By: Staff Writer
September 10, Colombo (LNW): Sri Lanka’s anti-money laundering defences are facing an uncomfortable test, with the country’s legal profession having filed only two Suspicious Transaction Reports (STRs) with the Financial Intelligence Unit (FIU) between 2020 and 2026.
The disclosure by Central Bank Governor Dr. Nandalal Weerasinghe has raised questions about whether lawyers, notaries and other independent legal professionals are adequately identifying and reporting transactions that could involve illicit funds.
Speaking at the inaugural National Anti-Money Laundering Symposium organised by the Bar Association of Sri Lanka (BASL), Weerasinghe described the number of reports as “alarming” and far below what would be expected from a profession that frequently handles property transactions, company formations, trusts and client assets.
Under Sri Lanka’s Financial Transactions Reporting Act, lawyers and other designated non-financial businesses and professions (DNFBPs) are required to report suspicious transactions to the FIU within two working days after forming a suspicion. The obligations apply when legal professionals handle real estate transactions, client money or securities, or the creation and management of companies, trusts and similar legal arrangements.
The extremely low reporting figure raises a fundamental question: does the absence of STRs indicate that suspicious transactions are genuinely rare, or that the reporting mechanism within the profession remains seriously underdeveloped?
The issue has become particularly urgent because Sri Lanka is preparing for an on-site assessment by the Asia-Pacific Group on Money Laundering (APG) from October 26 to November 6. The assessment will examine not merely whether laws exist, but whether the country’s AML/CFT system works effectively in practice.
Sri Lanka has already been downgraded in its previous two mutual evaluations under the Financial Action Task Force framework. Parliament this year passed three amendments covering the Prevention of Money Laundering Act, Financial Transactions Reporting Act and terrorism-financing legislation, partly to address deficiencies identified in previous assessments, incorporate recommendations from the 2023 IMF governance diagnostic and align the country with evolving FATF standards.
The FIU, operating under the Central Bank, remains the national centre for receiving and analysing financial intelligence and coordinating AML/CFT implementation.
Reporting entities must conduct institution-wide risk assessments, preserve transaction and correspondence records for at least six years and train staff to detect suspicious activity. STRs can be submitted electronically, in writing or by telephone, although telephone reports must be followed by written confirmation within 24 hours.
BASL President Rajeev Amarasuriya acknowledged the profession’s reporting weakness, saying the numbers must improve. He described lawyers as “gatekeepers” who can be exploited to disguise the ownership, movement or origin of illicit funds.
The concern extends beyond criminal justice. Money laundering can distort markets, facilitate corruption, allow criminally funded businesses to compete with legitimate enterprises and damage investor confidence.
As Sri Lanka seeks stronger international credibility, the legal profession’s ability to detect suspicious financial activity could become a critical measure of whether the country’s AML reforms exist on paper or actually work.
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