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What does ‘Money Laundering’ mean to you? It sounds a white-collared crime alright, but what does it really denote? Financial Intelligence Unit (FIU) of the Central Bank of Sri Lanka (http://fiusrilanka.gov.lk/) defines money laundering as ‘the process by which proceeds from a criminal activity are disguised to conceal their illicit origin. Money launderers send their illicit funds through legal channels in order to conceal their criminal origin and convert them into legitimate assets.’

First, the illegitimate funds are furtively introduced into the legitimate financial system. Then the money is moved around to create confusion, sometimes by wiring or transferring through numerous accounts. Finally, it is integrated into the financial system through additional transactions until the ‘dirty money’ appears clean

FIU is the national agency ‘for the receipt and analysis of suspicious transactions reports and other information relevant to money laundering, associated predicate offences and terrorist financing and for dissemination of the results of that analysis.

United States Treasury Department defines it as ‘the process of making illegally-gained products or ‘dirty money’ appear legal or ‘clean.’ It further notes that ‘typically it involves three steps: placement, layering and integration. First the illegitimate funds are furtively introduced into the legitimate financial system. Then the money is moved around to create confusion, sometimes by wiring or transferring through numerous accounts. Finally it is integrated into the financial system through additional transactions until the ‘dirty money’ appears clean.

Local legislature
In the wake of the rapid wave of transnational crime (crimes committed across borders) including narcotics, human trafficking and terrorism, the need for anti-money laundering laws in many nations has been unprecedented. Many jurisdictions across the world have legislature in place to counter this global menace and we enacted ours in 2006 which is the Prevention of the Money Laundering Act (PMLA) No 5 of 2006.

Section 3(1) of the Act states that, ‘any person who
(a) engages directly or indirectly in any transaction in relation to any property which is derived or realised, directly or indirectly, from any unlawful activity or from the proceeds of any unlawful activity;

(b) receives, possesses, conceals, disposes of, or brings into Sri Lanka, transfers out of Sri Lanka, or invests in Sri Lanka, any property which is derived or realised, directly or indirectly, from any unlawful activity or from the proceeds of any unlawful activity, knowing or having reason to believe that such property is derived or realised, directly or indirectly from any unlawful activity or from the proceeds of any unlawful activity, shall be guilty of the offence of money laundering.

The Act applies to a person who commits an offence under this Act whilst being resident in Sri Lanka, an institution which is used for the commission of an offence under the law and an act which constitutes an offence which is committed in Sri Lanka

The subsequent amendment brought in to the PMLA in 2011, based on 40 recommendations by the Financial Action Task Force (FATF), an inter-governmental body incorporated by the G7 to work as global policy-setter on anti-money-laundering has given more teeth to the law to counter money laundering. The amendment was to align anti-money laundering legislation of ours with international standards.

The Act applies to a person who commits an offence under this Act whilst being resident in Sri Lanka, an institution which is used for the commission of an offence under the law and an act which constitutes an offence which is committed in Sri Lanka.

A non-bailable offence
A person convicted of money laundering will be liable to a fine of not less than the value of the property in respect of which the offence is committed and not more than three times the value of the property in respect of which the offence is committed or to rigorous imprisonment for a period of not less than five years and not exceeding twenty years, or to both such fine and imprisonment. Moreover, the assets of any person guilty of this offence shall be liable to forfeiture under the Act.

The Act further stipulates that any person who attempts or conspires to commit this offence or aids or abets the commission of the offence shall also be guilty of an offence and shall be liable after trial before the High Court to be punished with the same punishment as is specified for the offence of money laundering. Offences under this Act are to be cognizable and non-bailable.