Transparency Int’l flags Finance Bill’s money laundering risk

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After Parliament last week passed the widely discussed Tax Amnesty Bill, also known as the Finance Bill, Transparency International Sri Lanka (TISL) warned that there is a possibility the said Bill would be abused for the purpose of money laundering, unless an authoritative body is available to counter such attempts. 

To counter anti-money laundering (AML), application of the Act of AML and Counter Terrorist Financing (CTF), co-ordination and co-operation between the Central Bank of Sri Lanka (CBSL) and Financial Intelligence Unit (FIU), as well as international co-operation in accordance with the Financial Action Task Force (FATF) can be considered pragmatic practices, TISL further emphasised.

With regard to the effective application of AML and CTF, TISL elaborated that this contributes to investing a certain amount equivalent to the undisclosed tax value in shares that have been issued by a company. Accordingly, the Treasury Bills issued by the CBSL, credit securities issued by a company in Sri Lanka, and movable or immovable property can be put for investment. Thus, CBSL, FIU, and other related institutions’ engagement is necessary to enforce the law of AML and CTF on beneficial ownership, customer requirements, and the origin of the property, and therefore, it makes the tax amnesty identifiable, explained TISL.

International co-operation will provide support to track suspects who bring black money to the country, and to monitor assets arriving from countries that do not have standard FATF recommendations in effect, said TISL.

Adding to this, TISL Executive Director Nadishani Perera commented: “We understand the current financial situation of the country and that the country is in need of foreign currency inflows. However, resorting to such a broad-ranging tax amnesty could possibly allow black money to enter the country and for Sri Lanka to eventually become a haven for such ill-gotten gains.” 

Accordingly, TISL emphasised the need to enforce laws to bar the abuse of the Tax Amnesty Bill for money laundering purposes. 

The Tax Amnesty Bill was passed on 7 September this year for those who voluntarily disclose undisclosed income and assets amidst criticisms from various parties, including the Opposition. The Bill encourages those with undisclosed assets and money to pay a mere tax of 1% of the value of those assets and money and use them for investing purposes. 

TISL is an advocacy and legal advice centre in Sri Lanka that works towards eradicating corruption in building an equitable country.

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