Amber Light warning of Money Parking threats
Posted on February 16th, 2016

Chandra Jayaratne Courtesy The Island

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An Open Letter to the Minister of Finance and the Governor of the Central Bank; To be duly noted by the President, the Prime Minister, the Government, Commercial and Financial Services Sectors and Professional Practitioners

Dear Minister and Governor,

You are accountable for your unwise and unacceptable actions and inactions

Transparency International Sri Lanka and many professionals in Civil Society, (including much respected retired Senior Central Bankers), have sounded “Amber Light” signals, warning you of your unwise and unacceptable actions and inactions, in connection with the open public call made by the Minister of Finance with the apparent concurrence of the Governor of the Central Bank, requesting investors to “park” foreign currency deposits in Sri Lanka, as “special deposits”, on “no questions asked” basis, with “no locked in investment period”.

The Minister has in fact boasted, a few weeks ago, of the success of the scheme, with an unnamed Belgian investor, working in partnership with a Sri Lankan, having agreed and partly funded, the ‘parking of one billion US Dollars in Sri Lanka’. He has also proudly announced this achievement as a due endorsement of the Sirisena-Wickremesinghe Government.

At the time of this first announcement, connected bank officials had informed the media that the remittances have topped USD 1.5 billion; and as the remitting banks overseas would already have cleared the customer and due diligence performed, there was no real need for “Know Your Customer” (KYC) validations at the receiving end bank. However, the media had later quoted the Central Bank chief as having confirmed that, commercial banks will continue to accept foreign inflows under mandatory international monetary regulations to know the source of funds.

The media today headlines “Many more” ready to deposit says Fin Min ; and “Why do you want aid when you can trade? Trade should substitute aid. Likewise, why do you need loans, when you can have deposits? “When deposits come, your reserves go up” quoting the Minister of Finance; who had asserted that “many more” are ready to help Sri Lanka defend its currency and bolster its reserves”; and says “these deposits will replace loans drawn at high interest rates.”

The Minister too has assured that the relevant KYC validations are carried out and that the critics need not worry whether these are hot money; and actions taken are without corrupt motives as a clean government is in power.

Civil Society, however, wishes to hold the Minister of Finance and the Governor of the Central Bank accountable for the following;

1. Potential consequential risks, in the medium to long term, of the scheme now in force and duly promoted by the Minister, as a way forward to protect the value of our currency and secure low cost funds in the short term, leading to monetary instability and a potential balance of payment crisis in the future.

2. Consequential potential negative national economic and social outcomes, if any, in the short to long term, in the absence of a transparent and publicly announced scheme, detailing the applicable guidelines, procedures and processes governing investors “parking” foreign currency deposits in Sri Lanka, as “special deposits”, on “no questions asked” basis, with “no locked in investment period”.

3. Consequential impact, due to the aforesaid scheme and its operations and reporting standards in practice in Sri Lanka, Sri Lankan Banks and Financial Institutions, violating any international conventions and commitments of Sri Lanka and the local legal and regulatory framework, in terms of;

a. International Anti Money Laundering and Terrorism Financing Conventions and Commitments

b. Acts and Regulations associated with the Financial Intelligence Unit of Sri Lanka – refer – http://fiusrilanka.gov.lk/acts_regulations.html

c. Financial Action Task Force on Money Laundering (FATF 40 recommendations)

d. Foreign Account Tax Compliance Act (FATCA) obligations

e. The new global standard on Automatic Exchange of Information (AEOI) introduced to minimize the possibility for tax evasion.

4. Consequential impact due to the aforesaid scheme and its operations and reporting standards in practice in Sri Lanka and Sri Lankan Banks and Financial Institutions on;

a. Sri Lanka’s International Credit and Risk Ratings

b. Sri Lanka’s Foreign Direct Investment attractiveness

c. Sri Lanka’s International Trade and Services linked Value added options

d. Sri Lanka’s Competitiveness and Investment Attractiveness as reflected by Internationally accepted Investment and Trading Indices

5. Assurance that none of the investors making deposits under this scheme, their actual beneficial interest holders, their proxies or associated or related parties, are presently or are likely to be, subject to prosecution in the future, for any international crimes or serious financial crimes, bribery or corruption, carried out by any of them, either in Sri Lanka or overseas; and further an assurance that none of the funds so deposited form a part of or are tainted by being proceeds of any such crimes carried out in Sri Lanka or overseas.

6. Assurance that the acceptance of such deposits under the scheme, will not be deemed tantamount to be a grant of a ‘general or special’ amnesty to such persons depositing proceeds, where such proceeds are later discovered to be out of any proceeds of serious crimes; and that such acceptance of deposits will thus not jeopardize any of the investigations or prosecutions which are currently being progressed against persons and their related parties and associates in Sri Lanka or overseas for having possessed or having deposited proceeds of serious crimes in banks in Sri Lanka or overseas.

Provided, the Minister and the Governor do hereby accept such accountability as outlined above, they are called upon to make a transparent public statement to that effect; and if not, the Minister and Governor are requested to make such changes to the scheme as essential to safeguard the long term interests of Sri Lanka and its civil society and advise the public of such amended scheme in a transparent way.

Chandra Jayaratne

2 Responses to “Amber Light warning of Money Parking threats”

  1. Lorenzo Says:

    It should be RED LIGHT.

    The Belgian depositor is a LTTE banned terror fund most likely. NO ONE else will bring money to SL given the record of its central bank and bond frauds.

  2. Charles Says:

    This money parking secretly without giving name and country from where it comes is certainly invitation for money laundering.

    In such a situation the Finanace Minister and the Governor of the Bank should be taken by the FCID and questioned. If they do not they should immediately release Yoshitha as no finger can be directed at Yoshitha for money laundering.

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