The arrest and remanding of four managers from leading private banks has exposed a potentially serious weakness in Sri Lanka’s financial system, as investigators probe an alleged foreign-exchange racket involving hundreds of millions of dollars transferred abroad through fraudulent trade transactions.
The four bank managers were arrested by the Financial Crimes Investigation Division (FCID) of the Criminal Investigation Department (CID) at their respective workplaces. Police described the arrests as unprecedented, saying it was the first known instance of bank managers being arrested in Sri Lanka over allegations connected to such a large-scale financial crime.
Four executive managers from leading private banks in Sri Lanka were arrested and remanded in custody over a massive illegal foreign exchange remittance scam involving approximately US$1 billion to US$1.5 billion.The suspects were arrested by the Financial Crimes Investigation Division (FCID) of the Criminal Investigation Department (CID) and produced before Colombo Additional Magistrate Liyan Varushavithana, who ordered them remanded until August 20, 2026.
The four high-ranking bank managers arrested directly at their respective workplaces are:Dharmalingam Prasad – Union BankShiran Mario – Seylan Bank Amila Udara – Nations Trust Bank (NTB) Umesh Randika Fernando – Sampath Bank
The scale and operation of this financial racket involve several critical elements uncovered by investigators:The Shadow/Shell Companies: The primary mastermind, a Colombo Fort-based money changer identified as Jeffrey Mohamed (who has alleged links to organized crime), established approximately 36 fake “shadow” or shell companies.
These entities falsely claimed to be importing goods into Sri Lanka.The Modus Operandi: The suspects abused their authority by preparing fraudulent documentation and opening specialized bank accounts.
They executed illegal overseas fund transfers through Telegraphic Transfers (TTs) under the pretext of paying for fake imports. Sri Lanka Customs later verified that no corresponding goods were ever brought into the country.Bribes and Weekly Payoffs:
The CID revealed that the bank managers personally met with the mastermind to facilitate the transactions. In exchange, they allegedly received routine weekly bribes ranging between Rs. 30,000, Rs. 50,000, and Rs. 100,000. One manager reportedly accepted a single lump-sum payoff of approximately Rs. 1 million on one occasion.Broader Implications:
The illegal outflows took place over multiple instances. Government authorities and the Committee on Public Finance (CoPF) have indicated that the illicit network may be tied to money laundering and the routing of proceeds from drug trafficking.
Investigators allege that the managers helped facilitate fraudulent transfers without carrying out adequate checks on transactions and supporting documentation. According to information uncovered during the investigation, the principal suspect allegedly made regular payments to bank officials. Some officials were reportedly paid Rs. 30,000, Rs. 50,000 or Rs. 100,000 a week, while one arrested manager allegedly received approximately Rs. 1 million on a single occasion.
The allegations form part of a wider investigation into what authorities describe as a massive shell-company foreign-exchange operation. FCID court submissions indicate that approximately US$715 million, equivalent to more than Rs. 214 billion, was transferred out of Sri Lanka between January 2023 and March 2026 through allegedly fraudulent “phantom imports”transactions in which payments were made for goods that apparently never entered the country.
The operation allegedly involved 105 shell companies, 55 individuals and more than 24,000 fraudulent Telegraphic Transfers processed through 13 banks, including state-owned and private institutions. The involvement of multiple banks raises questions about whether weaknesses in compliance systems were exploited systematically rather than through isolated acts of individual misconduct.
At the centre of the investigation is Colombo-based businessman Jeffrey Mohamed, also identified as Jiffry Mohamed, who remains in remand custody. Investigators allege that he operated through A.Y. Investment, a Fort-based entity, and controlled multiple accounts opened under his own name and the names of purported companies.
The case also highlights the limits of relying on banking documentation alone to detect sophisticated financial crime. Authorities allege that the network exploited procedures governing advance payments for imports, allowing funds to leave the country despite the goods allegedly never arriving.
The Financial Intelligence Unit has reportedly frozen 142 corporate and personal accounts linked to Mohamed, A.Y. Investment and the wider shell-company network.
While some reports have placed the alleged overall outflow at around US$1 billion, FCID court submissions cited in the investigation put the identified phantom-import component at US$715 million. The difference underscores the need for investigators to establish the precise scale of the alleged operation.
The arrests have now shifted attention from the alleged mastermind to the institutions that processed the money and whether stronger oversight could have stopped the billions of rupees from leaving Sri Lanka.
The central suspect, Colombo businessman Jeffrey Mohamed, also known as Jiffry Mohamed, is currently remanded by the Colombo Chief Magistrate’s Court. Investigators allege that Mohamed operated through A.Y. Investment, a Fort-based company, while opening numerous accounts under his own name and the names of fictitious or shell entities.
By Special Correspondent