Sri lanka News – Sri Lanka is deploying a money laundering law against the public in co-ordination with the central bank after expat workers were observed to use unofficial channels to transmit money, police said.
The central bank has told police that a key reason for Sri Lanka’s currency crisis is the reduction of remittances coming through the formal banking system.
Expat workers were engaging in transactions outside of the formal banking system to import essential and non-essential goods, police said, without mentioning which goods were ‘non-essential’.
Expat workers were also engaging in Hawala/Undiyal transactions outside the formal banking system.
“On the request of the Governor of the central bank, a special unit has been set up by the Illegal Assents Investigation division,” police said.
“In addition using Sections 03 and Sections 05 of the Money Laundering Act of 2006 the sources of foreign exchange will be investigated in co-ordination with central bank officials.”
Sri Lanka’s money printing intermediate regime central bank has triggered forex shortages from around two years of being established.
Over the years draconian exchange controls and trade control law have been enacted by legislators to control the public without tightening the monetary law to tame the central bank’s open market operations and liquidity injections to suppress rates, critics have said.
Interest rates have now been allowed to go up steeply to crush economic activity and reduce outflows and resurrect the broken peg. Kerb market rates have fallen.
The rupee has been destroyed from 4.70 to the US dollar in 1950 to 360 to the US dollar since in multiple currency crises since soft-peg was set up in the style of a Latin America central bank by a US money doctor in 1950. (Colombo/Aug29/2022)