Fresh pressure is mounting on Sri Lanka’s financial regulators after former Finance Minister Ravi Karunanayake called for an urgent parliamentary inquiry into what has been described as one of the country’s largest alleged foreign exchange frauds, raising questions over whether warning signs were ignored by institutions responsible for financial oversight.
Writing to Committee on Public Finance (CoPF) Chairman Dr. Harsha de Silva, Karunanayake urged lawmakers to investigate not only the companies and individuals accused of orchestrating the alleged fraud but also the conduct of regulatory agencies entrusted with safeguarding the nation’s banking and financial systems.
The appeal comes in the wake of statements made in Parliament by President Anura Kumara Dissanayake and Public Security Minister Ananda Wijepala detailing investigations into suspected fraudulent overseas remittances. According to figures cited by the President, Sri Lanka may have suffered losses approaching US$1 billion since 2024 through advance payments and telegraphic transfers made for imports that allegedly never arrived.
Separately, investigations disclosed by the Public Security Minister reportedly uncovered Rs.12.89 billion transferred overseas through 953 suspected fraudulent transactions involving more than 100 shell companies, intensifying concerns over the effectiveness of existing financial safeguards.
Karunanayake argues that these developments expose what he described as a significant gap in regulatory supervision. Although the Government has introduced emergency measures under the Imports and Exports (Control) Regulations No. 06 of 2026 and the Repatriation of Export Proceeds Rules No. 2 of 2026, he believes these steps do not answer the more fundamental question of how such large-scale financial movements escaped scrutiny in the first place.
Central to his concerns are reports that over 26,000 allegedly fraudulent telegraphic transfer transactions passed through 227 accounts maintained at 13 commercial banks over a two-year period. He questioned whether anti-money laundering systems, transaction monitoring software and Know Your Customer procedures functioned effectively, arguing that transactions of this scale would ordinarily trigger automated compliance alerts.
The former Finance Minister also pointed to the responsibilities of the Central Bank’s Bank Supervision Department and Financial Intelligence Unit, both of which possess legal authority to monitor banking activity, identify suspicious financial flows and enforce compliance standards. According to Karunanayake, the alleged fraud suggests either significant supervisory failures or serious weaknesses in institutional enforcement.
He further urged CoPF to revisit concerns he raised in January 2025 regarding cryptocurrency regulation, claiming he had warned that the absence of clear oversight could enable capital flight, tax evasion and movement of funds beyond Sri Lanka’s regulatory reach. Investigators, he said, should examine whether digital currencies were used alongside alleged trade-based financial fraud.
Karunanayake has recommended that CoPF summon senior Central Bank officials, the heads of Sri Lanka Customs and the Department of Imports and Exports, together with chief compliance officers representing the 13 commercial banks reportedly connected to the transactions.
Maintaining that accountability must extend beyond individual suspects, he argued that Parliament has a constitutional responsibility to determine whether regulatory institutions fulfilled their legal obligations. He has called for the proposed inquiry to be given priority at the committee’s next meeting as pressure builds for answers over the alleged billion-dollar foreign exchange scandal.