By Adolf
The recent revelations in Parliament regarding billions of rupees remitted overseas through telegraphic transfers (TTs) for imports that allegedly never entered Sri Lanka have once again exposed significant weaknesses in the country’s foreign exchange monitoring and trade oversight framework.
According to Public Security Minister Ananda Wijepala, investigations have uncovered tens of millions of dollars transferred abroad through hundreds of transactions linked to shell companies, with little or no evidence that corresponding goods were imported into the country. While the scale of the alleged fraud has attracted public attention, analysts point out that the underlying problem is not new.
Administration Failures
For years, weaknesses in the monitoring of trade-related remittances have been known to regulators and industry participants. The issue raises an important question: who is responsible for ensuring that foreign exchange leaving the country is genuinely linked to imports entering Sri Lanka?
The primary responsibility rests with the Central Bank of Sri Lanka (CBSL), which is the custodian of the country’s foreign exchange reserves and the regulator of the banking system. Commercial banks operate under rules established by the Central Bank, and therefore CBSL must ensure that adequate controls, reporting requirements and monitoring systems are in place to identify suspicious transactions and unusual patterns.
At the same time, Sri Lanka Customs and the Department of Imports and Exports Control have an equally important role. If foreign exchange is remitted for imports, there should be a mechanism to verify whether the goods subsequently arrive in the country. In an era where banking, customs and tax systems are increasingly digitised, reconciling TT payments with import declarations should not be an impossible task.
Analysts note that similar practices have existed for many years in different forms. For example, some parents fund children studying overseas through informal channels such as hawala systems. Others transfer money abroad and physically carry goods into the country through airports. In such cases, the remittance and the goods movement often cannot be properly reconciled through official records.
Failed Advisors
Perhaps the most significant concern, according to industry observers, relates to vehicle imports. It has long been alleged that invoices submitted for customs clearance do not always reflect the true value of vehicles. A portion of the actual payment may be settled separately through overseas transfers, creating discrepancies between declared import values and the real transaction value. Such practices not only result in foreign exchange leakages but may also lead to substantial losses in government revenue.
The focus therefore should not be on sensational headlines but on addressing the systemic weaknesses that have allowed such practices to continue. Authorities already possess extensive digital records. Every TT transaction leaves an electronic trail. Customs declarations, tax records, company registrations and banking information can all be analysed and cross-referenced.
Rather than broad accusations, investigators should identify the importers and companies involved and require them to demonstrate that imports corresponding to the remittances actually took place. Where discrepancies exist, businesses should be given an opportunity to show cause, regularise their positions and pay any taxes, duties or penalties that may be due.
The Financial Intelligence Unit (FIU) of the Central Bank must also play a more proactive role by strengthening monitoring systems, enhancing risk-based supervision and introducing clearer rules for trade-related foreign exchange transactions. Commercial banks should be required to conduct stronger due diligence when processing large volumes of import-related remittances.
Meanwhile, Sri Lanka Customs must improve post-clearance audits and strengthen digital tracking of imports against remittances. The Ministry of Finance should accelerate the integration of customs, tax and banking databases to ensure real-time monitoring and reconciliation.
Conclusion
The latest investigations should serve as a wake-up call. The solution lies not merely in punishing offenders but in building a modern, fully digitised system where every dollar remitted abroad for imports can be matched against goods entering the country. Only then can Sri Lanka effectively safeguard its foreign exchange resources and restore confidence in its regulatory and enforcement framework.
Increasingly, the public views attempts to blame banks, the private sector and industry for failures of state oversight with scepticism. When regulators, Customs, tax authorities and policymakers fail to detect or prevent such practices over many years, accountability must begin with the institutions entrusted with that responsibility.
President Anura Kumara Dissanayake faces a critical challenge. If he is serious about reform, he must surround himself with competent public servants, experienced technocrats and capable advisors who understand the realities of trade, finance and regulation. Relying on failed advisors and systems that have failed successive administrations risks producing more of the same outcomes. Sri Lanka does not need more investigations after the fact; it needs stronger institutions, smarter regulation and effective governance that prevents such abuses from occurring in the first place.