As enacted

Contents

Act of Parliament · As enacted

Financial Transactions Reporting (Amendment) Act 2026

Official English translation. Where it differs from the Sinhala or Tamil text, the Act itself says which text prevails.

Official translationFrom Department of Government Printing, unchanged

s 1Short title

This Act may be cited as the Financial Transactions

Reporting (Amendment) Act, No. 17 of 2026.

s 2Amendment of the long title to Act, No. 6 of 2006

The long title to the Financial Transaction Reporting

Act, No. 6 of 2006 (in this Act referred to as the “principal enactment”) is hereby amended by the substitution for the words “OFFENCES OF MONEY LAUNDERING AND

THE FINANCING OF TERRORISM RESPECTIVELY;

REQUIRE

CERTAIN

INSTITUTIONS

UNDERTAKE DUE DILIGENCE MEASURES TO

COMBAT

MONEY

LAUNDERING

AND

THE

FINANCING

TERRORISM;”, of the words

“OFFENCES OF MONEY LAUNDERING, TERRORIST

FINANCING AND FINANCING OF PROLIFERATION

WEAPONS

MASS

DESTRUCTION;

REQUIRE CERTAIN INSTITUTIONS TO UNDERTAKE

DUE DILIGENCE MEASURES TO COMBAT MONEY

LAUNDERING,

TERRORIST

FINANCING

AND

FINANCING OF PROLIFERATION OF WEAPONS OF

MASS DESTRUCTON;”.

s 3Replacement of the heading in PART I of the principal enactment

The heading appearing in PART I immediately before section 2 of the principal enactment is hereby repealed and the following heading is substituted therefor: -

Financial Transactions Reporting

“DUTIES OF INSTITUTIONS, RISK-BASED

APPROACH AND CUSTOMER DUE DILIGENCE”.

s 4Replacement of section 2 of the principal enactment

Section 2 of the principal enactment is hereby repealed and the following section is substituted therefor: -

2. (1) Every Institution shall, subject to any rules, directions and guidelines issued by the Head of the Financial Intelligence Unit under this Act, identify, assess and understand its money laundering, terrorist financing and financing of proliferation of weapons of mass destruction risks, and apply a risk-based approach for allocating resources and managing and mitigating such risks.

(2)

For the purpose of the application of a risk-based approach, an Institution shall -

(a)

undertake an assessment of money laundering, terrorist financing and financing of proliferation of weapons of mass destruction risks associated with its customers, the countries and regions in which those customers are engaged in business, their products, services and delivery channels;

(b)

with the approval of its Board of

Directors or senior management, design, develop and maintain internal policies and procedures and systems for the management and mitigation of money laundering, terrorist financing and financing

“Risk based approach, customer due diligence, &c.

of proliferation of weapons of mass destruction risks identified pursuant to paragraph (a), in accordance with the requirements of this Act and the regulations, rules, directions and guidelines issued under this Act or any other law applicable to that Institution;

and

(c)

periodically review the assessment of risks referred to in paragraph (a)

to ensure that it is up-to-date and adequate measures are put in place to manage and mitigate such risks.

(3)

An Institution shall not open, operate or maintain an account, where the holder of such account cannot be identified, including any anonymous account or any account identified by number only, or any account which to the knowledge of the Institution is being operated in a fictitious or false name.

(4)

Where an Institution –

(a)

establishes a business relationship with a customer;

(b)

carries out an occasional transaction above the threshold as specified by rules, including a transaction consisting of a single operation or multiple operations that appear to be linked;

Financial Transactions Reporting

(c)

carries out an occasional transaction, being a wire transfer above the threshold as specified by rules;

(d)

in relation to any transaction, entertains reasonable suspicion of an act constituting the offence of money laundering, terrorist financing, financing of proliferation of weapons of mass destruction or any unlawful activity, regardless of any exemption granted or threshold as specified by rules; or

(e)

entertains doubts about the veracity or adequacy of customer identification documents or information already obtained, such Institution shall conduct customer due diligence.

