The Board Secretaries Forum, a joint initiative of the Sri Lanka Institute of Directors (SLID) and Institute of Chartered Corporate Secretaries of Sri Lanka, hosted a webinar and panel discussion on the role of the FIU and obligations of directors and company secretaries, complying with the anti-money laundering (AML)/combating the financing of terrorism (CFT) requirements recently. 

The panel, moderated by Commercial Credit & Finance PLC Director D. Soosaipillai, comprised of keynote speaker Central Bank Financial Intelligence Unit (FIU) Director Enoka Mohotty, Senior Assistant Director Chandima Bandara and Deputy Director Ayesh Ariyasinghe, representing the FIU,  Registrar of Companies Sanjeewa Dissanayaka, Ernst & Young Partner Averil Ludowyke, Nations Trust Bank PLC Company Secretary and General Counsel Theja Silva and Hatton National Bank PLC Compliance Officer Janath Illangatileke.

“The FIU’s work begins upon the receipt of suspicious transactions and other prescribed reports from the reporting entities comprising of financial institutions and designated non-finance businesses and professions (DNFBP) including trust and company service providers (TCSPs), lawyers, notaries, other independent legal professionals, accountants, casinos and gambling houses, real estate agents and dealers in precious metals and stones,” said Director FIU in her keynote presentation. 

She said, “Section 5 of Prevention of Money Laundering Act No. 5 of 2006 states that where any person comes across any information during his trade, profession, business or employment on any unlawful activity or money laundering has the responsibility to report such activity to the FIU. Thus, the directors and secretaries have a responsibility to ensure that Section 5 is complied with.” She added that while financial institutions have been supervised by the FIU since its inception and are fully aware of the rules and regulations, it was only in 2018 that the FIU issued the Customer Due Diligence (CDD) rules and other guidelines to the DNFBP sector, which are now enforceable. Criminals have responded to the money laundering defences put in place by banks by misusing corporate vehicles and that the TCSPs could knowingly or unknowingly help criminals to misuse corporate vehicles to disguise and convert their proceeds of crime before it enters the traditional financial system. Organised crime groups or individual criminals tend to seek services of professionals, the TCSPs to benefit from their expertise in setting up schemes, which are then used for illicit purposes.

“Directors are expected to address any issues that may lead to criminals abusing your organisation to carry out money laundering/terrorist funding. As per the UN Office on Drugs and Crime campaign for prevention of money laundering, you need to “Distance Yourself to Protect Yourself”,” she concluded. 

Responding to a question from a panellist on the responsibilities of a company secretary when they are performing the company secretary’s role as an employee of the company as many in the profession do, Dissanayaka said that in his view, Section 5 of the  FTRA is very clear in that it casts a responsibility to each and every civilian to report fraudulent activities mentioned in the act and that a company secretary is liable as are directors to report any suspicious transaction.  

He also said that the ROC is in the process of amending the present Companies Act to introduce provisions and concur the responsibility on the directors. Firstly, there will be responsibility on the company and automatically the directors are responsible and they will have to inform, within a stipulated time, when there is a share transaction, the ultimate beneficial owner. 
He added that they are introducing provisions, some of which are similar to the Money Laundering Act and directors and company secretaries will be responsible. 

“Also, it will be the responsibility of the company secretary to inform the Registrar of Companies. As per the S. 181, the Registrar can conduct an investigation as well upon a complaint. As such, the law is quite comprehensive and if any party breaches, there will be prosecutions against such people. In terms of sharing knowledge and educating the company secretaries, with the help of the FIU, we are hoping to organise a seminar on the prevailing laws and their duties,”he added.

SLID’s Annual Corporate Partners are SYSCO Labs, Aventude, Sampath IT Solutions and Wijeya Newspapers.