ECONOMYNEXT – Sri Lanka’s Cabinet of Ministers has granted in-principle approval to amend the Foreign Exchange Act No. 12 of 2017 to make unauthorized transfers of funds out of the country a criminal offence, Cabinet Spokesman Minister Nalinda Jayatissa said.
The proposed legal reform follows an ongoing investigation into a fraud where 74 billion rupees was transferred overseas across 10,151 transactions via 89 bank accounts under the guise of import advance payments, without the corresponding goods ever entering the country, he said.
Under current provisions of the Foreign Exchange Act, remitting advance payments abroad and failing to import the goods within a reasonable period is deemed an unauthorized transfer.
However, the only action the Central Bank of Sri Lanka can take is imposing a monetary penalty in rupees equal to the transferred amount.
Because the Act does not define such transfers as a criminal offence, authorities have lacked the legal framework to file criminal charges.
To address the gap, the Cabinet approved a proposal to introduce explicit provisions criminalizing unauthorized outward remittances, Jayatissa said.
Responding to media queries on whether suspects could exploit existing loopholes, Jayatissa stressed the necessity of closing legal gaps.
“This amendment is being presented specifically to rectify shortcomings that existed in enforcing the law. There is a necessity to treat this as a criminal offense and enforce the law accordingly,” Jayatissa said.
The probe began in January 2026 when the Additional Director General of Customs lodged a complaint with the Financial Crimes Investigation Division (FCID).
After obtaining court permission to inspect 210 bank accounts, police arrested a suspect in Negombo on June 19, who was subsequently remanded.
The investigation recently led to the arrest of four executive officers, including managers from four private banks, who are being investigated under the Prevention of Money Laundering Act and the Penal Code for conspiracy, aiding, and abetting unauthorized telegraphic transfers.
Asked by journalists whether influential politicians or business figures were involved behind the scenes, Jayatissa noted that investigations were continuing.
“At this stage, it cannot be said whether they are politicians or figures from the business sector. The Police are conducting their investigations, and those identified are being arrested and interrogated,” Jayatissa said.
He added that whether the proposed amendments will apply retrospectively remains subject to further legal inquiry. (Colombo/Aug18/2026)