Wednesday Jul 08, 2026
Wednesday Jul 08, 2026
Wednesday, 8 July 2026 00:21 - - {{hitsCtrl.values.hits}}
The Parliamentary Committee on Public Finance (CoPF) last week questioned the effectiveness of the Central Bank of Sri Lanka’s (CBSL) attempt to bring informal money transfer operators into the regulated financial system after officials disclosed that not a single Hawala or Hundiyal operator has registered under the new licensing framework introduced earlier this year.
The discussion unfolded as the committee reviewed amendments to regulations governing money or value transfer service providers, with lawmakers probing whether the Central Bank’s strategy was likely to formalise a long-established informal sector or merely criminalise it without improving enforcement.
CBSL officials explained that regulations introduced in 2024 required money transfer operators to register with the Central Bank, while the latest amendments extend the framework to overseas-registered operators conducting business in Sri Lanka.
The revised regulations also lower the minimum capital requirement for locally registered operators to Rs. 15 million from Rs. 20 million, a change officials said was intended to encourage registration. They added that three overseas-based operators had applied for registration under the amended framework.
However, officials acknowledged that no operators had yet registered under the original framework applicable to local providers.
They said only one application had been received, with the applicant requesting a reduction in the capital requirement, prompting the latest amendment.
CoPF Chairman Dr. Harsha de Silva questioned whether the capital threshold was genuinely preventing operators from registering, arguing that a Rs. 5 million reduction was unlikely to influence businesses handling substantial informal remittance flows.
“Do you think 5 million capital requirement is the reason why these Hundiyal and Hawala fellows are not registering? Or is there something else?” he asked, suggesting other factors were discouraging operators from entering the formal system.
Committee member Ravi Karunanayake similarly questioned whether the policy had achieved its intended outcome.
Recalling earlier discussions when authorities expressed confidence that operators would register once the legal framework was introduced, he asked whether Hawala activity had in fact diminished or simply continued outside the regulatory perimeter.
CBSL officials responded that while they could not conclude Hawala activity had disappeared, formal worker remittances had recovered sharply after falling during the economic crisis, suggesting greater use of licensed channels.
The committee questioned whether official remittance data adequately captured informal foreign exchange transactions, particularly in light of recent public debate over alleged large-scale illicit financial flows.
CBSL Governor Dr. Nandalal Weerasinghe added that the new registration regime had nonetheless strengthened enforcement by making unlicensed Hawala and Hundiyal operations explicitly illegal, enabling law enforcement agencies to prosecute operators found conducting such business without Central Bank registration.
