Is The EU Encouraging Money Laundering In Sri Lanka?
Amrit Muttukumaru
I
had to pinch myself to believe the ‘Daily Mirror’ online news item just
out (12 May 2020) announcing “European Commission de-lists SL from High
Risk Third countries with Anti-Money Laundering” (EU de-lists Sri Lanka) This is the last thing one expected from the EU in the present post-Covid-19 context where Sri Lanka has thrown caution to the wind in the pursuit of foreign remittances at any cost. The EU did not deem it appropriate to even remove Sri Lanka from the ‘BLACKLIST’ it issued in
February 2018 for money laundering despite the FATF (Financial Action
Task Force) removing the country from its ‘GREY LIST’ in October 2019.
FATF recommendations are “recognised as the global anti-money laundering (AML) and counter-terrorist financing (CFT) standard.”
It is salutary to recall that the EU issued its ‘BLACKLIST’ in February
2018 subsequent to the FATF issuing its ‘GREY LIST’ in November 2017.
Let us now see the stance of the FATF? The precursor to the FATF ‘GREY
LIST’ and subsequent EU ‘BLACKLIST’ was the ‘invitation’ issued by then
Finance Minister Ravi Karunanayake through India’s prestigious
publication ‘The Hindu’ of 5 October 2015 to “Sri Lankans and Indians who had to take back their deposits from banks in Switzerland to place their funds in Sri Lanka”. He had further assured that “No questions would be asked”!
Money Laundering Hub?
If the FATF and the EU are consistent in what they preach, one would have expected them to have issued a stern warning to Sri Lanka particularly when in the post-Covid-19 scenario the Central Bank of Sri Lanka (CBSL) has given a “guarantee” that
“forex remittances will be exempted from Exchange Control Regulations
and taxes and protected under banking secrecy provisions.” Is this not
déjà vu in the context of former Finance Minister Karunanayake’s “No questions would be asked” assurance?
Although this is applicable for only “three months commencing from April 2, 2020” will it not open the floodgates for money laundering to
effectively convert black money into white money and destroy the
integrity of the country? This is on top of the previous Yahapalana
government enacting the contentious ‘Foreign Exchange Act, No. 12 of
2017’ which while purporting to liberalize foreign exchange transactions
also effectively facilitates money laundering and fiscal evasion.
One can only hope that the Rs. 150 Billion Strategy to Revive Economy proposal by former CBSL Governor Nivard Cabraal – now Senior Adviser, Economic Affairs to PM Mahinda Rajapaksa which envisages “Government and Banks to collectively access foreign investors” will not result in Sri Lanka becoming a regional hub for money laundering as a result of the CBSL “guarantee”?
Illicit Drugs Hub?
The link between money laundering, illicit drugs and funding of terrorism does not require elaboration.
If frequent detections of large quantities of illegally-trafficked drugs
such as heroin is the tip of the iceberg, Sri Lanka may well be on the
way to becoming a regional hub for illicit drugs. A Reuters Report has
quoted a ‘top police official’ as stating “Sri Lanka is becoming a hub
for cocaine as it is a risk-free location with less legal restrictions,”
There
is wide perception of a nexus between drug dealers and politicians.
Stories doing the rounds of widespread corruption in the customs
establishment in the context of the alleged extravagant lifestyles of
many customs officers does nothing to allay the fears one may have in
the integrity of the proposed ‘Colombo International Financial City’.
