The Financial Intelligence Unit (FIU) of Sri Lanka collected a total Rs. 3 million in penalties between January 1 to April 30 2024 from two banks for not complying with the provisions of the Financial Transactions Reporting Act (FTRA).

FIU of the Central Bank stated that the DFCC Bank was fined Rs. 1 million on March 7 and Sampath Bank faced a penalty of Rs. 2 million on March 28.

The administrative penalties had been imposed under the powers vested on the FIU under Section 19(1) together with Section 19(2) of the Financial Transactions Reporting Act, No. 6 of 2006 (FTRA).

The money collected as penalties were credited to the Consolidated Fund. As per the statement, DFCC Bank was fined for failing to conduct adequate Customer Due Diligence (CDD) on an individual, including obtaining information on the source of funds/earnings as mandated by the CDD rules.

The amount deposited to the account was inconsistent with the customer’s anticipated volumes from sources of income as stated in the account opening form.  

Moreover, the DFCC Bank failed to provide an acceptable reason for opening an account for the individual whose permanent address was far from the branch where the account was opened.  Additionally, the bank failed to recognise suspicious activities related to the individual’s transactions and did not file a Suspicious Transaction Report (STR). 

Sampath Bank was penalised for creating and maintaining accounts where the account holder could not be identified. 

The business relationships of these customers could not be traced in the Core Banking System as their identification data, such as National Identity Card numbers, were not linked to these accounts.  Moreover, the bank had established a business relationship with a designated individual listed in the Extraordinary Gazette No. 2124/32, dated May 23, 2019, under UNSCR 1373. (NR)