Sri Lanka is seeking to strengthen its financial crime defences after a new national review highlighted emerging threats from terrorist financing, digital financial channels and global proliferation risks.

The latest National Risk Assessment, completed by the Financial Intelligence Unit, examined the country’s vulnerabilities to money laundering, terrorist financing and proliferation financing.

The assessment, which involved 86 institutions and nearly 200 experts, represents the most extensive national review yet of Sri Lanka’s financial crime landscape.

Officials say the initiative was conducted under the guidance of the National Coordinating Committee on Anti‑Money Laundering and Countering the Financing of Terrorism and analysed risks across 15 core sectors.

For the first time, the review included a national assessment of proliferation financing the funding of activities linked to weapons proliferation reflecting growing international concern over such financial networks.

The report concluded that Sri Lanka’s proliferation financing risk currently stands at a medium level, shaped by a challenging global environment and domestic regulatory vulnerabilities.

Terrorist financing risks were assessed as medium-high, marking an increase from the previous medium rating.

Investigators attribute this shift to evolving extremist and separatist networks, as well as the potential influence of diaspora funding, online radicalisation and cross-border financial flows.

Emerging financial technologies are also becoming part of the risk equation.The assessment identified vulnerabilities linked to virtual assets and virtual asset service providers an area receiving growing attention from financial regulators worldwide.

Although the risk associated with these platforms was rated between low and medium, authorities say monitoring digital financial channels will become increasingly important as technology reshapes financial transactions.

The study also examined risks associated with legal entities and ownership structures.

Money laundering risks related to legal persons were rated medium-high, highlighting the importance of transparency around beneficial ownership to prevent shell companies being used to conceal illicit financial flows.

In contrast, risks associated with non-profit organisations, financial inclusion products and certain financial services were rated between low and medium.

Experts say these findings illustrate the delicate balance policymakers face between expanding financial inclusion and preventing financial systems from being exploited by criminal networks.

The report recommends stronger institutional coordination and more targeted regulatory oversight to address these challenges.

Authorities have already outlined plans to update Sri Lanka’s national anti-money laundering and counter-terrorism financing strategy for the 2026–2030 period.

Financial institutions and other organisations governed by the Financial Transactions Reporting Act No. 6 of 2006 have also been advised to integrate the report’s findings into their internal risk assessments.

Analysts say the next phase of reforms will determine how effectively Sri Lanka can align its regulatory framework with global standards while safeguarding financial stability.

With financial crimes becoming more sophisticated and increasingly digital, maintaining strong monitoring systems and international cooperation will remain central to protecting the country’s financial sector.

Sri Lanka’s export sector is navigating a complex mix of global and domestic pressures, with rising geopolitical tensions linked to the Gulf War threatening to compound longstanding weaknesses in the country’s trade ecosystem.

Industry data compiled by the Ceylon Chamber of Commerce suggests that exporters are increasingly concerned about the country’s ability to compete with regional rivals in attracting investment and sustaining export growth.

The chamber’s Export Barometer Survey 2026 reveals that a majority of exporters believe Sri Lanka’s investment environment is slightly or significantly worse than that of competing economies.

Conducted between November 2025 and January 2026, the survey included responses from 90 export-oriented firms comprising both small and medium enterprises and larger corporations—and was supported by key interviews with industry stakeholders.

Respondents pointed to several structural challenges affecting export competitiveness, including high labour costs, rising energy prices, regulatory hurdles and inefficiencies in logistics and infrastructure.

These domestic issues are now intersecting with global risks.With tensions in the Gulf region threatening shipping routes and increasing fuel costs, exporters fear further strain on supply chains and freight costs factors that could weaken Sri Lanka’s price competitiveness in international markets.

Yet the survey suggests that many companies are adopting survival strategies rather than retreating from global markets.

Market diversification appears to be a key tactic. Around 55% of exporters reported identifying new markets for their products and services, signalling a strategic shift aimed at reducing dependence on traditional destinations.

Product innovation is another approach. Approximately 28% of respondents said they were exporting new products to existing markets, while another 27% reported launching new products in entirely new markets. Meanwhile, about 28% are selling existing products in new international destinations.

A smaller share about 15% are also exploring domestic opportunities by introducing new products locally.

