Four officials attached to four leading private banks have been remanded until August 20 over an alleged scheme involving the transfer of approximately USD 1 billion overseas through illegal channels without corresponding imports into Sri Lanka.
The suspects were produced before the Colombo Magistrate’s Court on Monday (17), following their arrest at their respective banks by the Financial Crimes Investigation Division (FCID) of the Criminal Investigation Department (CID).
Police said it was the first time arrests of this nature involving bank officials had been made in Sri Lanka.
The investigation centres on a suspect identified as Jeffrey Mohamed, who had previously been arrested in connection with alleged banking and financial fraud.
When the suspects were produced before court, the FCID said they had been arrested based on statements made by Mohamed, whom investigators described as an organised criminal.
According to investigators, Mohamed had allegedly established around 36 companies claiming they would import goods into Sri Lanka and had approached the four private banks to open accounts for those companies.
The FCID told court that although money was subsequently transferred overseas purportedly to pay for imports, no corresponding goods had been brought into Sri Lanka.
Investigators alleged that the four bank officials had personally met Mohamed and facilitated banking transactions for him, with meetings reportedly taking place almost every Friday.
The FCID further alleged that the officials had received regular payments from Mohamed. According to investigators, individual payments of Rs. 30,000, Rs. 50,000 and Rs. 100,000 had been made on a weekly basis at different times, while one official had allegedly received approximately Rs. 1 million on a single occasion.
The investigating officer told court that bank officials were required to verify whether companies were properly registered when opening corporate accounts. However, the prosecution alleged that the suspects had failed to carry out the required checks and had knowingly assisted in opening the accounts.
The FCID also informed court that information had emerged suggesting that Rs. 6.5 million from the funds transferred out of the country had allegedly reached drug traffickers.
Seeking further remand, investigators said inquiries into the suspects and the wider financial network were continuing.
Defence disputes allegations
Lawyers appearing for the suspects disputed the FCID’s allegations, pointing out that while the second suspect was a manager at one of the commercial banks, the third, fourth and fifth suspects were junior-level officials.
The defence argued that the suspects’ responsibilities were limited to obtaining necessary information from customers who approached them.
Determining whether the companies had actually imported goods and whether they complied with relevant corporate requirements was the responsibility of senior officials, the lawyers argued.
They further contended that holding junior bank officials responsible for an alleged fraud involving billions of dollars would be unjust, arguing that transactions of such magnitude fell outside the scope of their duties.
The defence therefore sought bail for the suspects.
However, after considering the submissions, the Additional Magistrate of the Colombo Magistrate’s Court rejected the bail applications and ordered the four suspects to be remanded until August 20.
