Sri Lanka’s decision to formally permit foreign money transfer companies to register and operate under revised regulations has triggered fresh debate over financial oversight, regulatory enforcement, and the future control of the country’s rapidly evolving remittance market.
The Cabinet of Ministers earlier this week approved sweeping amendments aimed at strengthening supervision of money and value transfer service providers while closing legal loopholes that had allowed several overseas operators to function through local representatives without direct regulatory approval.
The reforms come under the Payment and Settlement Systems Act, No. 28 of 2005, and revise key sections of the Payment or Value Transfer Service Providers Regulations No. 1 of 2024.
Under the earlier regulatory framework, only firms incorporated under Sri Lanka’s Companies Act, No. 07 of 2007, qualified for registration. The restrictions effectively barred foreign-registered entities, offshore companies, and companies limited by guarantee from securing legal operating status within Sri Lanka.
However authorities discovered that many international remittance service providers continued servicing Sri Lankan customers through agency arrangements and local partnerships despite lacking formal registration.
Regulators viewed this as a growing compliance threat, particularly as cross-border digital transactions and online payment systems expanded at unprecedented speed.
Financial investigators and policy experts warned that the situation created blind spots in monitoring financial flows, potentially weakening Sri Lanka’s safeguards against money laundering, illicit financial transfers, and terror financing activities.
In response, the government introduced the Money or Value Transfer Service Providers Regulations No. 1 of 2025 through Extraordinary Gazette No. 2468/06 dated 23 December 2025.
The revised regulations now permit foreign money transfer operators to apply for registration directly, subject to compliance with local supervisory and reporting requirements enforced by the Central Bank of Sri Lanka.
Officials argue the move will help integrate all transfer operators into a unified monitoring structure, improving accountability and reducing risks linked to unregulated payment activities.
The policy shift also reflects mounting pressure on Sri Lanka to align its financial governance standards with international Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) obligations at a time when global scrutiny over cross-border transactions continues to intensify.
Economists say the timing is significant. Sri Lanka remains heavily dependent on worker remittances as a vital source of foreign exchange inflows, making the efficiency and credibility of formal remittance channels a major national economic priority.
Authorities hope the revised framework will encourage migrant workers and overseas Sri Lankans to increasingly use licensed digital transfer platforms instead of informal underground networks that bypass banking systems entirely.
However, some observers caution that allowing foreign operators into the regulated system may also increase competitive pressure on local financial service providers and create new supervisory challenges for regulators already struggling with enforcement capacity.
The proposal was presented by President Anura Kumara Dissanayake in his role as Minister of Finance, Planning and Economic Development, signalling the government’s intention to tighten financial governance while modernising Sri Lanka’s payment infrastructure in line with global regulatory expectations.
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