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Sri Lanka is hopeful it will be removed from an international money laundering list following an onsite assessment that is expected in May by the Financial Action Task Force, which could see the country removed from the ‘Grey List’ by June, the Central Bank said in a statement yesterday.
The Financial Action Task Force (FATF), the global policy-setter on Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT), has made the initial determination that Sri Lanka has completed its action plan and warrants an onsite assessment.
“The assessment is to verify that the implementation of Sri Lanka’s AML/CFT reforms has begun and is being sustained, and that the necessary political commitment remains in place to sustain implementation in the future,” the statement said.
The decision was taken at the FATF Plenary held during 20-22 February in Paris, the Central Bank said.
In October 2016, the FATF announced that Sri Lanka will be subjected to a review of the International Cooperation Review Group (ICRG) of the FATF to assess the progress of AML/CFT effectiveness in the country.
After several discussions and progress reports, the FATF indicated 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/CFT deficiencies in the FATF’s Compliance Document, which is more commonly identified as the ‘Grey List’ and provided a time-bound Action Plan for implementation.
“Since the listing in November 2017, the Financial Intelligence Unit together with other stakeholders have taken a series of effective and tangible steps to implement the FATF Action Plan.”
Sri Lanka reported the progress achieved in the implementation of the Action Plan regularly to the FATF. As per the decision taken by FATF Plenary, a team of evaluators will be visiting Sri Lanka during May and the team will meet all relevant stakeholders, including the private sector and the highest political authorities to verify the implementation of the FATF Action Plan and to ascertain Sri Lanka’s political commitment towards implementation of AML/CFT, the Central Bank said.
“The onsite team will make their recommendations to the FATF Plenary scheduled to be held in June, which could result in Sri Lanka exiting the ‘Grey List’ in June.”
The full statement made by FATF on Sri Lanka is as follows.
Since November 2017, Sri Lanka made a high-level political commitment to work with the FATF and APG to strengthen the effectiveness of its AML/CFT regime and address any related technical deficiencies. The FATF has made the initial determination that Sri Lanka has completed its action plan and warrants an onsite assessment to verify that the implementation of Sri Lanka’s AML/CFT reforms has begun and is being sustained, and that the necessary political commitment remains in place to sustain implementation in the future.
Specifically, Sri Lanka has made the following key reforms: (1) Enacting amendments to the MACMA to ensure that mutual legal assistance may be provided on the basis of reciprocity; (2) Issuing the CDD Rule for DNFBPs, issuing any necessary guidance, and ensuring implementation of this Rule has begun by way of supervisory actions; (3) Enhancing risk-based supervision and outreach to FIs, and high risk DNFBPs, including through prompt and dissuasive enforcement actions and sanctions as appropriate; (4) Providing case studies and statistics to demonstrate that competent authorities can obtain beneficial ownership information in relation to legal persons in a timely manner; (5) Issuing a revised Trust Ordinance and demonstrating that implementation has begun; and (6) Establishing a TFS regime to implement the relevant UNSCRs related to Iran, and demonstrating that implementation has begun on the UN Regulation related to the DPRK.
FATF is an inter-governmental body established in 1989 by the ministers of its Member Jurisdictions. The objectives of the FATF are to set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system. The FATF is therefore a ‘policymaking body’ which works to generate the necessary political will to bring about national legislative and regulatory reforms in these areas.
The FATF has developed a series of ‘Recommendations’ that are recognised as the international standard for combating money laundering, the financing of terrorism, and proliferation of weapons of mass destruction. They form the basis for a coordinated response to these threats to the integrity of the financial system and help ensure a level playing field.
First issued in 1990, the FATF Recommendations were revised in 1996, 2001, 2003, and, most recently, in 2012, to ensure that they remain up-to-date and relevant, and they are intended to be of universal application.
The FATF monitors the progress of its members in implementing necessary measures, reviews money laundering and terrorist financing techniques and countermeasures, and promotes the adoption and implementation of appropriate measures globally. In collaboration with other international stakeholders, the FATF works to identify national-level vulnerabilities with the aim of protecting the international financial system from misuse.
The FATF’s decision-making body, the FATF Plenary, meets three times annually.
