Transparency International Sri Lanka (TISL) has today said that the organisation is perturbed by the recent moves of the Minister of Finance, encouraging inward remittances in to Sri Lanka from investors (local, foreign and even ‘mystery’ investors) on a “No Questions” asked basis, as a first step in creating a “Financial Centre” in Sri Lanka.
Finance Minister Ravi Karunanayake invited investors to “park” their deposits, including funds presently in Switzerland and other tax/investment havens, in Sri Lanka as “special deposits” and offered a premium investment return of 2% per annum, with “no locked in investment period”. He has subsequently declared that a single “mystery” Belgian national working with a Sri Lankan partner had already remitted USD 500 million under this scheme and the balance of the promised total transfer of USD one billion will follow soon. Officials have separately announced that remittances under this scheme have topped USD 1.5 billion.
Finance Minister Ravi Karunanayake
In announcing the modalities of the deposit scheme, it has been stated that the remitting banks overseas would have already cleared the customer and associated due diligence; and hence there is no requirement for “Know Your Customer” (KYC) and associated validation processes to be repeated in Sri Lanka, though so required under international conventions to be carried out by the recipient Banks. Bank officials, who appear not to have received specific guidelines in connection with this scheme, believe that the scheme is akin to an “amnesty” being declared, exempting the receiving Banks from requirements under local statutory provisions and international guidelines.
This move is contrary to the Prevention of Money Laundering Act requirements. Accepted regulatory frameworks could be exploited to ‘park’ in Sri Lanka “Black Money” and funds gained through trading in narcotics, dangerous substances and illegal arms, as well as funds associated with serious financial crimes, bribery and corruption and terrorism. It is well recognized that investors of such funds seek new havens to launder their money; and such investors could be attracted by the scheme on offer, which in addition have the attractions of a “No Questions” policy, and provides them with attractive investment returns with no lock-in period stipulations.
These funds can very easily move back/out to other destinations whenever thought fit by the investors, especially after serving the objectives of laundering the money by the using the temporary “parking option”. Such actions could result in very serious macro economic and financial stability consequences for Sri Lanka in the future.
Sri Lanka is a signatory to international standards on Combating Money Laundering and Financing of Terrorism Proliferation (FATF Recommendations), and this move by the Minister of Finance could lead to Sri Lanka being internationally penalized. Such a situation will deter serious and honest foreign investments, which can add significant and sustainable value to Sri Lanka and its people, from coming into the island.
The FATF recommendations stipulate compliance procedures to be in place to ensure customer due diligence, ranging from record keeping and reporting suspicious transactions to strict regulation and supervision of financial institutions. In terms of the US Foreign Account Tax Compliance Act (FATCA), Sri Lankan Banks operating within the framework of this new “No Questions” scheme may risk being barred from the US banking system.
The scheme now introduced without transparency and public discussion, will regrettably create an investment framework operating outside acceptable and desirable best practices, and is likely to leave the country, its business sector and citizens exposed to dangers of penal international sanctions.
Patriot / February 2, 2016
He laundered Raj Rajaratnams money ones. So it is free for all. And the police after reading an email come to the conclusion that Yoshitha owns CSN. Well they made a similar judgement in Kotadeniyawa after going through a lap top of a school boy.
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Dinuk / February 3, 2016
Well, well Switzerland got rich with the secret bank accounts of third world dictators like Mahinda Jarapassa, who looted their counties’ national wealth. So, now Ravi K who himself was implicated in money landering wants to ask NO QUESTIONS.
Fact is money laundering in Switzerland and London has been legalized by the IMF and World Bank, but money laundering in the Global south a financial crime.
The sick global financial system that has enabled staggering growth of INEQUALITY and Poverty while 64 people own half the world’s wealth is worse and the IMF and WB should be shut down. Better to ask Mahinda Jarapassa to bring back his looted funds and pay off the National Debt and pardon his war crimes, than borrow from the criminal International Monetary Fund!
