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| Wednesday, 30 June 2004 |
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New laws soon to deal with money laundering US Ambassador Jeffrey Lunstead said that money launderers exploited weaknesses in financial systems and recognising this, the US has embarked on a worldwide effort to assist countries to develop effective anti-money laundering regimes. Sri Lanka requires a new comprehensive law to prevent money laundering to preserve the integrity and security of the financial system. To facilitate this process, Ambassador Lunstead was addressing a seminar on Anti-Money Laundering co-sponsored by the Central Bank of Sri Lanka and the US Embassy in Colombo last week. Representatives from the Central Bank, Ministry of Justice, Ministry of Finance, Ministry of Foreign Affairs, the Securities and Exchange Commission, banks and other financial institutions and the US Treasury Department participated in the seminar. As part of this initiative, two resource persons from the US Treasury - Richard Seaman , Regional Advisor, Financial Crimes Law Enforcement and William Gilligan, Senior Enforcement Advisor made presentations at the seminar. Deputy Governor of the Central Bank, Dr.Ranee Jayamaha said that it is important to have a mechanism to prevent money laundering, both at the national and international level. The Central Bank is aware of the vulnerability of financial systems to criminal activity and its serious consequences. In response to this concern and in the absence of specific legislation, the Central Bank introduced certain measures through the regulatory mechanism to enable the detection and investigation of the use of the financial system for laundering the proceeds of crime. These include the requirement for banks, finance companies and primary dealers to have customer due diligence, record keeping and "know your customer" policies. The Exchange Control Act can also be used to counter cross border transactions. Ms. Sarojini Kadurugamuwa, Director Legal, Central Bank said that the existing legal framework is not adequate to deal with the present threat of money laundering considering the speed at which funds can now move from one location to another. This is primarily because of limitations in the enforcement mechanism and strict confidentiality provisions that constrain the sharing of information between financial institutions and regulatory authorities both locally and internationally. Therefore, special laws are necessary to combat money laundering in a more effective way. Taking into consideration international initiatives, specific legislation to prevent money laundering and to combat the financing of terrorism have now been drafted. The Ministry of Justice, the Ministry of Foreign Affairs, the Legal Draftsman's Department, the Attorney General's Department, the Police Department and the Central Bank have been involved in this process. The proposed legislation, complies to the extent possible with internationally acceptable standards, which are the recommendations of the Financial Action Task Force (FATF) 40 +UN 8 guidelines. Under the proposed new regime, the act of money laundering, as well as attempting to and aiding and abetting money laundering will be criminal and extraditable offences. Mechanisms will also provide for the tracking, freezing and confiscation of tainted assets. The new law will impose requirements on the identification of customers by financial institutions, and the reporting of suspicious transactions and cash transactions above a certain prescribed value and on record keeping. The reporting requirements will apply not only to financial institutions (banks, finance, insurance and securities companies and money changing and transfer services), but also to certain businesses and professions. Under the proposed legislation, a new regulatory authority - the Financial Intelligence Unit (FIU) will be set up to collect, analyse and disseminate information required for enforcement purposes. The law also provides for co-operation between other regulatory authorities and the FIU, and enables the FIU to co-operate with similar agencies abroad. |
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