- Minister Bandula Gunawardana simply said even ‘Black Money’ was accepted under the new product
By Sandun A. Jayasekera
Transparency International Sri Lanka (TISL) yesterday raised concerns on the government’s move to attract foreign currency including ‘Black Money’ to boost the liquidity ratio of the rupee and improve Foreign Reserves.
The Executive Director of the local branch of the global whistle-blower TISL Asoka Obeysekara said the steps taken by the government to enact a “no questions asked” policy on deposits of foreign currency was worrisome.
“Whilst TISL recognises the need for policies to bolster foreign currency reserves, we strongly believe that any new policies should be consistent with Sri Lanka’s anti-money laundering framework,” Mr. Obeysekara stressed.
“At a time when there is an unprecedented lack of parliamentary and judicial oversight on government actions, coupled with limited proactive disclosure of information - corruption risks and vulnerabilities are exacerbated. It would therefore be unwise for a caretaker government to implement policies which could encourage money laundering, with potentially far reaching detrimental effect to the Sri Lankan economy,” he noted.
Sri Lanka was only recently removed from the “Grey List” of the Financial Action Task Force (FATF) and steps including “no questions asked” policies on foreign deposits could have a negative impact on the country’s ability to attract bona-fide investment. Furthermore, this contravenes FATF recommendations which set the international standards on combating money laundering, requiring reasonable measures to be taken to ascertain both sources of wealth and sources of funds, he emphasised.
In its report “COVID-19 Related Money Laundering and Terrorist Financing: Risks and Policy Responses” published this week, the FATF continues to recommend risk-based supervision of transactions, which would be contrary to any “no questions asked” policy. Countries with escalating money laundering exposure, risk FATF black listing, which has far reaching consequences on domestic banking and economic activity, Mr. Obeysekara said.
. Similar concerns were also raised by TISL regarding the potential money laundering risk surrounding the purported foreign direct investment by an Indian politically exposed person with multiple corruption allegations in 2019 for the USD 3.85 Billion Mirijjawila Oil Refinery project in Hambantota. In both these instances, democratic dissent allowed for a broad public debate, which has been rendered near impossible in this case due to the COVID-19 pandemic.
“It is important for the government and the Central Bank of Sri Lanka to consider the mid to long term implications of policies which may inadvertently encourage money laundering. This could have serious repercussions on the economic recovery as Sri Lanka emerges from the COVID-19 pandemic” Mr. Obeysekara further added.
The Cabinet on April 08 invited expatriate Sri Lankans and investors to open a special dollar account in Sri Lanka’s commercial banks with a range of extra benefits including a higher interest rate than the existing rates and zero tax and also no questions would be asked about the origin of the way of earning of the foreign currency deposited.
Asked by the Daily Mirror, Cabinet Spokesman cum Minister Bandula Gunawardana simply said even ‘Black Money’ was accepted under the new product.