Concerns over money laundering, IFFs and ownership disclosure linger over new Colombo Port City Law

Serious concerns linger over the new Colombo Port City Law passed by the Sri Lanka parliament at the end of last month.

Transparency International Sri Lanka (TISL) was one of the petitioners that had challenged the new law. One of the main concerns is that the establishment and inadequate oversight of offshore banks and companies could lead to the port city attracting money laundering and illicit financial flows (IFFs).

Money laundering and IFFs

A supreme court determination has eased some of the concerns over money laundering and IFFs by expressly stating that the country’s anti-money laundering and counter financing of terrorism legislation applies to operators in the port city.

But TISL and others remain concerned that the court has not expressly stated whether the Banking Act would apply to offshore banks in the zone, which is owned by a 100 per cent subsidiary of China Harbour Engineering Company (CHEC).

Beneficial ownership concerns

The petitioners also remain concerned that the registrar of companies has limited control over offshore companies.

They say lack of public access to beneficial ownership information could lead to the port city becoming a secrecy jurisdiction that provides a safe haven for proceeds of crime.

Further concerns

Parliamentarians were not given adequate time to review the revised version of the bill according to TISL.

It also suggests that Sri Lanka faces the risk of being downgraded by the Financial Action Task Force (FATF) due to the port city.


Categories: Trade Based Financial crimes News

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