The findings highlight a broader trend within Sri Lanka’s export community: businesses are attempting to adapt through innovation and diversification even while operating within a challenging policy environment.

Exporters say policy reforms will be critical to sustaining this momentum.

Among the most frequently proposed measures is the establishment of a National Single Window system to simplify export and import procedures. Such a digital platform could streamline regulatory approvals by integrating customs authorities, ports, tax agencies and other government institutions.

Businesses also stress the importance of digital trade tools including e-payments, digital identity verification systems and supply chain traceability infrastructure to help exporters comply with international regulations and maintain access to global markets.

Additionally, companies are calling for expanded training programs, concessional financing and tax incentives to support innovation, particularly among small and medium-sized exporters.

Greater collaboration among government institutions, industry chambers, development agencies and startups is also seen as vital to improving market research and fostering new business partnerships.

As global trade uncertainty intensifies, the survey underscores a central challenge: Sri Lanka’s exporters may be ready to innovate and diversify but their success will depend heavily on whether policy reforms keep pace with a rapidly changing global trade environment.

A major financing commitment from the Asian Development Bank is poised to influence Sri Lanka’s economic trajectory over the next several years, but analysts say the success of the initiative will depend heavily on policy execution and structural reforms.

The development lender announced it is prepared to provide more than $1 billion annually to Sri Lanka between 2026 and 2029 following high-level discussions between ADB President Masato Kanda and Prime Minister Harini Amarasuriya in Manila.

The funding package is designed to support macroeconomic stability, expand private sector activity, and strengthen human capital through education and skills development. It also aims to improve the country’s infrastructure resilience an increasingly urgent priority following the damage caused by Cyclone Ditwah.

One of the most ambitious components of the ADB’s support involves a large-scale digital transformation initiative. The program is intended to modernise Sri Lanka’s digital ecosystem, encourage innovation, and unlock new opportunities within the country’s technology-driven sectors.

Economists say digitalisation could boost productivity and improve government service delivery, but warn that such initiatives require consistent regulatory reforms and investment in digital infrastructure.

The ADB is also backing Sri Lanka’s potential entry into the Regional Comprehensive Economic Partnership. Membership in the Asia-Pacific trade agreement could significantly expand the country’s access to regional markets and strengthen its position within global supply chains.

However, trade analysts point out that deeper integration into the RCEP framework will require Sri Lanka to upgrade its competitiveness, streamline trade regulations, and align standards with regional partners.

The meeting between the two leaders also emphasised inclusive economic development. During discussions linked to the ADB’s International Women’s Day program, both sides highlighted women’s economic empowerment as a key development priority.

The bank has long served as an implementing partner of the Women Entrepreneurs Finance Initiative, which supports women-led businesses by improving access to finance, strengthening entrepreneurial skills, and promoting policy reforms.

Sri Lanka has already taken steps in this direction. In March 2025, the country became one of the first to adopt the Women Entrepreneurs Finance Code at a national level, a framework designed to improve financial inclusion for women entrepreneurs.

Meanwhile, Prime Minister Amarasuriya also participated in discussions facilitated by the ADB on strengthening the country’s workforce skills. These talks explored collaboration with the Association of Southeast Asian Nations to align skills and qualification frameworks, as well as potential cooperation with the Philippines on technical and vocational education and training.

While the funding commitment signals strong international backing, economists caution that its long-term benefits will depend on how effectively Sri Lanka translates development financing into sustained economic reforms and productive growth.

Nearly four months after the destructive landfall of Cyclone Ditwah, questions are emerging about whether Sri Lanka’s manufacturing sector is receiving adequate support to recover from the disaster’s economic shock.

The cyclone, which struck the country in late November 2025, caused widespread flooding across industrial zones and inflicted estimated losses of Rs. 33.96 billion on the manufacturing sector, according to preliminary assessments by the Industry and Entrepreneurship Development Ministry.

The most severe losses stemmed from destroyed raw materials and inventory valued at approximately Rs. 10.2 billion. But the damage extended far beyond stock losses. Floodwaters entered factories, disabling machinery, halting production lines and disrupting supply chains that many companies depend on to maintain operations.

Several manufacturers say the flooding left critical equipment unusable for extended periods, forcing them to temporarily shut down operations and incur heavy revenue losses.

