Thursday July 23, 2026 3:46 pm ECONOMYNEXT – Sri Lanka’s parliament has taken up new regulations under the Import and Export (Control) Act to curb illicit capital outflows, following police investigations that revealed over 715 million US dollars had left the country through adv…
Thursday July 23, 2026 3:46 pm
ECONOMYNEXT – Sri Lanka’s parliament has taken up new regulations under the Import and Export (Control) Act to curb illicit capital outflows, following police investigations that revealed over 715 million US dollars had left the country through advance payment loopholes without any goods arriving. Presenting the amendments in parliament, Deputy Minister of Finance and Planning Anil Jayantha said the measures under Regulation No. 5 and Regulation No. 6 of 2026 aim to stop trade irregularities, protect local industries, and create a fair playing field for tax-paying businesses. The government disclosed that investigations carried out by the Criminal Investigation Department (CID) and law enforcement agencies from 2023 to 2026 uncovered a massive operation involving roughly 55 individuals and 107 companies exploiting foreign exchange rules. Under current provisions, importers were granted between 360 to 720 days to bring goods into the country after sending advance payments abroad. However, bad actors used legal gaps to send funds out without delivering imports. “These introduced regulations aim to minimize those inefficiencies, enhance the monitoring mechanism, and close loopholes existing between our rules and regulations that certain groups have exploited to act illegally,” Jayantha said. To tighten control, the new regulations make registration with the Customs Department mandatory before banks issue advance payments. Importers must also supply transaction details, beneficiary information, and a Unique Identification Number (UIN) alongside Taxpayer Identification Numbers (TIN). The government also intends to present a Cabinet paper to amend the Foreign Exchange Act No. 12 of 2017. The move seeks to reclassify non-compliance in remitting foreign exchange as a criminal offense rather than a civil one subject only to Central Bank fines. “In terms of dollar outflow, a massive sum of around 715 million USD has left the country, which adversely affects our balance of payments,” Jayantha said. Responding to the government, Opposition MP Harsha de Silva argued that the issue stems from failing to enforce existing laws and poor technical coordination, rather than a lack of legislation. De Silva pointed out that the main flaw lies within the Customs department’s ASYCUDA software, which fails to reconcile customs documentation with bank transaction records. He noted that trade-based money laundering intelligence provided by the Central Bank’s Financial Intelligence Unit (FIU) went unacted upon. “The problem lies within a system called the ASYCUDA system. The ASYCUDA system cannot reconcile the Customs declaration document with the banking transaction document,” de Silva said. During committee investigations, police officials revealed severe enforcement lapses, including bank accounts being opened by entering a simple full stop instead of a valid TIN number, and shell companies registered at the Registrar of Companies (ROC) lacking verified addresses or background records. De Silva warned that forcing legitimate importers to register across three different state entities creates severe bureaucratic delays and inflates costs for consumers. “Because there is no coordination, these thieves slip through the cracks. And when thieves slip through, instead of enforcing the existing law, you bring in new laws!” de Silva said. Addressing concerns over business disruptions, Jayantha reassured Parliament that law-abiding importers have nothing to fear, clarifying that recent arrests were tied strictly to non-cooperation with official customs inquiries. (Colombo/Jul23/2026)
