The Batticaloa campus (Pvt) Ltd authorities may have escaped because of loopholes in the existing legal provisions, Central Bank officials today told the Parliamentary Select Committee (PSC) inquiring into the Easter Sunday attacks.
This was said by the Central Bank officials including Governor Indrajit Coomaraswamy, Director of Financial Intelligence Unit, D M Rupasinghe and Director of Department of Supervision of Non-Bank Financial Institutions, R.R. Jayaratne, who testified before the PSC.
They had been summoned by the PSC to testify with regard to the financial transactions of the Batticaloa Campus (Pvt) Ltd and any financial transactions related to any group or any person connected to the Easter Sunday attacks.
The CB officials said it was not possible to carry out an investigation on money transfers of the Batticaloa campus under the Amended Exchange Rate Act as it did not even define an offense.
PSC member Ravi Karunanayake said the legislation was prepared by the Central Bank itself. However Governor Coomaraswamy said they were kept out when the legislation were drafted. However it was revealed that Central Bank had recommended some amendments to the Exchange rate Act.
The CB officials said the Bank of Ceylon had failed to report the transactions of Batticaloa Campus to the Financial Investigation Unit as laid down in the Bill.
Dr Coomaraswamy explaining the role of the Financial Intelligence Unit (FIU) said the FIU is independent and its independence is preserved. The FIU functions as an independent institution within the CBSL in terms of the order made by the President under the provisions of the Financial Transactions Reporting Act No.6 of 2006 under the Ministry of Finance and Planning. The overall objective of the FIU is to combat money laundering, terrorist financing and related crimes in Sri Lanka in line with international standards and best practices. The FIU has been recognized as a department within the Central Bank but it operates as a separate entity. The Central Bank extends only the administrative support to the FIU. The FIU implements an action plan jointly agreed by the Central Bank and the Finance Ministry.
The CB Governor said Sri Lanka had been put into a gray list by an international Task Force on Financial Action and this task force covers investigations into money laundering and terrorism funding.
“We were asked to enact legislation and action was taken in this regard. A team from the task force was to visit Sri Lanka in May but travel advisories imposed on Sri Lanka after Easter Sunday attacks prevented them from doing so and Sri Lanka from getting out of the gray list in June. Now we will have to wait till November to get out of it,” he said.
It was also revealed that the accounts of the Easter Sunday bombers were identified and frozen. (Yohan Perera and Ajith Siriwadana)