While the damage represents less than two percent of the sector’s economic contribution, the disruption has still raised concerns within an industry that contributes significantly to the national economy.

Data from the Department of Census and Statistics shows industrial activities accounted for 27.7% of the country’s Gross Domestic Product in the third quarter of 2025, amounting to more than Rs. 2.3 billion at current prices.

Despite the sector’s importance, critics argue that recovery efforts so far appear limited in scope.

In December 2025, the Government introduced the Industry Revival Facilitation Program (IRFP) through a partnership between the Industry and Entrepreneurship Development Ministry and the Industrial Development Board.

The initiative was designed as a public–private partnership to support industries affected by the cyclone. However, the program’s first phase has only assisted 43 industries, raising questions about whether the support reaches the wider manufacturing base affected by the disaster.

The first phase of the initiative concluded this week at a ceremony attended by Deputy Minister Chathuranga Abeysinghe.

During the event, the ministry acknowledged private sector partners who contributed to recovery efforts. Officials also recognised individuals who helped establish the Industry Disaster Support Centre (IDSC), which created a digital system to collect and analyse data on the impact of the cyclone on industries.

The platform enabled authorities to build a centralised database of affected companies and damage assessments, a step officials say will improve disaster response planning in the future.

However for many businesses, the key issue remains financial recovery. With machinery damaged and supply chains disrupted, some companies face the costly challenge of restoring operations without significant state assistance.

The ministry has announced plans to introduce the Industry Development Foster Program (IDFP), which aims to provide longer-term support for industries identified in post-disaster assessments.

Nevertheless, industry observers say the effectiveness of that program will determine whether the manufacturing sector can fully rebound from the cyclone’s impact.

For now, the sector continues to navigate a fragile recovery—balancing limited relief support against the urgent need to rebuild production capacity and restore supply chains disrupted by one of the most damaging weather events to hit Sri Lanka’s industrial landscape in recent years.

The University of Peradeniya has urged students, staff and nearby residents to remain vigilant following several sightings of Sri Lankan leopards within the university premises.

University officials said the areas around the Veterinary Teaching Farm and the Staff Development Centre in the Hanthana region have been identified as locations where the animals have been frequently spotted.

Dhammika Perera, Head of the Department of Farm Animal Production and Health at the Faculty of Veterinary Medicine, said research is being conducted with the assistance of the Department of Wildlife Conservation to monitor leopard activity in the area.

Based on available data, he said around eight leopards are believed to be living in the area, including a female leopard with a cub.

Perera explained that female leopards with cubs often move closer to human settlements while searching for food, which may explain the increased sightings around the university premises.

Following discussions with relevant departments, several precautionary measures have been introduced to protect animals kept at the university farm. These include installing safety fences around vulnerable areas and implementing an alarm system with motion sensors and sirens to alert staff if leopards approach the farm.

University sources said the situation has temporarily subsided, with no new incidents reported recently, although a cow and a dog were found dead near Uda Peradeniya.

Last week, several leopard sightings were reported on campus along with attacks on livestock at the Veterinary Teaching Farm.

The university has advised members of the campus community to avoid walking alone, especially during early morning, late evening or night hours, and to immediately report any leopard sightings to university security.

Minister of Trade, Commerce, Food Security and Cooperative Development Wasantha Samarasinghe says there is no need at present to introduce work-from-home arrangements in Sri Lanka despite the global crisis triggered by the ongoing Middle East conflict.

Speaking on Thursday (12), the Minister said the government is closely monitoring the evolving situation and would consider implementing work-from-home arrangements for both public and private sector employees if conditions worsen.

Samarasinghe noted that the conflict has disrupted global supply chains, leading to increased shipping costs and higher prices for essential goods in international markets.

He also said global oil and gas prices have risen, warning that although fuel prices have already been adjusted locally, further increases could occur by April when new shipments arrive at higher costs.

The Minister added that some private gas suppliers have attempted to raise prices, but the government is keeping a close watch and taking steps to maintain price stability.

Samarasinghe also urged the public not to engage in panic buying and to use resources responsibly.

He noted that long queues often form at fuel stations immediately after news of global conflicts, stressing that such behaviour is unnecessary and can create avoidable pressure on supplies.

