The Cabinet has approved amendments to the Foreign Exchange Act that would make unauthorized transfers of funds out of the country criminal offences, strengthening enforcement against illicit outflows.
The Cabinet of Ministers has approved policy changes to amend Sri Lanka's Foreign Exchange Act of 2017, moving to classify unauthorized overseas fund transfers as criminal offences rather than civil violations. The government argues that this legislative shift is necessary to give law enforcement agencies stronger tools to combat illicit capital outflows.
Under the proposed amendments, individuals who remit funds abroad as advance payments for imports but fail to bring in the corresponding goods within a reasonable timeframe could face criminal charges. Currently, such transactions are treated as unauthorized foreign exchange transfers but do not carry criminal penalties under existing law.
Presently, the Central Bank of Sri Lanka can only impose financial penalties equivalent to the unauthorized remittance amount in Sri Lankan rupees. According to government officials, this limitation has hampered investigative and law-enforcement efforts. The proposed amendments, submitted by the President in his capacity as Minister of Finance, Planning and Economic Development, are designed to close this enforcement gap and enable more effective action against unauthorized transfers.
The move reflects growing concerns about capital flight and the misuse of advance import payment schemes to move money illegally out of the country. The government believes that introducing criminal provisions will serve as a stronger deterrent and provide authorities with broader investigative powers to address the issue.
