CoPF flags online scams as emerging financial crime risk despite stronger AML framework

• Committee seeks early warning on new vulnerabilities as CBSL identifies fraud and trade-based money laundering among highest risks

The Parliamentary Committee on Public Finance (CoPF) last week urged Sri Lanka’s financial authorities to identify emerging financial crime threats before they develop into systemic risks, with lawmakers warning that online scam networks could become a significant vulnerability even as the country strengthens its anti-money laundering framework.

The discussion came during the committee’s examination of legislation linked to anti-money laundering and counter-terrorism financing, where members argued that Parliament needed greater visibility of new risks rather than responding only after major incidents emerge.

CoPF Chairman Dr. Harsha de Silva drew attention to growing international concern over online scam operations relocating across Asia following enforcement action in other jurisdictions.

Referring to reports that criminal networks displaced from countries such as the Philippines had shifted operations elsewhere, he questioned whether Sri Lanka’s regulatory environment could expose the country to similar risks and damage its international reputation.

He also queried whether agencies responsible for anti-money laundering supervision would work closely with the proposed gambling regulator and other authorities as new forms of financial crime evolve.

Officials acknowledged that organised scam operations represented a growing concern, noting that foreign nationals involved in such activities had been arrested and deported in several instances, although prosecutions were often pursued by their home countries rather than in Sri Lanka.

Dr. de Silva observed that while immigration laws had been used in many cases, authorities would also need to consider the broader anti-money laundering implications of such operations as the threat evolves.

COPF member MP Ravi Karunanayake called on regulators to provide Parliament with regular assessments of emerging financial crime risks before they become major vulnerabilities.

He said legislators needed better visibility of potential threats so that Parliament could respond proactively rather than after new forms of financial crime had already become established.

Responding to the committee, Financial Intelligence Unit officials said Sri Lanka’s latest National Risk Assessment had identified several priority threats that now shape the country’s anti-money laundering strategy.

Officials said the most recent assessment ranked drug trafficking as the highest money laundering threat, followed by fraud, including scams, which was assessed as a medium-high risk. Trade-based money laundering also remained a medium-high risk, while the threat level associated with bribery and corruption had been revised lower to medium.

Officials noted that trade-based money laundering includes practices such as under-invoicing, over-invoicing and other forms of trade mispricing used to disguise illicit financial flows.

During the discussion, Karunanayake questioned whether some conduct previously treated primarily as customs or tax violations could increasingly fall within the broader anti-money laundering framework where linked to proceeds of crime.

Legal officials responded that customs offences could constitute predicate offences for money laundering where the necessary legal thresholds were met.

The committee subsequently approved the legislative measures, while emphasising the need for continued monitoring of emerging financial crime risks alongside the implementation of Sri Lanka’s strengthened anti-money laundering regime.