Sri Lanka Police has issued a public advisory following several complaints of valuables being stolen by individuals employed in domestic service.

According to a statement from the Police Media Division, complaints received by police stations indicate incidents where domestic workers have allegedly stolen gold jewellery, cash, foreign currency and other valuables from the households where they were employed.

The Police noted that employing domestic workers is common in Colombo and its suburbs such as Mirihana, Maharagama, Dehiwala and Mount Lavinia, as well as in many other parts of the country.

Domestic workers are often recruited through agencies, intermediaries or business establishments, while some are hired directly by homeowners.

However, investigations have revealed cases where certain individuals employed as domestic workers have dishonestly removed money, gold and other property from their employers’ residences.

Police also warned that in some cases groups may deliberately seek employment in affluent households with the intention of committing theft, sometimes involving relatives to assist in such activities.

In response, the Police have urged the public to follow several precautionary measures when employing domestic workers.

Homeowners are advised to verify the background and personal details of individuals before hiring them and obtain a clear photocopy of the National Identity Card (NIC) while checking it against the original.

Police also recommend obtaining police clearance or verification reports from the police stations in the worker’s permanent and temporary areas of residence.

Employers are further encouraged to collect contact details of family members and emergency contacts of the worker in advance.

The Police also advised residents to store jewellery, cash and important documents in secure locations and avoid leaving domestic workers alone in the house whenever possible.

In addition, homeowners are encouraged to provide copies of relevant documents to the Officer-in-Charge (OIC) of the local police station and inform the police about the employment.

Sri Lanka Police said that increasing public awareness and following these precautionary measures could help reduce and prevent theft-related incidents involving domestic workers.

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The 2026 Iran war is a lesson in the limits of power. You cannot bomb a civilization into a democracy, and you cannot win a war when your own people don’t believe in the cause. The picture shows Protesters rally in response to U.S.-Israeli attacks on Iran, at Embarcadero Plaza in San Francisco. (Picture courtesy KQED)

In military terms, Iran is a “defender’s dream.” Its rugged terrain acts as a natural force multiplier

While technology wins battles, it is the human will and a clear “end-state” that win wars

By dragging the conflict out, Iran is successfully depleting the expensive and limited stocks of Western interceptor missiles

Once those interceptors are depleted, the 27 American bases in the Middle East become “sitting ducks.” Iran isn’t fighting to win a traditional dogfight; they are fighting to make the cost of American presence unsustainable

The history of warfare is littered with the hubris of technologically superior powers who underestimated the resilience of a civilization state. On February 28, 2026, the world watched as a decapitation strike, intended to trigger a regime change in Tehran instead ignited a firestorm that threatens to consume the global economy.

As an infantry officer who spent two decades in the trenches of the Sri Lankan civil war, I have seen firsthand that while technology wins battles, it is the human will and a clear “end-state” that win wars. The current US-Israeli campaign against Iran is missing both; mirroring the same strategic failures that plagued the Indian Peace Keeping Force (IPKF) in Sri Lanka.

1. The geographic and demographic fortress

The fundamental miscalculation begins with a failure to understand what Iran is. Unlike Iraq, Libya, or Venezuela, Iran is a mountain-guarded civilization with a population of 92 million. It is 25 times the size of Sri Lanka and 75 times the size of Israel.

In military terms, Iran is a “defender’s dream.” Its rugged terrain acts as a natural force multiplier. Any attempt at a ground assault would require a commitment of troops that neither the United States nor Israel is prepared to lose. Western societies are historically casualty-averse; they “fear death and injury by nature” when the cause is not perceived as an existential threat to their own soil. In contrast, the Iranian population, now galvanised by the death of Ayatollah Ali Khamenei, views this as a war for national survival.

2.  The War of Attrition: Interceptors vs. Drones

The US-Israeli strategy relied on a “100-hour” knockout blow heavy casualties and immediate regime collapse. However, the Iranian strategy is more patient and far more dangerous: a war of attrition. By dragging the conflict out, Iran is successfully depleting the expensive and limited stocks of Western interceptor missiles. A swarm of low cost Iranian drones and ballistic missiles costs a fraction of the Aegis or Iron Dome interceptors used to stop them. Once those interceptors are depleted, the 27 American bases in the Middle East become “sitting ducks.” Iran is not fighting to win a traditional dogfight; they are fighting to make the cost of American presence unsustainable.