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Dude / February 3, 2016
Dead on Dinuk! The IMF has legalized criminality and corruption and Transparency International which is another Europe based INGO follows the IMF_WB_DAVOS rich man’s club agenda while turning a blind eye to STRUCTURAL CORRUPTION and CRIMINALITY in the global financial system which cannibalized counties and people – as happened recently in Greece.
The IMF should be shut down and the whole global order turned upside down.
IMF and global media talk as if world oil prices coming down is a tragedy, when in fact, it is the best thing that happened in along time for the poverty stricken global south where the majority of poor people live.
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maali karunaratne / February 2, 2016
TISL is not transparent enough to question Ravi. They gave awards to Ravaya chief!!!
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Kumara Raj / February 2, 2016
Swiss bank does the same, we cant claim its all black money!,
if ifs blood money (terror) or bad money (drugs / human smuggling n slavery) then the remitting bank or FBI would have frozen those account already, so its not a big risk for Sri Lanka,.
We need funds in to our economy, old Gov have taken all possible loans for high interest so this is the best applicable solution to boost up FDI..
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punchinilame / February 2, 2016
Ravi thinks think MR will jump the band-wagon in brining something back!
In a 32 page booklet CORRUPTION DECADE by srilankavotes.com, page 14 reads as follows:-
“Money Laundering: Foreign Minister Mangala Samaraweera received intelligence reports from four Nations that involved in tracing the billions of Dollars stashed abroad, stating that Rajapakse family holds
US Dollars 18 billion (approximately Rs. 237,933,000,000) worth of assets in Foreign countries.”
When will Case No. B35/15 at Kaduwela M.C. re ownership of Marriot Hotel in Dubai (Rs. 48 to Rs. 190 million) and Case No. B663/15 at Fort M.C. re Scychelles Bank operations, come up – only Minister
Wijedasa Rajapakse and Ravi will know?
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Barus / February 2, 2016
Kumara Raj seems to be an ECONOMIST PAR EXCELLENCE.
May be he can shed more light on the billions stashed outside the country by the previous regime. Is that Black Money or Not-So-Black Money?
There are educated crooks who do all kinds of manipulations to move out funds from one country to another WITHOUT ever getting caught. In the whole process, bribe a few ministers and such people to wash the color of money.
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silva / February 2, 2016
TISL? What the heck is that? Where were they when Rajapakshas robbed the country to complete ruin? And where were they when Rajapakshas smuggled the robbed billions to Switzerland, Dubai, Singapore, Seashells etc? And what fucking international laws were in force to prevent the sordid act whilst they still got away with the loot? Don’t write dogshit. If Dubail and Switzerland could accept Rajapaksha loot without any questions asked what fucking laws are you vomiting?
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KA Sumanasekera / February 3, 2016
Who could be more qualified to do Money Laundering than Galleon Ravi.
His Belgian mate promised to park USD 1 Billion. But delivered only half of that.
Transparency has to take Galleon’s word on that or go to our Yahapalana High Court as Galleon has advised.
Looking at the latest CB figures available on the Web, Nov 15 trade deficit is USD 700 Million.
Belgian mates USD 500 Mil is not enough to even quarantee one months deficit.
So much for Galleon’s accounting to impress the Yahapalana suckers who are waiting for Batalanda Ranil to bring home the Bacon.
Probably it has to be Chocolates for the SLMC.
Anyway focussing on the big picture, where is Abiththaya going to get USD 40 Billion to do his Megapolis?.
I know Btalanada , Abiththaya , JVP Prince,and even Bodhiplala will need full time accommodation in the Megapolis , the way things are panning out at the moment.
For example, this lot can now only call upon a few Bikkus in Colombo only , to give them Pansakula, the last rites in Roman.
Unless they bring down the Chief Prelate from Kirra’s Turf.
Another interesting point I came across is the latest Bond Auction results.
In Feb 02 , which is only yesterday , the average yield for the lenders is just 7.4 %.
My Elders tell me around Feb last year , one Mr Alloysious picked up 12.85 % for the same bonds.
Wonder whether this was picked up by this Transparency Radar Operators.
I mean 5.2 % extra is a F……. lot of money on 50 Billion even in our Yahapalana LKR…
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