By: Staff Writer
June 29, Colombo (LNW): Sri Lanka’s stock market regulator is embarking on a major clean-up of inactive investor accounts, introducing tighter verification requirements designed to reduce fraud risks while modernising oversight of electronically held securities.
From June 30, the Colombo Stock Exchange (CSE), through the Central Depository System (CDS), will begin restricting trading activity in accounts that have remained inactive for extended periods. The initiative forms part of a phased investor protection programme targeting dormant securities accounts that have not recorded transactions for three years or more.
The first batch of restrictions will apply to accounts inactive for at least 15 years. Before trading can resume, affected investors will be required to update their Know Your Customer (KYC) details, ensuring account information reflects current identities and contact details.
Authorities stress that the measure should not be mistaken for asset seizure or account closure. Investors will continue to retain full legal ownership of every security held in their portfolios, while dividends, rights issues, bonus shares and all other corporate action benefits will continue uninterrupted.
The programme has been carefully structured to minimise disruption. After the June rollout, accounts dormant for between 10 and 15 years will be classified on September 30, followed by those inactive for five to 10 years on December 31. The final phase, covering accounts with inactivity ranging from three to five years, will take effect on January 31 next year.
Officials argue that dormant accounts can become attractive targets for fraudsters, particularly where account holders have changed addresses, phone numbers or identification documents over many years. Requiring updated customer information before permitting transactions significantly reduces opportunities for unauthorised access and identity-related financial crime.
Importantly, there is no expiry date for investors wishing to restore their accounts. Trading privileges can be reinstated at any time by submitting updated KYC documentation through the CDS online platform or the official CSE mobile application.
The initiative aligns Sri Lanka’s capital market with practices already adopted by numerous international securities depositories, where periodic customer verification has become a standard defence against financial crime. As securities ownership shifts almost entirely to digital platforms, maintaining accurate investor records has become a central component of market regulation.
Industry observers view the move as part of a broader effort to strengthen confidence in Sri Lanka’s capital markets by improving governance and protecting investors from increasingly sophisticated cyber and financial threats.
Rather than restricting ownership, the new framework focuses on ensuring that only verified account holders can access and trade securities, reinforcing the integrity of the country’s electronic trading infrastructure while preserving investor rights