(5)

For the purpose of conducting customer due diligence, subject to any rules issued by the Head of the Financial Intelligence Unit under this Act, such Institution shall -

(a)

identify each customer, whether permanent or occasional, or whether a natural person or legal person or legal arrangement, and verify such customer’s identity on the basis of any official document or other reliable source document, information or data;

(b)

in the case of a person purporting to act on behalf of a customer, verify that such person is authorized by such customer, and identify such person and verify such person’s identity on the basis of any official document or other reliable source document, information or data;

(c)

identify the beneficial owner of the customer, if any, and in order to satisfy itself of the beneficial owner of the customer, take reasonable measures to verify such beneficial owner’s identity on the basis of any official document or other reliable source document, information or data; and

(d)

understand and, as appropriate, obtain information using any other relevant document, material or data on, the nature and the purpose of the intended business relationship with a customer.

(6)

Subject to any rules issued by the Head of the Financial Intelligence Unit under this

Act, an Institution –

(a)

shall conduct enhanced customer due diligence where money laundering, terrorist financing or financing of proliferation of weapons of mass destruction risks are assessed as high;

Financial Transactions Reporting

(b)

may conduct simplified customer due diligence where money laundering or terrorist financing risks are assessed as low; and

(c)

shall ensure that measures adopted to manage and mitigate financing of proliferation of weapons of mass destruction risks are proportionate with the level of risks assessed.

(7)

An Institution may, subject to any rules issued by the Head of the Financial

Intelligence Unit under this Act, share any information obtained under paragraphs (a) to

(d)

of subsection (5) with another Institution in any of the circumstances specified in paragraphs (a) to (e) of subsection (4).

(8)

For the purpose of subsection (4),

“occasional transaction” in relation to cash or electronic fund transfer, means any transaction that is conducted by any person one-off or from time to time, but not on a regular basis.”.

s 5Replacement of section 3 of the principal enactment

Section 3 of the principal enactment is hereby repealed and the following section is substituted therefor: -

3. (1) If an Institution is unable to comply with customer due diligence obligations as set out in section 2 or 5, such Institution –

(a)

shall not open the account, or commence business relationship or perform the transaction with the customer; or

“Procedure if customer due diligence obligations cannot be complied with.

(b)

shall terminate the business relationship with the customer.

(2)

Such Institution shall consider making a suspicious transaction report in relation to such customer under section 7:

Provided however, where such Institution suspects or has reasonable grounds to suspect the commission of the offence of money laundering, terrorist financing or financing of proliferation of weapons of mass destruction or any unlawful activity and if there are reasons to believe that conducting customer due diligence will tip-off the customer, such Institution shall not conduct customer due diligence and shall make a suspicious transaction report under section 7.”.

s 6Amendment of section 4 of the principal enactment

Section 4 of the principal enactment is hereby amended as follows: -

(1)

by the repeal of subsection (1) of that section and the substitution therefor, of the following subsection: -

“(1) Every Institution shall maintain –

(a)

records of all transactions, both domestic and international, and records of correspondence relating to all transactions and records of all reports furnished to the

Financial Intelligence Unit, for a period of six years from the date

Financial Transactions Reporting of completion of the transaction, correspondence or furnishing of the report, as the case may be; and

(b)

records obtained or created as part of the customer due diligence process in terms of section 2, including the results of an analysis undertaken, risk assessments and customer account files and business correspondence, for a period of six years from the date of the closure of the account or cessation of the business relationship or in the absence of such a relationship, from the date of the occasional transaction, as the case may be, unless the Head of the Financial Intelligence

Unit has issued directions to the effect that such records should be retained for such longer period as specified by him, in which case such records shall be retained for such longer period.”;

(2)

in paragraph (f) of subsection (2) of that section, by the substitution for the words “specified in rules issued by the Financial Intelligence Unit.”, of the words “specified by rules issued by the

Head of the Financial Intelligence Unit.”; and

(3)

by the repeal of subsection (3) of that section and the substitution therefor, of the following subsection: -

“(3) Where any record is required to be maintained under this Act -

(a)

it shall be maintained in a manner and form that will enable an

Institution to comply promptly with requests for information from the Financial Intelligence Unit or a law enforcement agency;

(b)

a copy of it may be kept-

(i)

in a machine-readable form, if a paper copy can be readily produced from it;

