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CBSL to crackdown on ‘hawala’ channels: $ 300 m drop in foreign remittance

05 Dec 2021

 
  • FIU and Police probing suspicious account transfers
  • Please use official channels: Cabraal urges expatriates
  By Asiri Fernando  The Central Bank of Sri Lanka (CBSL) yesterday (4) announced that they will crackdown on unofficial channels used to move remittances into Sri Lanka, following an estimated $ 300 million drop in inflows through official channels last month. Addressing a special press conference, CBSL Governor Ajith Nivard Cabraal told the press that the CBSL’s Financial Intelligence Unit (FIU) was working closely with law enforcement agencies to target “grey economy” remittance channels, as authorities suspect these of being used for money laundering. The move by the CBSL comes amidst a worsening foreign reserves crisis, with experts and Opposition politicians questioning Sri Lanka’s reserves and capability to continue necessary trading and debt servicing in 2022. Cabraal said the Government plans to prosecute persons who were sending, receiving, or facilitating the flow of remittances through unofficial channels, warning Sri Lankan expatriates not to take the risk of sending remittance to Sri Lanka through unofficial “hawala” channels, which may leave them open to be prosecuted. “Over the last month, we have seen a drop of $ 300 million through official channels. We suspect that a key reason for such a drop is the use of irregular, unofficial channels to send remittances. We understand that some such channels pay Rs. 240 per US dollar when the official exchange rate is at about Rs. 200 per dollar,” Cabraal explained. Expatriates were attracted to unofficial money transfer channels following the Government pegging the US dollar to around Rs. 200-203 earlier this year. Cabraal added that some accounts with funds used for unofficial remittance services were already frozen by the CBSL, with the Police investigating the persons involved. However, when prompted, Cabraal did not elaborate on the ongoing investigations. “We will be very vigilant of the accounts used to facilitate these actions and who is involved with them, so please use official channels via banks when you send remittance to Sri Lanka,” he appealed to expatriates, pointing out that the use of unofficial channels to remit US dollars may expose their dependents to legal action under money laundering regulations.  Cabraal also called on the public who had information on “unofficial channels” to come forth with information. The crackdown came days after the CBSL introduced a Rs. 10 per US dollar incentive to those who send remittances or change dollars via official channels at banks for the month of December.


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