Working on to get rid of money laundering destination label: Central Bank

16 February 2018 10:03 am - 0     - {{hitsCtrl.values.hits}}

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  • Says hoping to get off FATF grey list for money laundering and terrorist financing this October
  • Action plan with time frame in place and requests Cabinet support for implementation
  • Says FATF action resulted in European Union placing Sri Lanka on a money laundering blacklist


Sri Lanka is hoping to get off the Financial Action Task Force’s (FATF) grey list for money laundering and terrorist financing this October, and the Central Bank has requested the cabinet for all its support in implementing the required changes under an action plan and a new 
time frame.


“There is an agreed plan which we are implementing, and our expectation is that by about October we would get off the grey list,” Central Bank Governor Dr. Indrajit Coomaraswamy said yesterday.


He said that Sri Lanka was placed in the FATF grey list due to the complexities of coordinating the required changes among various implementing ministries and departments, such as the Justice Ministry, the Foreign Affairs Ministry, the Legal Draftsman, the Attorney General and the Registrar of Companies.


“So several agencies have to work together to deliver, but we can’t get away from the fact that we should have done better,” he said.
Central Bank Deputy Governor C. J. P. Siriwardena said that the Central Bank has briefed the Prime Minister and the Cabinet on the new situation, and requested their fullest cooperation.


On being asked whether this means that the Cabinet in the past had not been supportive of the required amendments, Dr. Coomaraswamy said “that is putting it too strongly.”


The FATF has outlined 40 recommendations and 11 immediate outcomes, and since Sri Lanka was unable to fulfil these from 2015 until November 2017, the country was placed on a grey list, which consequently saw the European Union placing Sri Lanka on a money 
laundering blacklist.


Dr. Coomaraswamy said that at the FATF meeting in Argentina, when FATF had decided to place Sri Lanka on the grey list, many member countries and the Asia/Pacific Group on Money Laundering (APG) had shown support in favour of giving Sri Lanka more time before being placed on the list, but two heavyweights had weighed against this.


“They wanted to give us more time, and a number of regional countries and other countries did support us, but one or two major countries felt that there are sensitive things like certain sanctions, where if you’re not up to speed on it, you should get penalized for it,” he said.

Siriwardena said that one of the reasons for the grey listing is Sri Lanka’s arrangements with regard to UN sanctions against Iran and North Korea.
He added that other main reasons included requirements to change the Trust Ordinance and the arrangements for legal persons within Sri Lanka, strengthening the supervision of non-banking financial institutions, casinos, gem and jewellery trade and other real sector operations.
“So we have to bring some regulations, supervision and monetary processes to these industries to minimize these money laundering operations through these sectors,” he said.


Although Sri Lanka is attempting to get out of the grey list by October 2018, the action plan and the new time frame introduced by FATF allows Sri Lanka until March 2019 to fulfil the recommendations, with quarterly reviews by the APG’s working committee.


 Dr. Coomaraswamy said that being placed on the FATF grey list has not affected Sri Lanka so far.


“The grey list, you‘re basically put on notice, so at present we have not seen any direct impact, but if you then slip down to the black list, there’s repercussions. Our banks could lose their correspondent relationships, and generally people would be more reluctant to deal with our financial sector,” he said.


He added that based on the latest meeting with APG, it had sent a report to FATF, which is happy with Sri Lanka’s progress so far.


(CW)

 

 

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