Anti-Money Laundering Laws Alone Are Not Enough, Says Central Bank Governor

COLOMBO (News 1st); Central Bank Governor Dr. Nandalal Weerasinghe has stressed that Sri Lanka's success in combating money laundering, terrorist financing and related financial crimes will ultimately depend not on the existence of laws alone, but on the country's ability to demonstrate that those laws are delivering tangible results.

Speaking at the inaugural National Anti-Money Laundering Symposium organized by the Bar Association of Sri Lanka, Dr. Weerasinghe noted that Sri Lanka is currently preparing for its third Mutual Evaluation by the Asia-Pacific Group on Anti-Money Laundering (APG), a process that will closely examine both the country's legal framework and the effectiveness of its implementation.

The Governor pointed out that Sri Lanka faced setbacks during its previous evaluations and emphasized the need to avoid a repeat of those outcomes.

Dr. Weerasinghe highlighted the recent enactment of three key legislative reforms aimed at strengthening the country's anti-money laundering and counter-terrorism financing framework. These include the Prevention of Money Laundering (Amendment) Act No. 16 of 2026, the Financial Transactions Reporting (Amendment) Act No. 17 of 2026, and the Convention on the Suppression of Terrorist Financing (Amendment) Act No. 18 of 2026.

Describing the new laws as a major milestone, the Governor said the reforms were designed to align Sri Lanka's legal framework with evolving international standards and strengthen the country's ability to detect and combat financial crime.

However, he stressed that passing legislation alone would not be sufficient to satisfy international assessors.

"Legislation is one thing, but demonstrating effectiveness is much more important in the current assessment process. It is not enough to say that we have a framework and the necessary laws. We must demonstrate that those laws are being effectively applied and that they are producing results," he said.

A significant part of the Governor's address focused on the critical role played by Suspicious Transaction Reports (STRs), which form the backbone of modern anti-money laundering systems around the world.

According to Dr. Weerasinghe, STRs are essential tools in identifying and preventing criminal activities such as drug trafficking, tax evasion, financial fraud, corruption and terrorist financing.

He emphasized that the responsibility for reporting suspicious transactions does not rest solely with banks and financial institutions, but extends to designated non-financial businesses and professions, including legal professionals, accountants and other service providers.

"STRs play a pivotal role in the detection, deterrence and prevention of illicit activities. The timely submission of these reports is critical to safeguarding the integrity of institutions, protecting the financial system and defending the wider economy from criminal exploitation," he said.

The Governor also expressed concern over the level of compliance among certain professional sectors.

He revealed that between 2020 and 2026, lawyers, notaries and other independent legal professionals had submitted only two Suspicious Transaction Reports.

"Only two reports were submitted during the last six years. This is alarmingly low and reflects a very poor level of compliance," he said.

Dr. Weerasinghe warned that such figures could raise concerns during Sri Lanka's upcoming evaluation, particularly as assessors increasingly focus on the effectiveness of implementation rather than the existence of laws on paper.

He called on all reporting entities to strengthen internal controls, improve customer due diligence procedures and ensure timely reporting of suspicious transactions in accordance with legal requirements.

The Governor further stressed that compliance should not be viewed merely as a regulatory obligation but as a fundamental contribution to the integrity of both the financial system and professional institutions.

"Compliance must not be viewed as a burden. It is a contribution to the integrity and stability of the financial system as well as the integrity of your own profession," he said.

With Sri Lanka's next APG evaluation expected in the coming weeks, Dr. Weerasinghe urged regulators, financial institutions, businesses and professional bodies to remain vigilant and proactive in strengthening the country's anti-money laundering regime.

According to the Governor, the ultimate objective is to ensure that Sri Lanka not only has strong laws, but can also demonstrate to the international community that those laws are being effectively enforced, protecting the country's financial system from abuse while enhancing its global reputation.