TISL deeply concerned regarding new Finance?Act

TISL is deeply concerned regarding the?new Finance?Act?passed?on 7th September 2021?that?aims?to?grant tax amnesty for?individuals?who voluntarily disclose their undisclosed income?and assets.?

TISL?warns?that this amnesty scheme could be abused for the purpose of money laundering unless?regulatory?authorities take extra measures to?counter such attempts.

In 2012,?the?Financial Action Task Force (FATF) identified the?following?three?best practices in managing?Anti Money Laundering (AML)?and?Counter Terrorist Financing (CTF)?during voluntary tax compliance programs.?TISL is of the view that?ensuring?compliance with these,?is crucial?in terms?of the implementation of this law, in order?to counter the Money laundering/?Terrorist Financing?risks.

1. The effective application of AML/CTF?preventative measures?-?This Act provides an opportunity to invest an amount equal to the undisclosed tax value in?shares issued by a company, Treasury Bills issued by the Central Bank,?credit securities issued by a company in Sri Lanka and?movable or immovable property. Therefore,?the?Central Bank of Sri Lanka (CBSL), the?Financial Intelligence Unit (FIU)?and other obligated entities?should ensure proper enforcement of existing AML/CTF laws?and guidelines?in relation to the new Act,?including on issues relating to beneficial ownership and Know Your Customer requirements, questioning the origin of assets.?This will ensure that those granted the tax amnesty are easily identifiable and remain under close scrutiny of authorities to ensure future compliance.?Adherence to such procedures will ensure that individuals with legitimate sources of money would be able to bring it into the country without hindrance while it makes it increasingly difficult?for?money generated?through?illicit means to enter the country.
2. Domestic co-ordination?and?co-operation -?CBSL and FIU to ensure ?that all relevant domestic competent authorities be able to co-ordinate and co-operate, and exchange information, as appropriate, with a view to detecting, investigating and prosecuting any ML/TF abuse?.?CBSL and FIU?should?raise awareness among the Banks and other financial institutions regarding the potential risk of ML through these investments.?The Commissioner General of Inland?revenue should strive to?ensure that the?confidentiality?clause in the Act does not hinder?such?inter-agency co-operation.
3. International co-operation?-?Authorities to ensure effective international cooperation and empower authorities to track individuals suspected of having brought black money into the country. Income and assets from countries that do not have effective implementation of FATF recommendations?need?to be monitored closely.

TISL Executive Director Nadishani Perera commenting on the?new?law,?shared these views:
?We understand the current financial situation of the country and that the country is?in?need of foreign currency inflows.?However, resorting to such a broad-ranging tax amnesty could possibly allow?black money?to enter the country and for Sri Lanka to?eventually?become a haven for such ill-gotten gains.”

TISL calls on all law enforcement and regulatory authorities to ensure that this tax amnesty is not abused by those who could cause detriment to the country, by implementing the recommendations made above, and ensuring that the public is kept informed of the safeguards put in place to avert such abuse. (Colombo Gazette)