By:Staff Writer
April 09, Colombo (LNW): A Rs. 13.2 billion internal fraud at NDB has exposed significant weaknesses in internal controls, raising urgent questions about oversight failures at multiple levels of the bank’s management structure.
The most striking red flag lies in the sharp increase in receivables linked to Customer Electronic Funds Transfer (CEFT) transactions. These balances surged to Rs. 12.22 billion in 2025 from Rs. 3.1 billion in 2024, far exceeding the historical norm of around Rs. 1.4–1.9 billion. Analysts argue that such an abnormal spike should have immediately triggered deeper scrutiny by finance teams and internal auditors.
Further analysis suggests the fraud was not a one-off incident but a sustained operation, likely beginning around mid-2024 and continuing for nearly 18 months. The scheme allegedly exploited weekend operational gaps, enabling repeated transactions just below the Rs. 5 million ceiling. In one instance, over 70 such transfers were reportedly executed in a single weekend prior to a whistleblower alert.
Governance experts point to a systemic breakdown in monitoring mechanisms. Failures appear to span operational staff, internal audit, finance oversight, and board-level risk committees. Critics argue that the bank’s own financial statements reflected warning signs that were either ignored or inadequately investigated.
Although the bank has moved to suspend implicated employees and initiate a forensic audit, the episode has intensified calls for accountability at senior levels. The case underscores the risks posed by weak internal controls in an increasingly digital banking environment and highlights the need for stronger, real-time monitoring systems.