The threat level of money laundering through drug trafficking and terrorism financing in Sri Lanka has seen an increase for the years 2024/25, according to a report by the Financial Intelligence Unit (FIU) of the Central Bank. This report, part of the National Risk Assessment (NRA) for 2024/25, was prepared in collaboration with 86 governmental organizations, regulatory bodies, and private sector institutions.
This assessment, the country’s third NRA, aims to identify the risks associated with money laundering (ML), terrorist financing (TF), and proliferation financing (PF). It highlights the most significant threats, vulnerabilities, and overall risks in these areas for Sri Lanka.
According to the Central Bank’s statement, the ML threat assessment identified drug trafficking as the most serious predicate offense, with the threat level elevated to high from the previous medium-high rating. Fraud and customs-related offenses, including Trade-Based Money Laundering (TBML), were assessed as medium-high threats.
The report indicates a decrease in the threat level for bribery and corruption, moving from a medium-high rating in the previous assessment to a medium level.
Sri Lanka’s national terrorist financing (TF) risk, which combines TF threat and vulnerability, has increased to a medium-high level from a previous medium level. This increase is attributed to evolving threats from extremist and separatist networks, potentially supported by diaspora funding, digital radicalization, regional spillover risks, and the use of informal and emerging financial channels.
The National Risk Assessment is released ahead of Sri Lanka’s third mutual evaluation in March by the Asia Pacific Group on Money Laundering (APG), a regional affiliate of the global watchdog, the Financial Action Task Force (FATF). Initially postponed due to the 2024 elections, this evaluation will now closely examine Sri Lanka’s anti-money laundering and counter-terrorism financing (AML/CFT) frameworks.
Sri Lanka is under pressure to address these issues to avoid repeating its previous history, having been placed on the FATF’s Grey List twice before, first in 2011 and again in 2017.
(Colombo/March 11/2026)
