A parliamentary debate over new import regulations has exposed what may be one of Sri Lanka’s most significant enforcement failures, with investigators alleging that weak coordination among state institutions allowed more than US$715 million to leave the country through questionable advance payment transactions.
Government investigations by the Criminal Investigation Department (CID) and other law enforcement agencies have identified approximately 55 individuals and 107 companies allegedly involved in exploiting gaps within Sri Lanka’s import control framework between 2023 and 2026.
The operation reportedly relied on advance payment rules that permitted importers to transfer money abroad months before receiving goods. While intended to facilitate legitimate international trade, investigators say the system instead became a gateway for illicit capital outflows because goods frequently never arrived despite substantial payments being made.
Deputy Finance Minister Anil Jayantha told Parliament that the government is now moving aggressively to close these loopholes by introducing stricter oversight under Regulations No. 5 and No. 6 of 2026.
Under the revised framework, Customs registration becomes compulsory before banks can approve advance payments. Importers must submit beneficiary details, transaction records, Taxpayer Identification Numbers and Unique Identification Numbers, allowing authorities to track payments from the banking system through Customs documentation.
However the parliamentary debate quickly shifted from legislative reform to institutional accountability.
Opposition MP Harsha de Silva argued that Sri Lanka’s real weakness lies not in insufficient legislation but in fragmented enforcement and outdated technology. He claimed that Customs’ ASYCUDA system cannot effectively reconcile customs declarations with banking records, preventing regulators from identifying suspicious transactions in real time.
According to de Silva, intelligence generated by the Central Bank’s Financial Intelligence Unit regarding possible trade-based money laundering was not translated into effective enforcement action.
Committee hearings also exposed startling administrative failures.
Police investigators reportedly discovered bank accounts opened using only a full stop in place of a valid taxpayer identification number. Meanwhile, shell companies registered through the Registrar of Companies allegedly operated without verified addresses or adequate background screening, creating ideal vehicles for financial abuse.
These findings suggest that the vulnerabilities extended across multiple government institutions rather than existing within a single agency.
Business groups have also voiced concern over the government’s response. Critics argue that requiring importers to complete registrations across several agencies could create additional paperwork, delay imports and increase operating costs that may ultimately be passed on to consumers.
Government ministers reject those concerns, insisting that compliant businesses will experience minimal disruption while dishonest operators lose the ability to exploit the system.
Beyond the political exchanges, the investigation exposes a broader…
By Special Correspondent