Regulatory & Policy News
View all(67)Customs Modernisation to Boost Exports Under NEDP 2026–2030 📈
A high-level discussion was held at the Presidential Secretariat to modernise Sri Lanka Customs and strengthen trade facilitation. The initiative aligns with the strategic goals of the upcoming National Export Development Plan (NEDP) for 2026–2030. • Key Focus Area: Streamlining and modernising customs processes to significantly enhance export facilitation and improve ease of doing business. • Strategic Alignment: The reforms are designed to support critical national sectors like apparel & textiles, tea, and ICT/BPM by reducing trade bottlenecks and boosting global competitiveness. • Context: Based on preliminary official updates regarding the NEDP 2026–2030 framework.
🚨 CCD Raids Uncover Counterfeit Engine Oil Operations in Kegalle & Mawanella
The Colombo Crimes Division (CCD) has seized a significant stockpile of suspected counterfeit engine oil following coordinated raids in the Kegalle and Mawanella districts. • The Operation: Conducted on June 2, 2026, targeting retail entities SF Marketing (Mawanella) and J.W. Auto (Kegalle). Court-authorized search warrants led to the seizure of multiple barrels bearing counterfeit labels of global brands Caltex and Delo. • Seizures & Legal Action: Four partially filled barrels were confiscated from J.W. Auto, where product was allegedly being sold at heavily reduced prices. Raids at SF Marketing led to three additional storage locations containing a larger stockpile. • Judicial Status: Case No. B/58709/26 is active in Kegalle and Case No. B/21492/26 in Mawanella. Both accused individuals have been released on surety bail of Rs. 10 million each. • Economic & Sector Impact: Offenses fall under the Intellectual Property Act No. 36 of 2006. Counterfeit products in the automotive lubricants sector pose severe financial and reputational risks to formal brand owners, undermine marketplace integrity, and risk costly mechanical failures or emissions hazards for consumers.
🚨 Suspect Remanded in Rs. 190 Bn Illicit Remittance Case
The Colombo Chief Magistrate’s Court has remanded a suspect until July 9, 2026, over an alleged scheme that illegally transferred nearly Rs. 190 billion out of Sri Lanka. • Overall Figures: Approximately Rs. 190 billion was fraudulently remitted overseas in US dollars via telegraphic transfers (TT) on the pretext of importing goods, with no corresponding imports entering the country. • Modus Operandi: The suspect allegedly operated multiple bank accounts under his name and a Colombo Fort-based company, A.Y. Investment. The Financial Crimes Investigation Division (FCID) has identified at least 36 additional companies suspected of involvement in similar dealings. • National Context & Risks: The investigation has uncovered suspected large-scale money laundering. The prosecution alleges that funds linked to drug traffickers were deposited into the suspect's accounts, threatening the integrity of Sri Lanka's banking & financial services sector. Investigators are currently probing the source of the unverified funds and the exact purpose of the overseas transfers.
Faster Cargo Clearance for AEO-Certified Traders: Sri Lanka Customs Study 📈
Sri Lanka’s first fully digital Time Release Study (TRS) 2025 reveals significant efficiency gains for compliant businesses under the Authorised Economic Operator (AEO) Program. • Overall Figures: AEO-certified traders achieved a median cargo release time of approximately 30 hours, compared to 53 hours for non-AEO traders—a massive 22-hour average facilitation gain per consignment. • Study Scope: Conducted by the Finance Ministry with Asian Development Bank (ADB) technical assistance, the study analyzed over 9,000 import Customs Declarations (CusDecs), comprising 6,700+ sea cargo and 2,300+ air cargo declarations entirely via electronic data from the ASYCUDA system. • Key Findings & Sector Impacts: - Risk-based frameworks significantly accelerated clearance, as non-examined consignments were released much faster than those selected for physical inspection. - A substantial share of delays occurs outside direct Customs processing. For sea cargo, considerable time elapses between Customs release and the cargo actually exiting the port. - Key bottlenecks include delayed CusDec submissions post-arrival, slow duty payments, and inefficient container movement to examination yards. • Digital Interventions: In response to the 2025 findings, Sri Lanka Customs launched _CargoFlow_, a new digital queue management system to optimize container movement to yards and prioritize refrigerated/perishable cargo. _Note: Data based on the official 2025 Time Release Study; preparations for the 2026 TRS are underway to broaden performance metrics._
📱 Private Bill Seeks Social Media Ban for Sri Lankan Minors Under 16
Opposition MP Faiszer Musthapha has submitted a Private Member’s Bill titled 'Social Media Minimum Age' to Parliament, aiming to restrict digital access for children to enhance child safety. • Key Legislative Proposals: • Prohibits children under 16 from accessing social media platforms. • Grants the Child Affairs Minister broad powers to block access, enforce daily usage limits, and restrict specific online hours for minors. • Appoints an Authorised Commissioner under the National Child Protection Authority (NCPA) to investigate complaints and enforce compliance. • Scope of the Ban: • Targets conventional social media but defines services broadly as any electronic service facilitating online interaction and content posting. • This definition could potentially sweep in digital platforms across the ICT landscape, including messaging, gaming, and content-sharing services. • National & Global Context: • The Bill aligns with a growing global push to counter cyberbullying, mental health issues, and excessive screen time. • If passed, Sri Lanka would become one of the few regional countries with statutory age restrictions, though global precedents show heavy challenges in age verification, privacy, and enforceability.
