BOI clears Hambantota oil refinery project of money laundering allegations

The Board of Investment yesterday assured that flow of funds connected to the proposed oil refinery project in Hambantota are compliant with best practices. 

In a statement the BOI said: “Foreign Direct Investment brought into Sri Lanka, including the oil refinery project in Hambantota, is channelled through the approved local banking system through Inward Investment Accounts (IIA) as per the Foreign Exchange Act and its Regulations in Sri Lanka.”

“In the case of the oil refinery project at the Mirijjawila Export Processing Zone, Hambantota, all financial transactions by the investor are routed through a reputed commercial bank of Sri Lanka. All commercial banks have their own AML/CFT regulations, which are also carefully monitored by the Financial Intelligence Unit of the Central Bank of Sri Lanka,” the BOI added.

The BOI statement was an apparent response to Transparency International Sri Lanka (TISL), which on Wednesday claimed that the proposed $3.85 billion oil refinery in Mirijjawila, Hambantota, could have a negative impact on Sri Lanka’s efforts to remove itself from the Financial Action Task Force’s (FATF) ‘Grey List’ of countries vulnerable to money laundering and terrorism financing.

The main investor in the project, the Singapore based ‘investment vehicle’ Silver Park International PTE Ltd.

, is a company controlled by the family of Tamil Nadu politician and former Indian Union Minister Dr. S. Jagathrakshakan, whose business interests have previously been implicated by Indian authorities and the media in several alleged corruption scandals. Of the 40 FATF recommendations which set the international standards on combating money laundering, recommendation 12 requires that reasonable measures are taken to ascertain the source of wealth and source of funds in transactions involving politically exposed persons. 

TISL said, “In light of the efforts being made by the Central Bank of Sri Lanka to get off the FATF Grey List, it is essential that the Board of Investment conducts enhanced due diligence on the Silver Park International investment, given that its directors fall squarely within the FATF definition of politically exposed persons.”