CB calls on gem and jewellery sector to help mitigate ML/TF risks

In an effort to ensure the prevention of illegal money entering the local financial system, the Central Bank provided the gem and jewellery sector with firsthand insights on anti-money laundering and countering the financing of terrorism (AML/CFT) compliance obligations and new developments. 

Delivering the keynote address, Central Bank Governor Dr. Nandalal Weerasinghe, while highlighting the significant contribution of the gem and jewellery sector to the Sri Lankan economy, emphasised that the sector’s successful adherence to the AML/CFT obligations would effectively mitigate the money laundering and terrorist financing (ML/TF) risks. 

Effectively doing so would ensure compliance with the international recommendations, governance standards and anti-corruption framework and would reinforce the AML/CFT framework of the country, he said.

Dr. Weerasinghe extended an invitation to the sector stakeholders, urging them to collaborate closely with the Financial Intelligence Unit (FIU) and National Gem and Jewellery Authority (NGJA) in this national endeavour.

According to FIU Additional Director Dr. Ayesh Ariyasinghe, who carried out the technical sessions, the ML/TF risk assessment conducted for the country in 2021/22 confirmed the gem and jewellery sector’s medium exposure to the ML/TF risks, which is a combination of medium threat level and medium level vulnerability of the sector. He emphasised that the sector’s risk level has decreased from medium-high in 2014 to medium, primarily due to the measures implemented by the FIU since 2018, to address the AML/CFT supervision for the registered gem and jewellery dealers. 

Dr. Ariyasinghe stressed on the importance of adhering to the AML/CFT obligations outlined in the FTRA, with a specific focus on promptly reporting suspicious transaction reports. 

He also encouraged the sector to ensure proper customer due diligence (CDD) is carried out for cash transactions on or above a value of US $ 15,000. The stakeholders were informed about the importance of adequately preparing for the upcoming Mutual Evaluation of Sri Lanka, scheduled to take place in March 2025.  The industry of gems and jewellery and precious metals and stones is a key contributor to the Sri Lankan economy. Sri Lanka is the ninth largest exporter of precious stones to the global market and one of the five most important gem-bearing nations of the world. Sri Lanka is also one of the world’s steadiest suppliers of top-quality gemstones.  

However, Sri Lanka’s export contribution to the economy is yet to match the other global stakeholders such as Thailand, which is an international trading hub for gem and jewellery and generates around US $ 12 billion in export revenue and Hong Kong notches US $ 30 billion.  

As per the Central Bank annual report 2022, Sri Lanka earned US $ 450 million as export income from gems, diamonds and jewellery during 2022 while the annual average for the past five years was US $ 298 million.