Policy Debate: Balancing Beneficial Ownership Rules and Business Ease 📈
Sri Lankan business leaders and governance professionals are calling for vital reforms to the Registrar of Companies' eROC platform, warning that new beneficial ownership rules could inadvertently stifle economic agility. • Systemic Friction: While the corporate sector welcomes the transparency aimed at curbing financial crimes, current beneficial ownership regulations risk creating parallel reporting mechanisms, triggering severe duplication of data already stored in the eROC system. • Key Operational Bottlenecks: Real-Time Constraints: The eROC platform currently lacks the capacity for real-time share transfer reporting, creating structural delays. Clerical Rigidities: Simple typos in filings require entire submissions to be canceled and manually re-entered, compounding administrative compliance costs. Verification Concerns: Professionals argue the burden of accountability should rest directly on company owners, rather than forcing intermediaries to certify unverified information. • Impact on Major Sectors: Publicly Listed Companies: Already heavily regulated by the Colombo Stock Exchange (CSE), forcing them to duplicate disclosures for >10% shareholdings. Non-Profits & Associations: Applying rigid frameworks to guarantee-based entities (charities, trade bodies) that hold no traditional share capital. • The Path Forward: Corporate leaders urge policymakers to leverage Sri Lanka's highly capable ICT/BPM sector to seamlessly integrate compliance features into the existing infrastructure. Resolving these eROC technical limitations is viewed as crucial to maintaining global competitiveness and attracting direct foreign investment.
📦 Sri Lanka Health Ministry Launches New Guidelines to Curb Rising Childhood Obesity and Diabetes
The Ministry of Health has introduced the "Guide to Healthy School Canteens" during National Nutrition Month 2026 to improve meal quality and combat alarming health trends among students, based on recent provisional survey data for children aged 13–17. • Key Health Metrics & Concerns: • 12% of schoolchildren are overweight. • 3% of schoolchildren are clinically obese. • The surge in obesity is directly fueling an increase in childhood diabetes across the island, raising severe concerns amid a declining national population growth rate. • Dietary Risk Factors (Daily/Frequent Consumption): • 41% of students consume high-sugar foods at least once a day. • 29% consume high-fat foods. • 28.05% consume high-salt foods. • 17.04% consume carbonated soft drinks daily. • Implementation Challenges: • High prevalence of fast food in urban school canteens and aggressive advertising targeting minors. • Commercially available sweet and instant machine drinks heavily exceed official Health Ministry sugar thresholds. • Regulatory enforcement faces pushback, including instances where corporate sponsors withdrew school funding following past food regulation changes.
⚠️ Financial Alert: Central Bank Warns Against Sophisticated Pyramid Schemes
The Central Bank of Sri Lanka (CBSL) has issued a stark warning regarding the evolution of illegal pyramid schemes, which are increasingly masquerading as legitimate jobs, online apps, and cryptocurrency investments. • Legal Implications & Penalties Under Section 83C of the Banking Act of Sri Lanka, starting, promoting, or participating in a pyramid scheme is strictly illegal. Convicted individuals face fines up to Rs. 10 million or imprisonment for up to 3 years. • The Core Fraud Mechanism Unlike legitimate businesses, these schemes provide no real goods or services. They rely entirely on a continuous flow of cash from new recruits at the bottom to pay early members, inevitably resulting in a total collapse where the vast majority lose their savings. • Key Disguises to Watch Out For Fake Multi-Level Marketing (MLM): Using overpriced, low-quality, or symbolic products as a front, while the true focus remains solely on member recruitment. Company Registration Abuse: Fraudsters present legitimate Registrar of Companies certificates to imply their business operations are legal, which is false. Digital & Crypto Scams: Mobile apps displaying fake earnings or promising returns via foreign currency and cryptocurrency (which is not legally recognized in Sri Lanka). Deceptive Training Programs: High-fee weekend workshops promising certificates and employment, but relying entirely on continuous enrollment fees. • National & Social Impact Beyond severe individual financial ruin and debt, these illegal operations heavily fracture societal trust, damage community relationships, and threaten the stability of the broader financial sector and consumer economy. _Note: Suspicious activities should be reported directly to the local police or the Central Bank’s Financial Consumer Relations Department._
📈 Study Highlights Trade Policy Impact on Sri Lanka's Workforce
A new study by Nilupulee Rathnayake (Neelan Tiruchelvam Trust) reveals how trade policies directly shape labour informality in Sri Lanka's manufacturing sector between 2014 and 2021. • Overall Reality: Nearly 70% of Sri Lanka's total workforce remains trapped in informal employment, lacking legal contracts, social security, and reliable protections. • Tariffs & Imports: Higher tariffs shield domestic industries from global competition but increase informal jobs, as protected firms cut costs via casual labour. Conversely, lower tariffs and higher imports drive formalisation by forcing local firms to boost efficiency and labor standards. • Export Sector Anomaly: Contrary to global trends, expanding exports correlate with higher levels of informal work in Sri Lanka. Flagship industries like apparel & textiles rely heavily on precarious subcontracting and casual labor to maintain low-cost flexibility. • Socioeconomic Disparities: Women, rural/provincial laborers, and workers with lower education levels bear the brunt of informal employment, worsening gender and regional inequalities. The 2020–21 COVID-19 pandemic further shattered standard market patterns, aggressively pushing vulnerable workers into precarious roles. • Recommendations: The study stresses that trade liberalisation alone cannot guarantee decent work. It urges policymakers to tie trade reforms with strict enforcement of fair labor contracts, strengthen social safety nets (pensions, health coverage), and targeted oversight within apparel subcontracting chains to transition small producers into formal operations.
