October 06, Colombo (LNW): Sri Lanka is gearing up for a high-stakes evaluation of its measures to combat money laundering and terrorist financing, as the country enters its third mutual assessment under international standards in 2025.

The process, coordinated by the Financial Action Task Force (FATF) and its regional counterpart, the Asia Pacific Group on Money Laundering, was postponed earlier this year due to the country’s major elections.

This time, however, the review will be conducted under the FATF’s enhanced methodology, which goes beyond simply having laws in place and instead focuses on how effective those measures are in practice.

Sri Lanka’s track record has been mixed. Following previous assessments in 2006 and 2015, the country was twice placed on FATF’s “grey list” for shortcomings in its anti-money laundering and counter-terrorism financing frameworks. These listings also led to being blacklisted by the European Union, damaging Sri Lanka’s financial reputation before it was eventually removed from both lists by 2020.

Now, authorities say the country cannot afford a repeat.

“We are still rebuilding after multiple shocks — from the Easter Sunday attacks to the pandemic and the economic collapse,” said Subhani Keerthiratne, Director of the Financial Intelligence Unit (FIU), which operates under the Central Bank. “Being grey-listed again would bring consequences we are not in a position to absorb.”

A grey listing, while not a sanction, prompts global financial institutions to treat a country as high risk. This can impact everything from international banking relationships to sovereign credit ratings, ultimately raising borrowing costs and insurance premiums.

To strengthen its position, Sri Lanka has completed two national risk assessments, the most recent of which identifies drug trafficking, corruption, and trade-based money laundering as significant threats. A national policy has also been adopted to guide anti-money laundering efforts from 2023 to 2028, with 24 government institutions assigned implementation responsibilities. A high-level task force is monitoring progress.

Yet critical gaps remain. One such area is virtual assets — including cryptocurrencies — where regulatory oversight is still lacking. Under FATF rules, countries must oversee virtual asset service providers, but Sri Lanka remains only “partially compliant.” The Central Bank has urged the government to take a policy decision, and legal amendments are being drafted to address this issue.

Another major concern is transparency over beneficial ownership — identifying the true owners behind companies. FATF deems Sri Lanka non-compliant in this area. A recent amendment to the Companies Act now mandates companies to maintain ownership records, and efforts are underway, with international assistance, to build a central registry by 2025.

The FATF also places emphasis on actual outcomes. Financial institutions are expected not just to follow formal “know your customer” protocols, but to apply them in practice, along with continuous monitoring. The same applies to lawyers, accountants, real estate agents, and casinos, all considered vulnerable to misuse by criminals.

Sri Lanka’s FIU stands out for having legal authority to freeze accounts, halt transactions, and levy penalties — powers that many of its counterparts lack. Even so, challenges such as high staff turnover and weak inter-agency coordination hinder progress.

The country now has more convictions for money laundering than it did during its last review — 14, up from just one in 2015. But FATF will be looking for systemic effectiveness.

“We need to make financial crime unprofitable,” said Ms Keerthiratne. “It’s not just about jailing offenders. It’s about dismantling the economic incentives behind criminal activity.”

October 06, Colombo (LNW): The Ceylon Electricity Board (CEB) has officially called for tenders to develop 200MW/200MWh of battery energy storage systems (BESS), as part of its broader strategy to strengthen Sri Lanka’s national grid and increase its capacity to absorb renewable energy.

The initiative, backed by funding from the Asian Development Bank (ADB), represents a key step in the country’s energy transition.

The BESS project, to be located at the Kolonnawa grid substation, is being tendered in two equal parts—each for 100MW/100MWh of storage capacity. This large-scale deployment is intended to address one of the major technical challenges in integrating variable renewable sources, such as solar and wind, into the grid: their intermittent nature.

The ADB had previously extended a credit facility of USD 150 million to Sri Lanka, aimed specifically at upgrading the transmission and distribution infrastructure to better handle renewable power generation. Unlike traditional fossil-fuel plants or large hydropower stations, solar and wind installations are subject to fluctuations in output, depending on weather and time of day.

Without appropriate grid support, these fluctuations can trigger voltage instability and potentially cause cascading failures across the system.

Battery storage offers a critical solution to this problem. BESS installations can respond to imbalances in supply and demand within milliseconds, helping to smooth out short-term fluctuations and improve overall grid reliability. In doing so, they act as a buffer—storing excess energy when supply is high and releasing it when demand rises or generation dips.

October 06, Colombo (LNW): The Consumer Affairs Authority (CAA) has initiated legal proceedings against 135 traders across Sri Lanka for allegedly selling rice at inflated prices, as part of a broader clampdown on unethical market practices amid rising concerns over food affordability.

According to the CAA, the cases stem from raids conducted islandwide over the past month, targeting both individual vendors and businesses suspected of price manipulation or hoarding of essential food items.

The authority confirmed that enforcement operations are ongoing, particularly against those attempting to profit by concealing rice stocks or violating price controls.

Under the Consumer Affairs Authority Act, traders found guilty of overpricing rice may face significant penalties. Individuals risk fines ranging from Rs. 100,000 to Rs. 500,000, imprisonment for a period of up to five months, or both.

In the case of corporate entities, penalties can range from Rs. 500,000 to Rs. 5 million, with the added possibility of custodial sentences and the confiscation of goods found to be hoarded or sold unlawfully.

