Sri Lankan legal professionals submitted only two Suspicious Transaction Reports to the Central Bank’s Financial Intelligence Unit (FIU) in the last six years, as Sri Lanka attempts to pass its third mutual evaluation conducted by the Asia Pacific Group on Anti-Money Laundering in 6-weeks time, Central Bank of Sri Lanka Governor Dr Nandalal Weerasinghe said, speaking at the Inaugural Anti-Money Laundering Symposium by the Bar Association of Sri Lanka (BASL) held yesterday (8).
“Between 2020 and 2026, in the last six years, there have been only two STRs submitted. This was alarming low performance and compliance. This is well below the expectation and this will be a problem. We will fail the implementation of the laws, if we are not doing it properly,” Dr Weerasinghe said, referring to the evaluation Sri Lanka is to face under the guidance of a regional group, more than ten years after failing its previous attempt.
“Given the critical importance for the current period, particularly as Sri Lanka approaches our third mutual evaluation in approximately six weeks. Therefore it is imperative that all reporting persons exercise heightened vigilance, and demonstrate unwavering commitment to AML/CFT compliance obligations, strengthen internal controls, enhance the identification and reporting of STRs, and ensure full compliance.”
Dr Weerasinghe said that central to the Financial Intelligence Unit’s information gathering, is the responsibility to gather enough information from institutions, including banks and non-bank institutions. “The key instrument is the receipt of Suspicious Transaction Reports (STR). This provides the critical information for identifying and investigating potential instances of money laundering, terrorism financing and related criminal activity.”
“STRs play a pivotal role in the detection, deterrence, and prevention of illicit activities including drug trafficking, tax evasion, financial fraud, corruption and other forms of financial crimes,” he added.
In August, Sri Lanka received full parliamentary approval to fully implement the Prevention of Money Laundering amended Act No. 16 of 2026, the Financial Transaction Reporting Amendment Act No. 17 of 2026, and the Convention of Suppressing Terrorism Financing Amendment Act No. 18 of 2026.
The Governor noted the delay in moving ahead with the legislative progress, as Sri Lanka closes in on its third evaluation after almost 11 years.
“Every stakeholder needs to submit STRs in a timely manner, especially when there is any suspicion on the activities that you as a professional may engage in. Despite the critical role played by legal professionals in mitigating financial crime risks, reporting levels remain alarmingly low. This has been the case even in the past, back when reporting obligations belonged to the legal profession as well.”
Sri Lanka in the past has been downgraded by the group, failing to meet its standards, and then been re-listed.
Speaking of the implemented laws that are expected to be utilised by those in legal profession, to identify and deter financial crimes, he said: “Commonly this is referred to as the AML/CFT CPF framework. The fundamental objective of the AML/CFT framework is broader than being a mere regulatory compliance requirement. People think of it as compliance meant for financial institutions, which it is not.”
Speaking of the official body responsible for setting standards globally, he said: “For the past decade, international standards governing anti-money laundering and countering terrorism financing have evolved considerably over a period of time. The FATF (Financial Action Task Force) has continued to strengthen its recommendation to address emerging risks over virtual assets, terrorism financing and increasingly sophisticated criminal networks.”
“The amendments were made in line with these evolving standards, to comply with them. The three amendments were driven by a few factors. First, to enhance Sri Lanka’s AML/CFT framework, in line with the global standards. Second, to address deficiencies identified during the 2015 mutual evaluation, where we failed. Third, preparing Sri Lanka for the third mutual evaluation,” Dr Weerasinghe noted.