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| Friday, 11 July 2003 |
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by Ravi Ladduwahetty Central Bank Governor A.S. Jayawardena yesterday called upon the Finance Ministry to implement anti-money laundering laws expeditiously without which Sri Lanka will be blacklisted by the international community. Addressing the banking and the financial services community at a seminar titled:" Customer due diligence and know your customer" organised by the Ceylon Chamber of Commerce and the Sri Lanka Association of Securities and Investment Analysts (SLASIA) at the CCC auditorium yesterday, the CBSL Governor said:" The law has been at the draft stage for some time now. There was also an international conference in Sri Lanka on the subject around six years ago and unless the laws are implemented soon, world agencies will take serious note of the non-cooperative territories or countries and would name and shame institutions and countries which do not cooperate." He said:" We in Sri Lanka, have still not been able to enact the Anti Money Laundering Laws although we have tried hard to impress upon the relevant Ministries to do so. The latest is that there will be three pieces of legislation on the AML. The first will be the Financial Transactions Reporting Act for Sri Lanka, which will replace some parts of the AML Draft Act, particularly with regard to governance, legal powers and operations of the Financial Intelligence Unit. This part will be completed by the Central Bank and the Ministry of Finance." The second part is the Proceeds of Crime Law which would contain parts relating to criminalisation of money laundering, freezing and seizing and confiscation, mutual legal assistance, information exchange and investigation powers. This would be done by the Ministry of Justice. The third will be the combating of the Combating of Financing of Terrorism Law which would include some parts of the Financial Transactions Reporting Act and this would be based on the Commonwealth Model. This would be done by the Ministry of Foreign Affairs. He said that the CBSL has taken the initiatives to finalise the drafting of the Financial Transactions Reporting Act, which together with the other two pieces of legislation, will be finalised by the end of the year. Following the enactment of these laws, all financial institutions will be required to work within the laws specifically in relation to Knowing Your Customer (KNC) guidelines. " Then, Supervisors and Regulators such as the CBSL, Securities and Exchange Commission and the Insurance Board and such others will be called upon to supervise the banks and other financial institutions on money laundering and other financial services activities. They cannot no longer will be able to be indifferent to criminal transactions that are routed through the banks, " he said. Commenting on the international backdrop in relation to money laundering, he said that international organisations such as the Basel Committee of the Bank for International Settlements, the OECD, the Commonwealth Secretariat, the World Bank and the International Monetary Fund have been preparing various codes of best practices, guidelines, legislations rules and regulations to combat money laundering and terrorist financing activities. He said: " One of the most important pieces of work which has been internationally accepted is the work of the Financial Action Task Force (FATF) which has made 40 recommendations which is the joint action of the World Bank, IMF, FATF and other standards setters such as the Basel Committee. It is now accepted in 130 countries. The United Nations has made eight recommendations relating to terrorism financing. Both these are now known as FATF 40+8." The Governor said that in the absence of the anti-money laundering laws in Sri Lanka, the Central Bank has issued guidelines to banks and financial institutions in December 2001, which may have to be revisited in the light of the revised FATF 40 Guidelines. He said that the global awareness on terrorism financing has been increasing after the September 11 bomb attacks in the US and concentration has increased to identify the sources of criminal and terrorist activities who launder the proceeds of these crimes through the financial systems and that has increased the attention of the international legal and law enforcement authorities as well as the banking community. Efforts have been hitherto to been taken to prevent the financial system from being used in this way have largely been implemented by judicial and regulatory agencies a national level", the Governor added. |
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