📈 CBSL Defends FATF Reforms Against Lawmaker Regulatory Concerns

• Overview: The Committee on Public Finance (CoPF) questioned the Central Bank of Sri Lanka (CBSL) on whether proposed anti-money laundering and counter-terrorism financing (AML/CFT) frameworks are expanding regulatory powers beyond international benchmarks. • Legislative Debate: CoPF Chairman Dr. Harsha de Silva raised concerns from civil society regarding civil liberties and broad criminal provisions. MP Ravi Karunanayake questioned if Sri Lanka is over-legislating beyond domestic interests to satisfy external bodies, warning of potential "technical defaults" from excessive regulations. • CBSL & Legal Defense: CBSL and the Financial Intelligence Unit emphasized that financial sector stability relies on avoiding costly FATF grey-listing. Officials noted that the current FATF evaluation cycle shifts focus from having laws in place to active enforcement metrics (investigations, convictions, and asset freezes). • Economic Context: CBSL Governor Dr. Nandalal Weerasinghe stated that compliance is a critical national interest to prevent economic damage. Grey-listing increases cross-border transaction scrutiny, raises compliance costs, and harms Sri Lanka's international financial reputation. • Conclusion: CoPF indicated it would approve the pending bills but stressed that Parliament must continue balancing stronger state enforcement powers with clear safeguards for individual rights.