Central Bank Governor Dr. Nandalal Weerasinghe has expressed confidence that Sri Lanka will avoid being placed on the Financial Action Task Force (FATF) grey list for a third time as the country undergoes a crucial international evaluation of its anti-money laundering and counter-terrorism financing framework.
Speaking at an Anti-Money Laundering and Anti-Corruption Thematic Fund event in Thailand, held on the sidelines of the IMF-World Bank Annual Meetings, Weerasinghe said the country had undertaken extensive legal, regulatory and institutional reforms ahead of the assessment.
An on-site evaluation by international assessors commenced in Sri Lanka this week and is scheduled to continue for two weeks. The assessment will examine the effectiveness of the country’s measures to combat money laundering, terrorist financing and related financial crimes.
Weerasinghe recalled that Sri Lanka had been grey-listed twice, in 2014-2015 and again in 2017. Technical assistance from the International Monetary Fund (IMF) had played an important role in strengthening risk assessment frameworks for licensed banks and finance companies, helping the country secure its exit from the grey list by 2019, he said.
He described the current evaluation as particularly significant, noting that authorities had spent several years preparing with the aim of preventing another grey-listing.
A key step in this process was the IMF’s Governance Diagnostic Assessment in 2023, which identified weaknesses in governance structures and anti-corruption systems. Sri Lanka was among the first countries in Asia to publicly release the report, enabling stakeholders to identify the reforms required, the Governor said.
The assessment’s findings subsequently informed national risk assessments conducted in 2024 and 2025, which helped guide preparations for the current evaluation.
Weerasinghe said the government had since introduced a series of legislative and institutional reforms aimed at bringing Sri Lanka’s financial governance and regulatory framework into line with international standards.
These included the establishment of an asset recovery framework through CLIMAC, the enactment and implementation of a new Anti-Corruption Act, amendments to public finance legislation, reforms to Customs and Excise revenue administration, and the introduction of the National Audit Act.
Amendments to the Banking Act were also introduced to strengthen corporate governance and regulatory oversight, while changes to the Companies Act established beneficial ownership requirements in line with FATF recommendations.
Further amendments were made in 2026 to the Financial Transactions Reporting Act, the Prevention of Money Laundering Act and the Convention on the Suppression of Terrorist Financing Act to address evolving international standards.
However, the Governor stressed that enacting legislation alone would not be sufficient to secure a favourable outcome. Authorities must demonstrate that the laws and regulatory measures are being effectively implemented by the relevant institutions and enforcement agencies.
“The challenge now is to show that these laws work and that the framework is effective,” he said, underscoring the importance of demonstrating tangible results in practice.
Weerasinghe expressed confidence that the reforms undertaken, together with the support of domestic institutions and international partners, would help Sri Lanka successfully complete the evaluation without returning to the FATF grey list.
The outcome of the assessment is expected to be closely watched by international financial institutions, investors and development partners as Sri Lanka seeks to demonstrate the effectiveness of its financial oversight, anti-corruption and anti-money laundering measures.