Sri Lanka Country Summary
Medium Risk
View full Ratings TableSanctions
Lower Concern
FATF AML Deficient List
Lower Concern
Terrorism
Medium Concern
Corruption
Medium Concern
US State ML Assessment
Lower Concern
Criminal Markets (GI Index)
Medium Concern
EU Tax Blacklist
Lower Concern
Offshore Finance Center
Lower Concern
Please note that although the below Summary will give a general outline of the AML risks associated with the jurisdiction, if you are a Regulated entity then you may need to demonstrate that your Jurisdictional AML risk assessment has included a full assessment of the risk elements that have been identified as underpinning overall Country AML risk. To satisfy these requirements, we would recommend that you use our Subscription area.
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Anti Money Laundering
FATF Status
Sri Lanka is no longer on the FATF List of Countries that have been identified as having strategic AML deficiencies
Compliance with FATF Recommendations
The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Sri Lanka was a follow-up to the APG evaluation that took place in 2021. According to the Evaluation, Sri Lanka was deemed Compliant for 7 and Largely Compliant for 25 of the FATF 40 Recommendations. It remains Highly effective for 0 and Substantially Effective for 1 of the Effectiveness & Technical Compliance ratings.
Sanctions
Canada has imposed sanctions on Sri Lanka under the Special Economic Measures Act in response to gross and systematic human rights violations in the country. The Special Economic Measures (Sri Lanka) Regulations impose a dealings prohibition and an asset freeze on listed persons, prohibiting Canadians from dealing in property owned or controlled by listed persons, entering into or facilitating related transactions, providing any financial or related services, making goods available to listed persons, or providing related services, and prohibiting causing or assisting in prohibited activities.
Criminality
Rating |
0 (bad) - 100 (good) |
|---|---|
| Transparency International Corruption Index | 35 |
| World Bank: Control of Corruption Percentile Rank | 40 |
Sri Lanka is grappling with significant challenges related to crime and corruption, with endemic corruption and a lack of transparency in public procurement severely impacting the economy and deterring foreign investment. While the government has made commitments to combat corruption and has introduced new legislation to enhance enforcement, institutional corruption remains entrenched, particularly in sectors influenced by powerful vested interests.
The country faces a range of criminal activities, including human trafficking, extortion, and drug trafficking, exacerbated by the ongoing economic crisis. Additionally, the judicial system is plagued by inefficiencies and corruption, while civil society organizations struggle to operate in a constrained environment, highlighting the need for stronger governance and resilience against organized crime.
Economy
Sri Lanka, a lower middle-income country with a population of approximately 22 million, is navigating a recovery from a significant economic crisis in 2022, achieving a projected GDP growth of 5 percent in 2024. Despite this positive growth, the investment climate remains fraught with challenges, including regulatory unpredictability, bureaucratic hurdles, and a lack of transparency, which continue to deter foreign direct investment (FDI). The recent electoral success of President Anura Kumara Dissanayake and his National People’s Power (NPP) coalition has brought political stability and a commitment to an IMF program aimed at economic reform, but investor confidence is tempered by concerns over the NPP's historical anti-Western stance and mixed signals regarding state-led economic policies.
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