Two banks fined Rs. 3 m by FIU for non-compliance on customer due diligence

The Financial Intelligence Unit (FIU) has imposed administrative penalties on two licenced commercial banks as part of enforcing compliance on financial institutions during the second quarter of 2021.

FIU is Sri Lanka’s regulator for Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT).

The two banks are Union Bank of Colombo Plc, slapped with a fine of Rs. 2 million, and DFCC Bank Plc, imposed a Rs. 1 million fine. 

The action is by virtue of the powers vested under Section 19 (1) read together with section 19 (2) of the Financial Transactions Reporting Act, No. 06 of 2006 (FTRA).

Financial penalties are imposed on institutions for non-compliance with the provisions of the FTRA. 

The penalty may be prescribed taking into consideration the nature and gravity of relevant non- compliance of the financial institution.

The money collected as penalties were credited to the Consolidated Fund.

Penalties were imposed mainly on the violations of Financial Institutions (Customer Due Diligence) Rules, No. 1 of 2016 in relation to the United Nations sanctions screening, ongoing scrutiny of transactions undertaken throughout the course of the business relationship with a customer, establishing and maintaining procedures and systems to ensure the process of monitoring and implementing proper risk controls and mitigation measures.

In May this year FIU fined Commercial Bank Rs. 3 million and Kanrich Finance Rs. 1 million following the first quarter review of compliances. 

Separately in January this year FIU fined three finance companies to the tune of Rs. 2.3 million for the period from 1 June 2020 to 31 December 2020 to enforce compliance on financial institutions. They were Richard Pieris Finance Ltd., which was fined Rs. 300,000, and Softlogic Finance PLC and Siyapatha Finance PLC, which were fined Rs. 1 million each.   

During 2019/20, five financial institutions were fined – Bank of Ceylon (Rs. 3 million), Nations Trust Bank PLC (Rs. 1 million), Commercial Credit & Finance PLC (Rs. 1 million), Sarvodaya Development Finance Ltd. (Rs. 500,000) and UB Finance Company Ltd. (Rs. 500,000).