3. The Economic Noose: The Strait of Hormuz

The closure of the Strait of Hormuz has sent shockwaves through the global markets. While President Trump threatened to force the passage open, the reality on the water is different. Iran’s proximity to the strait gives it a decisive military advantage via shore-based anti-ship missiles and asymmetric naval tactics.

The result? Oil prices soaring past $100 per barrel. This is an economic “dirty bomb” dropped on the doorsteps of Europe and Asia. For countries like Sri Lanka, already navigating delicate economic recoveries, these prices are catastrophic. By allowing Chinese and Russian vessels to pass while blocking others, Iran is effectively driving a wedge between the US and its traditional allies, who now see American policy as the primary threat to their own heating and transport costs.

4. The “Vietnam” of the Middle East: Lack of Domestic Support

No war can be won without the “blessing” of the local population. The American public doesn’t see Iran as a direct threat. There is a growing realization that this is an “Israel-first” war, funded by lobby interests rather than national necessity.

President Trump campaigned on an “America First” platform, promising to end “forever wars.” By initiating this conflict, he has inverted that promise. He is now spending an estimated $3.2 billion every 100 hours. If this war lasts 100 days, the bill will exceed more than half of American defense budget and American taxpayers will not tolerate for a war of choice.

5. The IPKF Parallel: A War without an End-State

My experience with the IPKF in Sri Lanka provides the most haunting parallel. The Indian Army entered Sri Lanka with superior numbers and technology, but they lacked a clear, achievable end-state. They were fighting on behalf of another’s interests, and the “human psychology” of the soldier reflects that.

In Iran, the US has no realistic end-state.

 Regime Change? The killing of the leadership has unified a fractured population.

  Surrender? A civilization with thousands of years of history does not surrender to a “blessing” from Washington.

  Puppet Leadership? Any leader appointed by Trump would have zero legitimacy and would be assassinated within days.

6. The Crumbling of NATO and International Law

The arrest of Venezuelan Leader Nicolás Maduro and the threats toward Greenland had already alienated NATO. This unilateral strike on Iran, conducted under the influence of the Israel lobby, has left the US isolated. When the commander-in-chief prioritises the interests of a foreign lobby over the stability of his own allies, the “good faith” that holds alliances together evaporates.

Impact of Iran-US Conflict on Sri Lanka

The military escalation on February 28, 2026, between the US-Israeli coalition and Iran has triggered a seismic shock to the global economy. For Sri Lanka, a nation still in the “fragile waiting zone” of recovery after its 2022 crisis, this conflict is not a distant geopolitical event. It is a direct threat to its national stability.

The Macro-Economic Fallout

Sri Lanka’s economy is deeply tethered to the Middle East through three primary lifelines: Energy, Remittances and Exports.

 Energy Insecurity: Sri Lanka is a net importer of oil, spending approximately $3.8 billion annually. The closure of the Strait of Hormuz through which 20% of global oil flows has already pushed Brent crude toward the $100-$110 range. This feeds directly into the domestic pricing formula, causing immediate spikes in petrol and diesel prices.

 The Remittance Risk: Over one million Sri Lankans work in the Gulf. Remittances, which reached over $8 billion in 2025, are the backbone of the island’s foreign exchange reserves. A regional war puts these workers in physical danger and threatens to freeze the primary source of dollar inflows.

 Export Disruptions: The Middle East (specifically Iran, Iraq, and the UAE) accounts for nearly 20% of Ceylon Tea exports. War-related logistics hurdles and reduced purchasing power in these markets threaten the livelihoods of the plantation sector.

Strategic Recommendations for Sri Lanka

To weather this storm, the government and the private sector must pivot from “recovery” to “defensive resilience.

Just as in the infantry, the success of Sri Lanka’s economic defense depends on the psychology of the public.

1.    Transparency: The government must provide regular, honest briefings on fuel stocks (currently at ~35 days) to prevent panic buying and hoarding.

2.    Vulnerable Protection: Targeted subsidies must be used to shield the poorest from the “imported inflation” of food and transport costs.

