Tuesday Jul 07, 2026
Tuesday Jul 07, 2026
Tuesday, 7 July 2026 04:31 - - {{hitsCtrl.values.hits}}
Sri Lanka is set to significantly broaden its money laundering laws by expanding the range of conduct covered under the offence, strengthening investigators’ powers and making wilful tax evasion a predicate offence for money laundering.
Central Bank of Sri Lanka (CBSL) officials told the Parliamentary Committee on Public Finance (CoPF) that amendments to the Prevention of Money Laundering Act are intended both to improve compliance with Financial Action Task Force (FATF) standards and to address practical shortcomings identified through nearly two decades of investigations and prosecutions.
Under the proposed changes, the offence of money laundering would extend beyond concealing or transferring criminal proceeds to include their use, purchase, conversion, and beneficial ownership, broadening prosecutors’ ability to pursue individuals dealing with assets derived from unlawful activity.
When the CoPF questioned what would happen if an investor unknowingly acquired property derived from the proceeds of crime, officials said the purchaser would have to establish that the acquisition was made in good faith and without knowledge of its criminal origin. They added that the burden of proof would rest with the defence.
One of the most consequential changes would designate deliberate tax evasion under Section 189 of the Inland Revenue Act as a predicate offence. Officials emphasised that the amendment applies only to wilful tax evasion that already constitutes a criminal offence under tax law, rather than ordinary tax disputes or assessment disagreements.
The Committee questioned whether such provisions were excessively severe and could expose taxpayers to money laundering charges over tax liabilities.
CBSL officials replied that the proposed amendment merely links existing provisions criminalising tax evasion into the money laundering framework, in line with FATF recommendations requiring serious tax evasions to be treated as predicate offences.
The Bill also extends the period during which investigators may freeze suspected criminal assets from seven days to 14 working days before investigators are required to seek High Court orders, with officials arguing that the existing time frame had become impractical given Court schedules and public holidays.
Separately, assets confiscated through money laundering cases would be managed by the proposed Proceeds of Crime Management Authority rather than under the existing arrangements. Officials said confiscated assets would generally be sold once Court orders become final, with the proceeds remitted to the Consolidated Fund, while the Authority would manage assets during legal proceedings.
The amendments form part of a package of three Bills before Parliament aimed at strengthening Sri Lanka’s anti-money laundering framework ahead of the country’s next FATF mutual evaluation.
