In response to an invitation from Sri Lanka’s Financial Intelligence Unit, a high-level delegation from the Asia Pacific Group on Money Laundering (APG) visited Sri Lanka recently. The high-level delegation consisted of eminent personalities, including Mr. Julien Brazeau: APG Co-Chair and Associate Assistant Deputy Minister of Canada’s Department of Finance in Ottawa within the Financial Sector Policy Branch, Dr. Gordon Hook: Executive Secretary, APG and Mr. David Shannon: Director Mutual Evaluations, APG.

Their aim was to provide crucial insights ahead of the upcoming mutual evaluation of Sri Lanka’s Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) Framework.

The APG, an integral regional monitoring body under the Financial Action Task Force (FATF), focuses on guiding member jurisdictions in implementing international standards to combat money laundering (ML), terrorism financing (TF) and proliferation financing related to weapons of mass destruction (PFWMD). FATF oversees about 200 countries through nine regional bodies.

Sri Lanka has faced “Grey List” designation twice by FATF, in 2011 and 2017, with the European Union also blacklisting the nation in 2017 due to non-compliance.
Sri Lanka’s 3rd Mutual Evaluation is set for March 2025. It’s crucial to achieve Technical Compliance with FATF’s 40 Recommendations and ensure effective AML/CFT framework results. The country is actively engaging 24 stakeholders in this effort, coordinated by the Financial Intelligence Unit.

During the 3-day visit, the delegation met with key Sri Lankan figures, including the President, Chief Justice, Foreign Minister, Attorney General and Central Bank Governor. Sri Lanka’s leadership recognizes the importance of the upcoming mutual evaluation for economic and societal security.

To prepare effectively and avoid economic consequences tied to FATF grey-listing, Sri Lanka prioritizes Focus on Effectiveness:

• Emphasize the ability of the AML/CFT system to produce operational results that address Sri Lanka’s specific risks effectively
• Enhanced Monitoring: Stakeholders should intensify monitoring of progress and operational outcomes to support the advancement of priority implementation plans and surmount any obstacles to effectiveness.
• Timely Legislation: Expedite the passage of critical AML/CFT-related legislation to ensure the availability of the necessary tools for achieving operational outputs.
• Resource Allocation: Allocate resources to agencies responsible to implement the AML/CFT framework to facilitate the achievement of operational outcomes.
• Inter-Agency Coordination: Sustain inter-agency coordination through effective leadership and well-supported mechanism for targeted planning and progress monitoring in line with implementation plans.
• Prosecutor: Enhancing the capacity and active involvement of prosecutors in money laundering and terrorism financing cases.
• Law Enforcement: Bolster implementation by law enforcement agencies, particularly through the clearance of backlogs in money laundering cases and increase in the scope of asset recovery and money laundering-related activities.
• Judiciary: Improve the capacity of the Judiciary for timely and effective adjudication of money laundering cases and terrorism financing cases
• Private Sector Engagement: Encourage active involvement of the private sector, fostering shared goals with the government for priority implementation of AML/CFT systems.
• International Cooperation: Strengthen and focus on international cooperation, recognizing its pivotal role in demonstrating effectiveness. Foster deeper collaboration with countries that share key money laundering and terrorist financing risks.

By diligently following these priorities, Sri Lanka aims to secure a positive outcome in its mutual evaluation and mitigate the economic consequences associated with FATF Grey-Listing. Stakeholders are committed to addressing AML/CFT Framework gaps effectively.