3.    Diplomatic Neutrality: Sri Lanka must maintain its “friend to all” foreign policy, ensuring that its shipping lanes remain open even as major powers take sides.

The 2026 conflict is a reminder that in a globalised world, a spark in the Persian Gulf can start a fire in the Indian Ocean. Sri Lanka must act with the discipline of an infantry unit; clear objectives, managed resources and a focus on survival.

Conclusion: The Inevitable Settlement

The “man behind the weapon” always matters more than the weapon itself. The Iranian soldier is fighting for his home; the American soldier is fighting for a policy he doesn’t understand.

Within a month, the pressure will become unbearable. Between the depletion of interceptors, the rebellion of European allies, the global outcry over oil prices, and the mounting body bags, Trump will find himself with no escape. He will be forced to the negotiating table for a settlement he never intended to grant.

The 2026 Iran war is a lesson in the limits of power. You cannot bomb a civilization into a democracy, and you cannot win a war when your own people don’t believe in the cause.

(The writer is a battle hardened Infantry Officer who served the Sri Lanka Army for over 36 years, dedicating 20 of those to active combat. In addition to his military service, Dr. Perera is a respected International Researcher and Writer, having authored more than 200 research articles and 16 books. He holds a PhD in economics and is an entrepreneur and International Analyst specialising in National Security, economics and politics. He can be reached at [email protected])

The United States has struck around 6,000 targets in Iran and damaged or destroyed more than 90 Iranian vessels as part of the ongoing military campaign known as Operation Epic Fury, according to an official U.S. military fact sheet released on Wednesday.

The operation was launched at 1:15 a.m. on February 28 by the U.S. Central Command (CENTCOM) under orders from the U.S. President. The campaign is aimed at dismantling Iran’s military and security infrastructure.

According to the fact sheet, CENTCOM forces are targeting sites considered to pose an imminent threat, including command and control centres, Islamic Revolutionary Guard Corps (IRGC) headquarters, intelligence facilities and integrated air defence systems.

The strikes have also targeted ballistic missile sites, drone manufacturing facilities, weapons production plants, surface-to-air missile systems and military communication infrastructure.

Naval infrastructure has been a key focus of the operation. The U.S. military said more than 90 Iranian vessels have been damaged or destroyed, including over 60 ships and at least 30 minelayers. Targets also included navy ships, submarines, anti-ship missile sites and facilities linked to minelaying operations such as factories and warehouses.

The campaign involves a wide range of U.S. military assets across air, sea and missile defence systems.

Aircraft deployed include B-1, B-2 and B-52 bombers, along with fighter jets such as F-15, F-16, F-18, F-22 and F-35. Other aircraft involved include A-10 attack aircraft and EA-18G electronic warfare platforms.

Surveillance and reconnaissance support is being provided by aircraft such as the U-2 Dragon Lady, RC-135 reconnaissance aircraft and P-8 maritime patrol aircraft. Unmanned systems including MQ-9 Reaper and LUCAS drones are also part of the operation.

Missile defence systems deployed include Patriot interceptor systems and THAAD anti-ballistic missile systems, while HIMARS rocket systems are being used for ground-based strikes.

Naval forces supporting the operation include nuclear-powered aircraft carriers, guided-missile destroyers and refuelling ships, while airborne command and communication support is provided by aircraft such as the E-2D Advanced Hawkeye.

Logistical operations are being supported by refuelling tanker aircraft and cargo planes including the C-17 Globemaster and C-130, along with specialised electronic warfare platforms such as the EC-130H Compass Call.

Showers or thundershowers will occur at several places in Western, Sabaragamuwa and Northwestern provinces and in Galle, Matara, Kandy and Nuwara-Eliya districts after 2.00 pm. Fairly heavy showers above 50 mm can be expected at some places in Western and Sabaragamuwa provinces and in the Galle and Matara districts.

A few showers may occur in Uva and Eastern provinces.

Mainly fair weather will prevail elsewhere over the island.

Misty conditions can be expected at some places in Western, Central and Sabaragamuwa provinces and in Galle, Matara and Kurunegala districts during the early hours of the morning.

The general public is kindly requested to take adequate precautions to minimize damages caused by temporary localized strong winds and lightning during thundershowers.