Financial Analysis Task Force taking on terrorist financing, money laundering

Hiran H. Senewiratne

CLOSE TAB: Government established the Financial Analysis Task Force (FATF) which outlined 40 recommendations covering counter measures against money laundering, the criminal justice system, law enforcement, the financial system and international co-operation, Chief Executive Officer - Financial Intelligence Unit of the Central Bank of Sri Lanka George Fernando said.

He said these recommendations have been recognized, endorsed and adopted by most Jurisdictions. In addition to the above FATF has also formulated a further 9 proposals specially directed to combat terrorist financing and money laundering.

The FIU has established the administrative type of model as the unit is attached to the Central Bank with close liaising with the Ministry of Finance, Fernando said.

To meet international requirements, Sri Lanka has adopted the FATF recommendations and promulgated three Acts, namely the Convention on the Suppression of Terrorist Financing Act of 2005, Prevention of Money Laundering Act No. 5 of 2006 and The Financial Transaction Reporting Act No. 6 of 2006.

The establishment of the FIU was a key component under the FTR to deter criminals from using Sri Lanka and its financial institutions for money laundering and terrorist funding activity to reduce the risk of the country being exposed to volatile economic and financial conditions.

FIU's vary from country to country but basically all have three core functions, which are to receive, analyse and disseminate information to combat money laundering and terrorist financing activity both at a domestic and at an international level.

This model suits our needs as it acts as a buffer between the reporting institutions, such as banks, finance house and other bodies and the enforcement agencies; these being the Police agency and law enforcement.

The advantage of this is that it acts as an interface between financial institutions and other reporting sectors on the one hand and also avoids the institutional link between the reporting agencies and the law enforcement authorities.

Notwithstanding this the FIU will disclose all matters relating to money laundering and terrorist funding to the agencies for enforcement, Fernando said.

It will deal only in matters within the arena of money laundering and terrorist financing. The Unit has provided three reporting formats to entities, which are, Suspected Transaction Report (STR), Cash Transaction Report (CTR) and Electronic Funds Transfer Report (both inward and outward) EFT for reporting purposes.

Hard copies of the CTR and EFTs have been sent to the institutions and have required the institutions to develop, in-house, computer spreadsheets to incorporate the information from the format into data bases and forward these to the FIU for analysis.

The exception to this is the STR where all entities are required to report matters in the given format. For the record there is no reporting threshold for the STRs, he said. The data thus far received is analysed by three analysts who have specialized knowledge in accounting and financial investigations.

Suspect transactions that require reporting involve any known or suspected criminal violation committed or attempted by an individual or a body of individuals who will be taken to the task for the benefit of the country, he said.