(ii)

in an electronic form, if a paper copy can be readily produced from it and an electronic signature of the person who keeps the record is retained for the purposes of verification;

(iii)

in the form of an audio or video recording; and

(c)

it shall be maintained in a manner and form that will enable reconstruction of individual transactions for the purpose of furnishing evidence in criminal proceedings where necessary.”.

s 7Amendment of section 5 of the principal enactment

Section 5 of the principal enactment is hereby amended as follows: -

Financial Transactions Reporting

(1)

in paragraph (b) of that section, by the substitution for the words “the source of funds,”, of the words

“the source of funds; and”;

(2)

by the addition immediately after paragraph (b)

of that section, of the following new paragraph: -

“(c) ensure that documents, information or data collected through customer due diligence process are kept up-to-date and relevant by reviewing existing records,”; and

(3)

by the repeal of the marginal note to that section, and the substitution therefor, of the following marginal note: -

“Ongoing due diligence of customers and scrutiny of transactions.”.

s 8Replacement of section 6 of the principal enactment

Section 6 of the principal enactment is hereby repealed and the following section is substituted therefor: -

6. (1) An Institution shall report to the

Financial Intelligence Unit in such form and manner, and within such period as may be directed by the Head of the Financial

Intelligence Unit –

(a)

any transaction in cash unless the recipient and the sender are both banks licensed by the

Central Bank; and

(b)

any electronic fund transfer of a customer,

“Institutions to report financial transactions.

of an amount exceeding such sum or its equivalent in any foreign currency, as shall be specified by the Minister by Order published in the Gazette.

(2)

For the purpose of subsection (1), the

Minister may specify different thresholds in respect of different categories of Institutions.”.

s 9Amendment of section 7 of the principal enactment

Section 7 of the principal enactment is hereby amended as follows: -

(1)

by the repeal of subsection (1) of that section and the substitution therefor, of the following subsection: -

“(1) Where an Institution—

(a)

suspects or has reasonable grounds to suspect that any transaction or attempted transaction may be related to the commission of any unlawful activity or any other criminal offence; or

(b)

has information that it suspects, or it has reasonable grounds to believe, may be relevant—

(i)

to an act preparatory to an offence under the provisions of the

Convention on the

Suppression of Terrorist

Financing Act, No. 25 of 2005;

Financial Transactions Reporting

(ii)

to an investigation or prosecution of a person or persons for an act constituting an unlawful activity, or may otherwise be of assistance in the enforcement of the

Prevention of

Money

Laundering Act, No. 5 of 2006 and the Convention on the Suppression of

Terrorist Financing Act,

No. 25 of 2005; or

(iii)

to the commission of any act constituting the offence of financing of proliferation of weapons of mass destruction, the Institution shall, as soon as practicable, after forming that suspicion or receiving the information, but not later than two working days therefrom, report the transaction or attempted transaction or the information to the Head of the

Financial Intelligence Unit.”;

(2)

in subsection (2) of that section –

(a)

by the repeal of paragraph (a) of that subsection, and the substitution therefor, of the following paragraph: -

“(a) be in writing or by electronic means or by telephone in which case to be followed up in writing within twenty-four hours, or such other manner as may be specified by way of directions issued by the

Head of the Financial Intelligence

Unit in that behalf;”;

(b)

by the repeal of paragraph (b) of that subsection, and the substitution therefor, of the following paragraph: -

“(b) be in such form and contain such details as may be specified by way of directions issued by the Head of the Financial

Intelligence Unit;”; and

(3)

by the repeal of the marginal note to that section and the substitution therefor, of the following marginal note: -

“Duty of Institutions to disclose information to the Financial

Intelligence Unit.”.

s 10Amendment of section 8 of the principal enactment

Section 8 of the principal enactment is hereby amended as follows: -

(1)

by the re-numbering of that section as subsection (1) of that section;

(2)

in the re-numbered subsection (1) of that section –

(a)

in paragraph (a) of that subsection, by the substitution for all the words from “property derived from” to the end of that paragraph and the substitution therefor, of the words

“property related to terrorism;”;

Financial Transactions Reporting

(b)

by the repeal of paragraph (b) of that subsection and the substitution therefor, of the following paragraph: -

