Virtual asset rules take shape as Sri Lanka prepares for AML evaluation

Monday, 12 October 2026 04:22 - - {{hitsCtrl.values.hits}}

The Securities and Exchange Commission (SEC) will lead the regulation of virtual assets and the businesses that trade and hold them. Draft legislation is now being prepared as Sri Lanka readies for its third Mutual Evaluation, an international peer review of its defences against money laundering and terrorist financing.

Digital Economy Deputy Minister Eng. Eranga Weeraratne briefed the National Committee on Anti-Money Laundering (AML), Countering the Financing of Terrorism (CFT) and Countering Proliferation Financing (CPF) at the Central Bank of Sri Lanka (CBSL). Deputy Minister Eng. Weeraratne chairs the Committee’s Virtual Asset Service Providers (VASP) Regulatory Subcommittee. VASPs are businesses such as cryptocurrency exchanges and custodians. The meeting was held under the patronage of CBSL Governor Dr. Nandalal Weerasinghe.

The Cabinet approved the policy framework for regulating virtual assets and VASPs on 27 July. The CBSL, the Financial Intelligence Unit (FIU), and the Inland Revenue Department (IRD) will work with the SEC under the framework. The approval requires clear regulatory boundaries to be drawn between the SEC and the CBSL.

The Digital Economy Ministry’s VASP concept paper was sent to the Legal Draftsman’s Department on 24 September. Work has begun on amending the SEC Act and drafting related legislation, and SEC officials have received training on virtual assets.

Virtual assets will not be permitted as legal tender and will be treated only as investment assets. Their use for domestic payments will initially be limited, with broader rules to follow as regulatory systems and oversight capacity develop. The first phase will cover licensed exchanges and custodians.

The Legal Draftsman’s Department and GovTech Sri Lanka plan a pilot project using artificial intelligence (AI) to draft legislation, with every draft subject to human and legal review.

Detailed legal proposals will go back to the Cabinet. In parallel, the Ministry will set up licensing procedures, AML controls, reporting systems, and staff training.

FIU Head Dr. Subhani Keerthirathna outlined the status of the Mutual Evaluation, the action plan, and the roles of the institutions involved. International AML/CFT Consultant Dr. Gordon Hook said public and private institutions must work together closely for the evaluation to succeed.

CBSL Senior Deputy Governor Dr. C. Amarasekara, Deputy Governor K.G.P. Sirikumara, Anti-Money Laundering Task Force Chairman and retired Supreme Court Justice Buwaneka Aluwihare, and former CBSL Senior Deputy Governor and Task Force Member Nelumani Daulagala also attended.