Disclose source, if you receive more than Rs. 200,000
The Central Bank has tightened regulations to monitor inward remittances exceeding Rs. 200,000 – with Sri Lankans being required to provide to their receiving banks the source of their funds.
This comes in terms of new Customer Due Diligence (CDD) Rules gazetted by the Financial Intelligence Unit of the Central Bank.
The move runs counter to a claim by Finance Minister Ravi Karunanyaka in October last year where he offered amnesty to Sri Lankans holding secret numbered accounts in Swiss banks. He invited them to bring back their money under a ‘no questions asked’ policy.
“There are about 10 to 15 billion US dollars held outside the country. We are inviting Sri Lankan expatriates to bring their money and we can offer a considerable interest rate,” the Minister said.
The new regulations are aimed at identifying money laundering or terrorism funding activity. Thus it will be illegal for banks and finance companies to open anonymous accounts, or one under a false name. They are also prohibited from opening numbered accounts.
The regulations place more restrictions on financial institutions when doing business with those identified as Politically Exposed Persons (PEPs).
In such cases the institutions are required to subject them to greater scrutiny particularly their sources of funds and wealth or beneficial ownership of funds and wealth as well as conduct enhanced ongoing monitoring in business dealings with PEPS. A PEP has been defined as an individual who is entrusted with prominent public functions either domestically or by a foreign country, or in an international organisation and includes a Head of a State or a Government, a politician, a senior government officer, judicial officer or military officer, a senior executive of a State owned Corporation, Government or autonomous body but does not include middle rank or junior rank individuals.
The regulations state that the CDD will also apply to occasional customers, one-off customers, walk-in customers and third party customers in respect of transactions exceeding Rs. 200,000 or its equivalent in any foreign currency. It will also apply to those who wish to purchase remittance instruments such as pay orders and drafts exceeding Rs. 200,000 or its equivalent in any foreign currency.
The new rules have been made under the Financial Transactions Reporting Act of 2006 and apply to every institution which engages in finance business.The Central Bank comes under the purview of the Ministry of National Policies and Economic Affairs headed by Prime Minister Ranil Wickremesinghe.