SL moves to regulate cryptocurrency providers ahead of global AML review

Thursday, 24 July 2025 00:10 - - {{hitsCtrl.values.hits}}

Central Bank Governor Dr. Nandalal Weerasinghe yesterday said Sri Lanka is taking steps to register cryptocurrency service providers as part of its broader commitment to align with international anti-money laundering (AML) and counter-terrorism financing (CTF) standards.

Speaking at the post-Monetary Policy Review meeting media briefing, he said the move is part of preparations for Sri Lanka’s upcoming mutual evaluation under the Financial Action Task Force (FATF), the global body that assesses countries’ adherence to AML/CFT standards.

“There is a need to obtain information about cryptocurrency use in the

country. We are currently holding discussions with the Government in this regard. The Financial Intelligence Unit (FIU) of the Central Bank, Finance Ministry, and Digital Economy Ministry are discussing how to regulate this,” he said.

Despite discussions underway to build a regulatory framework for Virtual Asset Service Providers (VASPs), Dr. Weerasinghe was however clear in stating that this does not mean the Central Bank endorses or legalises cryptocurrency.

Responding to a question on the recently imposed 18% VAT on digital assets, he clarified that taxation should not be confused with legal recognition. “Imposing VAT doesn’t mean legal recognition or regulation. Many activities, like casinos, operate under taxation without being fully legalised or regulated. Similarly, cryptocurrency is not regulated or promoted by the Central Bank,” he stressed.

Sri Lanka’s efforts to develop VASP regulations come amid heightened international scrutiny. The FATF is set to conduct its mutual evaluation of the country next year and Sri Lanka is working to strengthen its legal and regulatory frameworks accordingly.

In addition to the virtual asset oversight, it was noted that the country has already enacted the Proceeds of Crime Act and is currently debating key amendments to the Companies Act in Parliament.

Several other legislative updates are also in progress, including revisions to the Financial Transactions Reporting Act (FTRA), Anti-Money Laundering Act, and the Prevention of Terrorist Financing Act. One of the FATF’s core recommendations is ensuring Beneficial Ownership transparency (Recommendation 24), which requires law enforcement agencies to have timely access to accurate information on the ownership and control of legal entities.

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