Sri Lanka’s Criminal Investigation Department (CID) has uncovered what investigators describe as one of the country’s largest suspected trade-based money laundering operations, revealing that approximately US$715 million (around Rs. 214.7 billion) was allegedly transferred overseas through fraudulent import transactions over a little more than three years.
The findings were disclosed before Parliament’s Committee on Public Finance (COPF) by Senior Deputy Inspector General of Police Asanka Karawita, who heads the CID. According to the investigation, 105 companies are suspected of remitting funds abroad through around 24,300 telegraphic transfers (TTs) between January 2023 and March 2026, despite failing to import the goods purportedly covered by those payments.
The investigation was launched following complaints lodged by Sri Lanka Customs, which raised concerns over suspicious import declarations and foreign exchange remittances. CID investigators subsequently traced the transactions to 55 individuals operating through 227 bank accounts, suggesting a well-organized network that allegedly exploited weaknesses in trade documentation and banking procedures.
Investigators say the companies used forged commercial invoices and fabricated customs documentation to convince banks that legitimate imports were taking place. Based on those documents, millions of dollars were reportedly transferred overseas without any corresponding goods entering Sri Lanka.
The CID also informed lawmakers that 13 state and private sector banks have been identified in connection with the transactions. While investigators have not alleged institutional wrongdoing by the banks, authorities are examining how the fraudulent documentation passed through existing compliance and verification mechanisms before the transfers were approved.
The probe has already resulted in significant arrests. Police told the committee that one suspect, allegedly linked to 43 companies, has been remanded after investigators connected the individual to overseas transfers totaling approximately US$43 million.
More significantly, investigators now believe the fraudulent transactions formed part of a broader international money laundering network with alleged links to drug traffickers operating from Dubai. According to the CID, two key suspects believed to have played central roles in the operation were located in the United Arab Emirates and returned to Sri Lanka with the assistance of INTERPOL. Both suspects have since been remanded as investigations continue.
Authorities say the inquiry remains active and is expanding as investigators examine financial records, banking transactions and international connections. The CID’s Financial Crimes Investigation Division and Proceeds of Crime Investigation Division are continuing efforts to identify additional suspects, trace illicit financial flows and determine whether further assets can be recovered.
The case has once again highlighted the growing threat of trade-based money laundering and the challenges faced by regulators in detecting sophisticated financial fraud. As investigators continue to unravel the network, the outcome of the probe is expected to have significant implications for Sri Lanka’s banking oversight, customs controls and broader efforts to combat cross-border financial crime.
By International Correspondent