14 July, 2020

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Is The EU Encouraging Money Laundering In Sri Lanka?

By Amrit Muttukumaru

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’.

It was just the other day on 1 April 2020 that the ‘Daily Mirror’ had a report captioned “Country’s largest ever drug haul” informing us that “The Sri Lanka Navy seized a total of 1184.9kilos of drugs, the country’s largest ever drug haul worth of Rs. 12,500 million”

The state of play in Sri Lanka is such that we have it on the authority of Mangala Samaraweera  when he was Finance Minister in the Yahapalana government claiming “personal knowledge”

that Sri Lanka’s top dealers in illicit drugs are some of those holding high posts in some leading NGOs. The Sri Lanka Customs came under his purview.

His back peddling a few days later claiming “inadvertence” is pathetic:

Readers can listen to his words in the link given below and decide for themselves whether there is any likelihood of any “inadvertence”?

Samaraweera’s Damning Allegation  (3:27 onwards)

Conclusion

In the public interest should not the European Union explain its RATIONALE for de-listing Sri Lanka from its money laundering label?  (EU de-lists Sri Lanka).

It will also be interesting to have the stance of the FATF in this connection.

Things are such in Sri Lanka that such concerns are of little or no interest to our mainstream media – particularly business media which by and large merely act as the mouthpiece of the corporate sector without critical analysis.

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Latest comments

  • 2
    0

    UN does not have one single atomic bomb. In that state, it cannot make anybody to listen to it. We like somebody or some group to protect the world democracy. US and NATO at this time claiming that they are paying that role. I don’t want to go deep. GSP + and FATF all are carrot and cane to achieve this. Again I don’t want to go too deep. So these are political money. Time to time, these will be adjusted as per the world politics, but not always on public expectations. Many maneuvering are secret. West worked with Old Royals believing there promise on LTTE get defeated. Seeing deceived they navigated for regime change using Ponny. Didn’t work. They changed tactics and did retry in 2015; regime change was successful. But deception didn’t have any change. It was at the same old status. October 2018 and April 2019 are peak or climax of this deception game of Yahapalanaya. West completely gave up on Yahapalanaya. Now we don’t know where their position is. We yet to have to know if they plan to support Royal government or want to punish it for its past destruction. Foreign Exchange Fraud Amnesty Act 2017 was brought in & exchange start to fall by the action of EU & FATF. The new bill was brought because Exchange fell too much for new government. So did the Aanduwa explain to EU that it will give up the act as soon as the exchange improves? And will Aanduwa follow its promise to EU after three months. We know nothing.

  • 3
    2

    This is where a rational human being can judge what people like Mr. Amrit Muttukumaru realy wants…………
    .
    When European Commission listed Sri Lanka as a high risk third country by the EU in February 2018 – These people were very HAPPY.
    .
    When European Commission removed Sri Lanka from the list – These people were very UNHAPPY.
    .
    Either European Commission is correct or otherwise wrong. You cant have it both ways.
    .
    So…..
    Basically……
    If they are hurting us……………………………………. OK. VERY HAPPY.
    When they are not hurting us……………………. NOT OK. VERY UNHAPPY.
    .
    To be loyal to our country is the duty of every man; to be loyal to ourselves is the first trust of manhood; but the most essential of all loyalty is to be loyal to Him who created us – E. P. Day.

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