By Banker
The recent arrest of bank officials over an alleged $1 billion import scam reveals a troubling pattern: the government and Central Bank of Sri Lanka (CBSL) are deflecting blame onto junior banking staff while their own catastrophic regulatory failures remain unaddressed.
The False Narrative
Contrary to official claims, only one bank manager has been arrested, alongside junior officers. The government’s rhetoric exaggerates the arrests to create a convenient scapegoat for far deeper systemic issues. Even the defense counsel has argued these branch managers lacked authority over large transfers—decisions were made by head offices, not frontline staff.
The Real Culprit: Institutional Lapses
Under the Import and Export Act, Customs must notify the CBSL’s Foreign Exchange Department when importers fail to bring goods within six months . This fundamental regulatory mechanism appears non-functional since at least 2012. The CBSL and Import Controller, not banks, bear primary responsibility for monitoring and enforcement.
The Untold Crisis
Sri Lanka’s credit rating was downgraded to “cash buyer” status in September 2020, leaving local banks unable to open credible Letters of Credit (LCs). Even after the import ban was lifted, overseas banks continued refusing Sri Lankan LCs. The only way to secure essential supplies was through Telegraphic Transfers (TT)—precisely the mechanism now being criminalized.
The CBSL knew this. Their failure to implement basic reconciliation—matching outward TTs with Customs declarations (CUSDECs)—represents negligence at the highest level.
Widespread Scams Exposed
The scale of fraud is staggering. Recent investigations uncovered 26,108 TT transactions through 227 bank accounts across 13 banks, involving 105 shell companies.
Another scheme saw one company remit $42.7 million through 953 transactions to 256 companies across 26 countries—with no corresponding imports.
Hypocrisy and Human Cost
The government’s response—blaming poorly paid bank staff while ignoring their own failures—is a “pathetic display of governance.” A bank officer earning around Rs. 150,000 monthly faces skyrocketing living costs (rice at Rs. 300/kg) while being prosecuted for systemic failures.
Meanwhile, the same CBSL and Finance Ministry that cannot manage a $2.5 million loan installment demand accountability from frontline workers.
New Regulations, Old Problems
In June 2026, new regulations were introduced requiring banks to assign unique IDs to every import remittance and mandating Customs registration before advance payments.
While welcome, this reactive measure confirms that proper oversight never existed. A single competent CBSL staff member could have prevented this crisis years ago through basic reconciliation procedures.
The media narrative must shift from condemning individual bankers to exposing the institutional rot at the CBSL, Finance Ministry, and Customs—the real architects of this crisis.