By Jehan Perera –

The government’s proposed NGO law is a heavy-handed piece of legislation. The government’s justification is that regulating NGOs is necessary to comply with the requirements of the Financial Action Task Force (FATF) which is an inter-governmental body that among other things aims to address issues of terrorist financing and money laundering. Furtherm that there is a sense of urgency because the government is required to respond to the Financial Action Task Force (FATF) before October. NGOs are one of 17 sectors in which the FATF expects the government to demonstrate measures to address terrorist financing and money laundering risks. However, in its present form, this proposed law can alienate many NGOs, even those that broadly support the government’s reform agenda.

The nature of the proposed NGO law can reinforce claims by governmental critics that it has authoritarian instincts. On the other hand, this is not the first time that NGOs are facing the prospect of heavy-handed government control. NGOs faced similar issues during the period of the Sirisena-Wickremesinghe government in the period 2015-19. Subsequently, they faced the problem in an aggravated way under the Gotabaya Rajapaksa presidency which brought in a significant element of defence sector supervision of NGOs. In the first instance, the NGOs appealed to Prime Minister Ranil Wickremesinghe who withdrew the draft law. In the second instance, President Rajapaksa had to leave office prematurely. Sri Lanka would not be the first country to learn this lesson the hard way. India’s tightened Foreign Contribution Regulation Act has forced thousands of NGOs to close resulting in a loss of international grant aid to those organisations and the people they serve.

Representatives of the CSO NGO Collective recently met officials of the government’s NGO Secretariat and the relevant ministry. At their previous meeting in June 2025 they had once again been shown a draft that they could not accept. At that meeting the NGOs submitted a set of principles on which a new law could be prepared. Those principles recognised that while the government has a legitimate responsibility to regulate NGOs, it needs to respect their democratic freedoms, the right to association and to engage in educational and empowerment related work, including development and political reform. At their meeting with the government authorities, the NGO representatives pointed out that the latest draft contains provisions that undermine the independence of civil society.

Political Control

Registration of NGOs in one government authority, which is one of the objectives of the proposed law, is itself not the problem. Many democratic countries require NGOs, particularly those receiving foreign funding, to register with a designated authority. There are sound reasons for doing so. The government has the right to know which organisations are operating in the country, where their funds come from, whether they maintain proper accounts and whether they comply with the law. A single registration system could even improve transparency by replacing Sri Lanka’s fragmented arrangements. The concern is not where NGOs register. The concern is what the government can do after registration.

The problem is that the present NGO draft law, and its predecessors, have sought to transform registration into the beginning of an extensive system of supervision. The “Competent Authority” under the present draft law who is appointed by the relevant government minister to be in charge of the NGOs will be empowered to demand information, enter NGO premises without a judicial warrant, monitor projects, issue directions, suspend organisations and deregister them. A Competent Authority armed with these powers could also suspend a human rights monitor or election observer group weeks before a national election, leaving it no independent tribunal to appeal to before the damage to its work is done.

In addition, the NGOs will be issued a license for three years which needs to be renewed. The issue of re-registration can become a mechanism through which independent organisations may feel pressured to conform to government policy if only to survive. The clearest example is the requirement in the draft law that NGOs must “align with the policies of the Government.” This is a questionable provision in the draft law because it changes the relationship between the government and civil society. The problem may or may not necessarily be today’s government. A future government with fewer democratic scruples could use exactly the same powers against organisations that criticise it. Good governance requires regulators such as the “Competent Authority” to be independent of partisan political pressures.

There is no disagreement that financial fraud, money laundering and terrorist financing should be dealt with firmly. Indeed, many if not most civil society organisations, support the government’s commitment to reducing corruption, strengthening accountability and creating a more equitable society. International standards on terrorism financing and money laundering also do not justify the draft law’s most intrusive provisions. The Financial Action Task Force requires countries to adopt targeted, proportionate and risk based measures. In FATF Recommendation 8 there is a specific caution against treating the entire NGO sector as a potential security threat. Sri Lanka’s own National Risk Assessment concluded that the terrorist financing risk within the NGO sector is only low to medium.

Political Mistake

The government’s opponents have consistently sought to portray it as centralising power and intolerant of independent opinion. The present draft NGO law gives credibility to this accusation. The consequences can extend beyond domestic politics. Sri Lanka continues to engage the international community on democracy, human rights, reconciliation and good governance. The European Union’s GSP Plus tariff concession requires adherence to preserving and promoting democratic freedoms and rights. Legislation that appears to restrict civic space will inevitably attract criticism and complicate those relationships. At a time when Sri Lanka seeks greater international confidence and investment, this would be an unnecessary self-inflicted setback.

NGOs in general complement government efforts in humanitarian assistance, poverty reduction, women’s empowerment, peacebuilding, education, disability rights and environmental protection. They often work where government capacity is limited and, therefore, should not be viewed as organisations requiring constant supervision. The objectives of ensuring financial accountability, and protecting against terrorist financing and money laundering can be achieved through targeted legislation that respects constitutional freedoms and international democratic standards. They do not require political conformity or sweeping executive powers that discourage legitimate civic activity.

At the meeting with the government authorities, the NGOs proposed that the government should reconsider and revise the draft NGO law in consultation with civil society groups and NGOs. This request met with a positive response which indicates a governmental openness to the contribution of civil society. President Anura Kumara Dissanayake has repeatedly spoken of democratic renewal, clean governance and a just society. Those within the government who share that broader democratic vision should ensure that it prevails. They should not allow narrower perspectives within sections of the bureaucracy and the security establishment to shape Sri Lanka’s relationship with civil society. These would weaken the government’s own democratic reputation and also the NGO sector. A democratic government needs independent civil society as a partner and not control over it.