CBSL slaps Rs. 14.6 m in AML non-compliance fines

The Central Bank of Sri Lanka (CBSL) yesterday said its Financial Intelligence Unit (FIU) imposed administrative penalties totalling Rs. 14.6 million on 12 reporting institutions between October 2025 and March 2026, with the enforcement action highlighting failures to report high-value transactions within stipulated timelines, weaknesses in customer screening against UN sanctions lists, and broader gaps in anti-money laundering and countering the financing of 

terrorism (AML/CFT) controls.



The FIU, which functions as Sri Lanka’s regulator for AML/CFT, said the penalties were imposed under Section 19 (1) read together with Section 19 (2) of the Financial Transactions Reporting Act, No. 6 of 2006 (FTRA) after considering the nature and gravity of the relevant non-compliances. The funds collected as penalties were credited to the Consolidated Fund.

The penalties covered 12 institutions, comprising eight financial institutions and four designated non-financial businesses and professions, following risk-based on-site examinations, spot examinations, and offsite follow-up examinations.

The highest penalty of Rs. 3 million was imposed on Citizens Development Business Finance PLC after the FIU identified failures in customer screening and sanctions compliance.

The FIU said the company had failed to effectively verify whether prospective customers appeared on designated lists issued under UN Security Council resolutions before entering into new business relationships. It had also failed to effectively screen its existing customer database when sanctions lists were updated.

The examination found that, due to these gaps in systems and procedures, the company had established and maintained business relationships with three individuals designated under UN Regulation No. 1 of 2012, issued pursuant to UN Security Council Resolution (UNSCR) 1373.

The FIU said the company had also failed to freeze funds, other financial assets, and economic resources held by designated persons and failed to inform the FIU of such assets within the required 24-hour period.

Cargills Bank PLC and Sanasa Life Insurance Company PLC were each fined Rs. 2 million for separate AML/CFT compliance failures.

Cargills Bank was penalised after failing to report 18 electronic fund transfer transactions from an examination sample where the value exceeded Rs. 1 million or its equivalent in foreign currency within the prescribed period.

The bank was also found to have failed to maintain a complete list of designated persons, groups, and entities under UN Regulation No. 1 of 2012. The FIU said the lapse was due to delays in updating designated lists within the bank’s screening tool, but no business relationships with designated individuals or entities were identified during the examination.

Sanasa Life Insurance was fined after failing to report nine cash transactions exceeding Rs. 1 million within the required period and for shortcomings in maintaining updated sanctions lists, screening customers and beneficiaries, and obtaining senior management approval before establishing a business relationship with a politically exposed person. The FIU said the examination did not reveal any business relationships maintained with designated individuals or entities despite the identified system and procedural gaps.

Penalties of Rs. 1 million each were imposed on LB Finance PLC, LOLC Securities Ltd., Janashakthi Finance PLC, and Indian Overseas Bank.

LB Finance was fined after failing to report nine transactions exceeding Rs. 1 million or its equivalent in foreign currency within the specified period.

LOLC Securities was penalised for failing to report 12 electronic fund transfer transactions exceeding the reporting threshold, while Janashakthi Finance was cited for delays in verifying prospective customers against designated lists before establishing business relationships.

Indian Overseas Bank was penalised for several deficiencies, including failing to report 13 transactions exceeding the reporting threshold, inadequate sanctions screening during wire transfers, maintaining incomplete designated lists and delays in updating its screening system after receiving notifications from the FIU.

The FIU noted that no business relationships with designated persons or entities were identified in the cases involving LOLC Securities, Janashakthi Finance and Indian Overseas Bank.

Among designated non-financial businesses and professions, Swarnamahal Jewellers Ltd. received a penalty of Rs. 2 million for failures relating to customer due diligence, identification and verification of customers and beneficial owners, record retention, AML/CFT risk assessments and sanctions screening.

Harbour Village Ltd. was fined Rs. 1 million for failing to verify customers against designated lists and for not having mechanisms to screen existing customers when sanctions lists were updated.

Colombo Jewellery Stores Ltd. was fined Rs. 500,000 after failing to conduct a money laundering and terrorist financing risk assessment, while Zay’s Ltd. was fined Rs. 100,000 for failing to verify customers or beneficiaries against designated lists relating to targeted financial sanctions.

The FIU said the administrative penalties form part of measures to strengthen compliance with Sri Lanka’s AML/CFT framework by ensuring reporting institutions maintain effective transaction monitoring, customer due diligence and sanctions screening mechanisms.