“(b) the existence of any property related to terrorism in such person’s ownership, possession or control, if such property is owned, possessed or controlled by or on behalf of a specified individual or entity or for which there are reasonable grounds for suspicion that it is owned, possessed or controlled by or on behalf of a specified individual or entity;”;

(c)

in paragraph (c) of that subsection, by the substitution for all the words from “property derived from” to the end of that paragraph and the substitution therefor, of the words

“property related to terrorism; or”;

(d)

in paragraph (d) of that subsection, by the substitution for all the words from “property derived from” to the end of that paragraph and the substitution therefor, of the words

“property related to terrorism.”;

(3)

by the addition immediately after the re-numbered subsection (1) of that section, of the following new subsection: -

“(2) For the purposes of this section,

“property related to terrorism” means –

(a)

proceeds from the commission of a terrorist act;

(b)

property which has been, or is being, or is likely to be used to commit, or which is incidental to the commission of, a terrorist act;

(c)

property which has been, or is being, or is likely to be used by a terrorist group;

(d)

property owned or controlled by or on behalf of a terrorist group; or

(e)

property which has been collected for the purpose of providing support to a terrorist group for funding a terrorist act.”; and

(4)

by the repeal of the marginal note to that section and the substitution therefor, of the following marginal note: -

“Duty to disclose information relating to property related to terrorism.”.

s 11Amendment of section 9 of the principal enactment

Section 9 of the principal enactment is hereby amended as follows: -

(1)

in subsection (1) of that section-

(a)

by the substitution for the words “A person shall not disclose”, of the words “A person shall not, directly or indirectly, disclose”;

and

(b)

by the repeal of paragraph (c) of that subsection and the substitution therefor, of the following paragraph: -

Financial Transactions Reporting

“(c) any other information from which the person to whom the information is disclosed could reasonably be expected to infer that a suspicion has been formed or that a report has been or may be made.”; and

(2)

in subsection (2) of that section, by the repeal of paragraph (a) and the substitution therefor, of the following paragraph: -

“(a) an officer or employee or agent of the person making the report under this

Act for any purpose connected with the performance of that person’s duties;”.

s 12Amendment of section 10 of the principal enactment

Section 10 of the principal enactment is hereby amended in subsection (1) of that section as follows: -

(1)

by the substitution for the words “A person shall not disclose”, of the words “A person shall not, directly or indirectly, disclose”;

(2)

in sub-paragraph (i) of that subsection, by the substitution for the words “respectively; or”, of the words “respectively;”

(3)

in sub-paragraph (ii) of that subsection, by the substitution for the words and figures “No. 25 of 2005.”, of the words and figures “No. 25 of 2005;

or”; and

(4)

by the addition immediately after sub-paragraph (ii) of that subsection, of the following new sub-paragraph: -

“(iii) the investigation or prosecution of a person for any act constituting the offence of financing of proliferation of weapons of mass destruction.”.

s 13Replacement of section 11 of the principal enactment

Section 11 of the principal enactment is hereby repealed and the following section is substituted therefor: -

11. Subject to the provisions of this Act and any other written law for the time being in force prohibiting disclosure of information, anything contained in section 9 or 10 shall not prevent the disclosure of any information in connection with, or in the course of, proceedings before a court:

Provided however, a person shall not disclose any information to which this section applies in any judicial proceedings unless the judge or the presiding officer is satisfied that the disclosure of the information is necessary in the interests of justice.”.

s 14Amendment of section 12 of the principal enactment

Section 12 of the principal enactment is hereby amended as follows: -

(1)

by the repeal of subsection (1) of that section and the substitution therefor, of the following subsection: -

“(1) No civil, criminal or disciplinary proceedings shall lie against-

(a)

an Institution, or a qualified auditor or a supervisory authority of such

Institution; or

“Disclosure not to be prevented in judicial proceedings.

