

The Asia Pacific Group on Money laundering where Sri Lanka is a founding member, functions as the FATF’s regional affiliated body and monitors the level of compliance with the FATF recommendations in the region.

In a statement released to the media, the FIU explained that in October 2016, the FATF informed that Sri Lanka will be subject to a review of the International Cooperation Review Group (ICRG) of the FATF to assess the progress of AML and CFT effectiveness.

“After several discussions and progress reports, the FATF informed that Sri Lanka has not made sufficient progress in four areas, namely International Cooperation, Supervision, Legal Persons and Arrangements and Targeted Financial Sanctions on Proliferations (North Korea and Iran). As a result, the FATF at its Plenary held at Buenos Aires, Argentina in October 2017, listed Sri Lanka as a jurisdiction with strategic AML and CFT deficiencies in the FATF’s Compliance Document which is more commonly identified as “the Grey List”. Upon listing, a time bound action plan to address the strategic deficiencies identified was provided to Sri Lanka”, they said.

Since the listing in November 2017, Sri Lankan authorities have taken a number of measures to enhance AML and CFT compliance such as issue of Customer Due Diligence Rule No 1 of 2018 for Designated Non-Finance Businesses and Professions (DNFBPs), issuance of regulation for North Korea on targeted financial sanctions on proliferations.

Further, several initiatives are being taken by Sri Lanka including, introducing amendments to the Trust ordinance & Mutual Assistance in Criminal Matters Act No 25 of 2002 by the Ministry of Justice, introducing amendments to the Companies Act No 7 of 2007 by the Registrar of Companies, issuance and implementation of regulation on proliferation targeted financial sanctions on Iran by Ministry of Foreign Affairs, implementation of regulation issued on North Korea by the Competent Authority (Ministry of Defence) and introduction of risked based AML and CFT supervision for Designated Non Finance Businesses and Professions by the Financial Intelligence Unit. In addition, measures have been taken to strengthen AML and CFT supervision of the Financial Intelligence Unit by allocating more competent staff to the existing team of supervisors.

“There is no doubt on the successful completion of the action plan within the given time frame, Sri Lanka will improve its compliance and improve the country’s rating”, the FIU said.

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