The CAA also issued a stern warning to repeat offenders, stating that courts are empowered to impose double the standard fine and extend prison terms to a maximum of one year upon a second conviction.

October 06, Colombo (LNW): Efforts to restore power across Sri Lanka have been significantly hampered due to ongoing industrial action by employees of the Ceylon Electricity Board (CEB), as the country grapples with widespread outages triggered by severe weather.

According to CEB sources, nearly 30,000 power failures have been reported islandwide, largely attributed to high winds that have brought down trees and damaged power lines. However, despite the urgent need for repairs, response times have been severely affected due to a continuing work-to-rule campaign by electricity sector trade unions.

The Sri Lanka Nidahas Sevaka Sangamaya, a key union within the CEB, confirmed that the industrial action has delayed power restoration in many affected areas. Their campaign, now in its 32nd consecutive day, has seen employees limit themselves strictly to regular working hours, refraining from overtime and additional duties typically essential during emergency repair operations.

The protest began on September 04 and initially involved 25 trade unions, including those with affiliations to political parties such as the Sri Lanka Freedom Party (SLFP), United National Party (UNP), and Sri Lanka Podujana Peramuna (SLPP). It has since expanded in scope and impact.

Union representatives originally tabled 24 demands focused on the ongoing restructuring of the CEB. However, the list has since grown to include grievances over stalled promotions, unpaid salary arrears, and the non-permanency of a temporary Rs. 10,000 monthly allowance paid until the end of 2023.

Workers are also calling for this allowance to be incorporated into their basic salary and for a 25 per cent salary increase effective from 1 January 2024, along with corresponding back payments.

In response to the deteriorating situation, the CEB has suspended all forms of employee leave in a bid to maintain critical operations and minimise disruptions to the public. Meanwhile, an Extraordinary Gazette declaring electricity services as essential remains in force, theoretically obligating staff to report for work. Despite this, the industrial campaign continues to paralyse key functions, particularly emergency repair work.

October 06, Colombo (LNW): The authority to oversee transfers, promotions, and other administrative matters concerning police personnel is set to return to the Inspector General of Police (IGP) in the coming week, marking a notable shift in the governance of Sri Lanka’s police force.

A formal gazette notification is expected to be issued shortly, officially transferring these powers from the National Police Commission (NPC) back to the IGP. This development follows a decision made during a recent meeting of the NPC held last Wednesday.

Currently, the National Police Commission is vested with the power to manage critical human resource functions within the police service, including disciplinary matters, career advancement, and officer transfers.

October 06, Colombo (LNW): Authorities in Sri Lanka are currently conducting laboratory tests on a quantity of chemical substances recently uncovered in Kandana, which are suspected to be methamphetamine, commonly referred to as ‘Ice’.

The National Dangerous Drugs Control Board (NDDCB) has stated that the final test results are expected to be released within the week.

The seizure in Kandana follows a string of discoveries in recent weeks, believed to be part of a larger international drug network operating across several regions. Substances recovered from previous raids in Middeniya and Netolpitiya, both located in the Tangalle area, have already been confirmed through laboratory analysis as methamphetamine—one of the most potent and widely trafficked synthetic narcotics.

Additionally, the NDDCB confirmed that a separate substance found in the possession of a Moldovan national in Weligama has been positively identified as Mephedrone, a synthetic stimulant that poses serious health risks and is known for its high potential for abuse and addiction.

Mephedrone is classified among the newer generation of designer drugs, often linked to party scenes and recreational misuse, but increasingly appearing in organised trafficking operations.

These findings are part of an ongoing investigation with international dimensions. Sri Lankan authorities were alerted following intelligence obtained from several individuals arrested in Indonesia, identified as members of a transnational crime syndicate.

The information provided by these suspects led to the discovery of substantial quantities of suspicious chemicals at multiple locations across the island.

All samples recovered from the recent operations have been sent to the NDDCB’s forensic laboratories for detailed examination. Officials noted that such testing is crucial not only for criminal prosecution but also to identify the exact composition and origin of the drugs, which may help uncover broader trafficking routes and supply chains.

October 06, Colombo (LNW): The head of Sri Lanka’s postal service has voiced deep concern over ongoing irregularities and systemic inefficiencies within the department, pointing to a culture of misconduct that has undermined both public trust and operational standards.

Postmaster General Ruwan Sathkumara made the remarks during a World Post Day gathering held at the Haputale Post Office, where he addressed both employees and the public.

Speaking candidly, he acknowledged that his tenure has been marred by persistent internal challenges, many of which stem from fraudulent practices and administrative negligence.

Among the most alarming revelations was the misuse of overtime claims, which, according to Sathkumara, has cost the department millions of rupees.

“Overtime has been recorded and paid out without proper biometric verification,” he stated, referring to the fingerprint-based attendance system intended to ensure transparency. In many cases, records were manipulated or not maintained at all, enabling employees to secure payments without fulfilling the corresponding work hours.

He also highlighted abuse in relation to vehicle maintenance operations, where staff reportedly exaggerated the number of personnel involved and overstated the hours spent on routine servicing.

In addition to financial mismanagement, Sathkumara drew attention to unacceptable delays in the core function of mail delivery. He cited a recent incident in which a letter posted from Pilimathalawa to the Ministry of Higher Education in Colombo inexplicably took close to a month to arrive.