📈 Harsha de Silva Urges Govt. to Overcome ETCA Deadlock with India
Opposition MP Dr. Harsha de Silva has called on the government to advance beyond the 25-year-old India-Sri Lanka Free Trade Agreement (ISFTA) and finalize the Economic and Technology Cooperation Agreement (ETCA) to secure regional value chains and accelerate economic growth. • Key Demands & Economic Impact • Value-Chain Integration: Stated that Sri Lanka risks missing India’s rapid growth expansion; urged moving from first-generation trade pacts to second-generation agreements focusing on manufacturing value chains and production networks. • Services Sector Safeguards: Highlighted that the services sector accounts for ~60% of Sri Lanka's GDP. Called for a pragmatic approach with strict regulations and accreditation frameworks to protect the domestic workforce rather than outright protectionism. • Investment Certainty: Emphasized that a modernized framework is crucial to guarantee regulatory certainty and attract higher foreign direct investment (FDI) inflows. • Trade Barriers & Obstacles • Non-Tariff Barriers: Insisted that India must resolve practical bottlenecks for Sri Lankan exporters, including product certification delays, rigorous testing requirements, and port inefficiencies. • Political Will: Criticized long-standing anti-ETCA lobbying that has stalled progress for nearly 15 years, noting that ETCA has been conspicuously absent from recent bilateral joint statements. • Bipartisan Support Offer • Assured that the Opposition will provide bipartisan backing for any final economic agreement with India, provided it safeguards Sri Lanka's national interest and expands its marketplace beyond domestic limits.
Crypto Tax Enforcement: Sri Lanka’s Strongest Weapon Against Financial Fraud 📈
• The Core Issue: Regulatory gaps and the absence of clear digital asset rules have turned cryptocurrency into a "highway for fraudsters" to siphon funds abroad. A recent Rs. 290 Mn fraud case highlighted how criminals exploit the Foreign Exchange Act with zero Central Bank oversight. • The Policy Gap: Sri Lanka’s Inland Revenue Act No. 24 of 2017 remains dangerously outdated. The Inland Revenue Department (IRD) currently treats crypto loosely as "intangible assets" subject to Capital Gains Tax (up to 30% for companies, 15% for individuals) or trading profits (up to 36%). However, the law remains completely silent on common activities like staking rewards, airdrops, DeFi yields, and mining. • The Al Capone Strategy: Proving complex criminal offenses takes time. Implementing express tax legislation shifts the burden of proof to individuals to justify their digital wealth, enabling faster intervention, asset recovery, and a transparent audit trail to combat money laundering. • Global Roadmap: India successfully used taxation as a surveillance tool in 2022 by introducing a 30% flat tax on digital assets and a 1% Tax Deducted at Source (TDS), allowing real-time transaction tracking. Over 75 countries are now adopting the OECD’s Crypto Asset Reporting Framework (CARF). • Five Urgent Amendments Needed: 1. Insert a broad, technology-neutral statutory definition for Virtual Digital Assets. 2. Explicitly list all taxable crypto events (e.g., fiat conversions, crypto-to-crypto swaps, airdrops). 3. Mandate transaction valuation at LKR fair market value. 4. Enforce a source-of-funds declaration during acquisition. 5. Mandate transaction data reporting from exchanges to the IRD.
📈 CDS to Suspend Dormant Investor Accounts
The Central Depository System (CDS) has announced a phased framework to suspend non-operative investor accounts to enhance regulatory compliance and mitigate fraud risks. • Implementation Timeline: • 15+ years of inactivity: Effective 30 June 2026. • 10+ years of inactivity: Effective 30 September 2026. • 5+ years of inactivity: Effective 31 December 2026. • 3+ years of inactivity: Effective 31 January 2027. • Key Safeguards: • Suspended accounts retain ownership of securities; dividends and corporate entitlements remain unaffected. • Securities will not be forfeited or cancelled. • Trading and transactions will be restricted until successful reactivation. • Reactivation Process: • Individual investors can reactivate accounts digitally via the CSE Mobile App or CDS website. • Institutional investors must submit CDS Form 31 via their respective depository participants. • Updated KYC documentation is required to complete the process. This initiative aims to improve data quality across the capital markets while ensuring an orderly transition for stakeholders.