Govt. amends Companies Act to counter money laundering

• Public companies required to maintain a register of individuals who own 25% or more
• Such details should also be filed with Companies Registrar annually

Sri Lanka has tightened its screws on money laundering and terrorist financing by amending the Companies Act, a Finance and Mass Media Ministry communiqué said. The European Parliament recently confirmed that Sri Lanka, Tunisia and Trinidad and Tobago were on the European Commission’s blacklist of countries at risk for acts of money laundering. 

The amendment, which received the cabinet nod recently, requires the companies to maintain a register which contains details of the beneficial interest in shares or warrants or similar interests held by any individual (director or shareholder), who owns 25 percent or more of the issued shares of any public limited company.

Such details should also be filed with the Companies Registrar annually.

“Accordingly, every public limited company will have to file the records of such beneficial interest in the share, warrant or any other interest, along with the personal details of the individual concerned, with the Registrar of Companies annually, along with the annual returns of the company,” the Finance and Mass Media Ministry communiqué said.

Mirror Business, quoting Colombo University’s Law Faculty academic Dr. Prathiba Mahanamahewa, recently reported that an amendment to the Companies Act was forthcoming to give more powers to the Criminal Investigation Department (CID) to question any director or shareholder holding 25 percent or more in a company.  “Don’t let this amendment be passed because it is highly pressuring the directors. Even innocent directors can be questioned without any reason,” Dr. Mahanamahewa told a recently held seminar attended by company directors. 

However, Finance State Minister Eran Wickramaratne denying the claim stated that these are sheer claims by the opposition to create a fear psychosis among the prospective investors at a time when the country claimed the highest foreign direct investment figure in the history in 2017.  
“These countermeasures were taken immediately as Sri Lanka was recently listed among the high-risk countries for money laundering by the Inter-governmental Financial Action Task Force (FATF) and the European Union, following which Sri Lanka made a political commitment to the FATF to address any technical deficiencies in countering the money laundering and counter financing of terrorism regime,” Wickramaratne said. 
He also stressed that the amendment would only apply to the public limited companies as privately held companies are spared from the need to maintain such records.