New AML Law Widens Liability Risks for Bank Staff: Justice Nawaz 📈

Sri Lanka’s amended Anti-Money Laundering (AML) framework significantly expands criminal liability for banking & financial services personnel and extends cross-border reach, Supreme Court Justice A.H.M.D. Nawaz highlighted. • Liability for Financial Sector Staff: Employees knowingly facilitating illicit transfers face charges for aiding and abetting money laundering. Bank managers knowingly receiving criminal property can be prosecuted directly for money laundering. Context follows an FCID probe into ~$1 Bn allegedly transferred abroad via fake import documents, leading to the remanding of 4 commercial bank officials. • Key Provisions & Wider Reach: Covers transactions partly conducted outside Sri Lanka and proceeds from foreign crimes used to purchase local property (subject to forfeiture). Money laundering can now be prosecuted as a stand-alone offense. Unexplained funds disproportionate to legitimate income can trigger proceedings if not properly explained. Target offenses expanded to include crimes carrying minimum sentences of 5+ years. • Trade-Based Laundering & Controls: Highlights risks in trade-based money laundering (e.g., advance import payments with no incoming goods). Demands stricter Know Your Customer (KYC) and ongoing due diligence to prevent fake companies from operating accounts. • Freezing Powers & Reporting: Police (ASP rank and above) can freeze assets for an initial 14 days based on suspicion of irregular fund movements. Failure to report suspicious transactions or "tipping off" targets about investigations carries criminal penalties. • Upcoming APG Review: Questions effective implementation ahead of the Asia/Pacific Group on Money Laundering (APG) evaluation scheduled for October. <FollowUp label="Would you like a summary on how these AML changes impact customer due diligence and reporting requirements?" query="Summarize how Sri Lanka's new AML law impacts customer due diligence and reporting obligations for financial institutions."/>