More than US$ 85 million has been illegally transferred out of Sri Lanka by a group of racketeers who abused the Telegraphic Transfer (TT) system under the guise of importing goods, Minister of Public Security Ananda Wijepala revealed in Parliament today (9).
Wijepala said amendments made to the Exchange Control framework in 2017 during the tenure of then Finance Minister Ravi Karunanayake had directly contributed to the rise of such financial crimes by removing exchange control violations from the scope of money laundering offences.
The Minister said the large-scale operation was uncovered through three separate investigations jointly conducted by the Sri Lanka Police and Sri Lanka Customs.
According to Wijepala, the investigation began following the arrest of suspects in Peliyagoda on 22 October 2025 with approximately Rs. 300 million in suspicious funds. After the case was handed over to the newly established Central Crime Investigation Unit by the Inspector General of Police, investigators uncovered what he described as a massive financial fraud network.
One investigation revealed that a fraudulently registered private company had transferred Rs. 12.89 billion through 953 TT transactions to 256 companies in 26 countries. Through these transactions, US$ 42.7 million had been remitted overseas despite no goods being imported into Sri Lanka.
Wijepala further stated that funds linked to the recent Rs. 13 billion NDV financial fraud had also been transferred abroad through the same network. Accounts maintained by the company at the People’s Bank and Sampath Bank have since been frozen.
A separate investigation stemmed from the arrest of four suspects with heroin in Negombo on 15 February this year. Authorities found that payments for drug transactions had been deposited into a Commercial Bank account in Divulapitiya linked to a trafficker operating from Dubai.
Those funds were later transferred to the account of an investment company maintained at Commercial Bank, Pettah, through which Rs. 2.2 billion had circulated, the Minister said.
He added that the money was periodically withdrawn through cheques and transferred into four current accounts at Union Bank in Pettah. Between 2025 and 2026 alone, approximately Rs. 13 billion had been transferred through TT transactions to 108 countries via those four accounts.
Although the account holders claimed to be importing hardware items, bathroom fittings and gold products, investigations found that no such goods had been brought into the country. Authorities have now frozen a remaining balance of Rs. 53.6 million in the accounts.
Wijepala also revealed that another investigation launched following a complaint by Sri Lanka Customs covering the period from 2023 to 2025 found that 26,108 TT transactions had been carried out through 227 accounts maintained at 13 banks.
The transactions involved 105 local companies. However, investigators discovered that only 55 individuals were behind all 105 entities.
According to the Minister, the suspects operated by shutting down companies within six months, using proxy individuals to establish new entities and continuing the fraudulent activities. He added that instances had been identified where up to 14 TT transactions were processed on a single day through the same bank, prompting a separate inquiry into the accountability of banking officials.
Wijepala noted that under existing regulations, Customs is required to notify either the Central Bank or the Controller of Imports and Exports if goods are not imported within 180 days of a TT payment. However, those regulatory mechanisms had not been properly enforced in recent years.
In response, President Anura Kumara Dissanayake convened a special meeting on 3 June and directed the immediate implementation of several measures. These include requiring all importing companies to register not only with the Registrar of Companies but also with Sri Lanka Customs, while making Taxpayer Identification Numbers (TINs) mandatory for import-related transactions.
The Minister also said the President had instructed the Monetary Board to take immediate steps to amend the law to bring exchange control violations back under the scope of anti-money laundering legislation, reversing the changes introduced in 2017.
Wijepala stressed that such fraudulent operations posed a serious threat to Sri Lanka’s economic stability at a time when the country was actively seeking foreign investment. He said the Government would not hesitate to take strict legal action against those responsible.