Financial Transactions Reporting

(b)

a director, partner, an officer, employee or agent acting in the course of such person’s employment in, or agency of such

Institution, or acting on behalf of such Institution, qualified auditor or supervisory authority, in relation to any action carried out by such

Institution, qualified auditor or supervisory authority, or a director, partner, an officer, employee or agent of such Institution, qualified auditor or supervisory authority, in terms of this Act in good faith or in compliance with regulations made under this Act or rules or directions issued by the Head of the Financial

Intelligence Unit, in terms of this Act.’’;

(2)

in subsection (2) of that section, by the substitution for the words and the figure “section 8 of this

Act.”, of the words and figures “section 28 of this

Act.”; and

(3)

by the repeal of subsection (3) of that section and the substitution therefor, of the following subsection: -

“(3) If an Institution, a qualified auditor or supervisory authority or any director, partner, officer, employee or agent of such

Institution, qualified auditor or supervisory authority makes a report under the provisions of this Act, such Institution, qualified auditor, supervisory authority, director, partner, officer, employee or agent shall, for the purposes of a prosecution for the offence of money laundering, terrorist financing or financing of proliferation of weapons of mass destruction, be deemed not to have been in possession of such information at any time.”.

s 15Amendment of section 13 of the principal enactment

Section 13 of the principal enactment is hereby amended as follows: -

(1)

in subsection (1) of that section, by the substitution for the words “a lawyer to disclose any privileged communication only if -”, of the words “a lawyer to disclose any privileged communication.”;

(2)

in subsection (2) of that section-

(a)

by the repeal of paragraph (a) of that subsection and the substitution therefor, of the following: -

“For the purpose of this section, a communication shall be a privileged communication, only if –

(a)

it is a confidential communication, whether oral or in writing, passing between —

(i)

a lawyer or legal advisor in the professional capacity and another barrister, solicitor, lawyer, attorney or legal advisor in such capacity;

Financial Transactions Reporting

(ii)

a lawyer or legal advisor in the professional capacity and the client, whether made directly or indirectly through an agent of either;”;

(b)

by the repeal of paragraph (c) of that subsection, and the substitution therefor, of the following paragraph: -

“(c) it is not made or brought into existence for the purpose of committing or furthering the commission of any illegal or unlawful activity.”; and

(3)

in subsection (3) of that section, by the substitution for the words “(whether a lawyer his or her client, or any other person),”, of the words “(whether a lawyer, client or any other person),”, and for the words “a trust account of the lawyer.”, of the words “a trust account of the lawyer.”.

s 16Replacement of section 14 of the principal enactment

Section 14 of the principal enactment is hereby repealed and the following section is substituted therefor: -

14. Every Institution shall-

(a)

appoint an officer at the senior management level as the

Compliance Officer who shall be responsible for ensuring the

Institution’s compliance with the requirements of this Act;

“Appointment of a

Compliance

Officer and duties and functions of the Institution relating to compliance.

(b)

appoint such other officers as may be necessary to assist the

Compliance Officer and provide sufficient other resources to ensure that the duties, functions and obligations of the Institution under this Act are properly performed and discharged;

(c)

establish and maintain procedures and systems to –

(i)

identify, understand and assess money laundering, terrorist financing and financing of proliferation of weapons of mass destruction risks and develop policies and procedures for the management and mitigation of those risks applying a risk-based approach;

(ii)

implement targeted financial sanctions against terrorist financing and financing of proliferation of weapons of mass destruction;

(iii)

implement the customer due diligence requirements under section 2;

Financial Transactions Reporting

(iv)

implement procedures for record keeping and retention requirements under section 4;

(v)

implement the process of ongoing due diligence of customers and scrutiny of transactions under section 5;

(vi)

implement the process of reporting requirements under sections 6, 7, 8, and 22;

(vii)

ensure compliance with section 15 where applicable and any regulation, rule or direction made or issued under this Act;

(viii)

make its officers, employees and agents aware of the measures, policies and procedures adopted by the Institution as required by this Act and regulations, rules, directions, circulars and guidelines made or issued thereunder and any other law in force for the time being in relation to the combatting of money laundering, terrorist financing and financing of proliferation of weapons of mass destruction;

(ix)

screen all persons before hiring them as employees or agents; and

(x)

ensure compliance with other measures imposed on Institutions by this Act and regulations, rules, directions and guidelines made or issued thereunder;

(d)

establish an audit function to test its procedures and systems for the compliance with the provisions of this Act; and

(e)

train its officers, employees and agents to identify suspicious transactions.”.

Read on from s 17