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Central Bank looses teeth in combating foreign exchange rackets

Central Bank claims that stern action cannot be taken against money launders and illicit foreign exchange dealers due to lack of necessary provisions in the Sri Lanka’s new Foreign Exchange Act of 2017.

Governor of the CB Dr. Indrajith Coomaraswamy revealed that although the Penal Code demands that there ought to be an offence, the new Exchange Control Act, such offences are loosely defined .

The monetary can neither initiate investigations on transactions prior to November 2017 since the old Exchange Control Act was rescinded and replaced he added.

He further disclosed that: “Sri Lanka is a high risk country in terms of money laundering. A global survey has put Sri Lanka on a grey list along with Syria, Cambodia, Pakistan and Sudan.

A mission was to be sent to review the status and steps taken by Sri Lanka on May 12 and 13 but plans were inadvertently changed due to the travel warning.”

The governor noted that racketeers are carrying out foreign currency dealings taking advantage of loopholes in the Act.

The Act extends the limits to which companies can invest. The limit for listed companies has been increased from USD 500,000 per year to USD 2 mn per year.

Firms also have the opportunity to invest in sovereign bonds and Unit Trusts abroad. The limit for individuals has also been increased from USD 100,000 (life time investment) to USD 200,000.

This would be an opportunity for firms in Sri Lanka and individuals to diversify their risk by investing abroad

The limit on how much Sri Lankan rupees and foreign currency that can be taken in and out of the country has been changed.

Anyone can take up to Rs. 20,000 or up to USD 15,000 in foreign exchange without having to declare it.

(LI)

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