The Cabinet of Ministers has granted policy approval to amend Sri Lanka’s Foreign Exchange Act, No. 12 of 2017, to make the unauthorised transfer of funds out of the country a criminal offence.
Under the proposed amendment, a person who remits money overseas as an advance payment for imported goods, but fails to bring in the corresponding goods within a reasonable period, could have the transaction treated as an unauthorised transfer of foreign exchange.
The gap the amendment targets
At present the law allows the Central Bank to impose a financial penalty equal to the rupee value of the unauthorised remittance. Such transactions are not classified as criminal offences under the Act, which limits the legal basis for criminal prosecution.
The government has identified a need to strengthen the framework so investigative and law-enforcement authorities can act more effectively against unauthorised outward transfers. Cabinet approved in principle a proposal submitted by the President in his capacity as Minister of Finance, Planning and Economic Development.
Reported alongside a Rs. 74 billion case
At the same weekly Cabinet media briefing, Cabinet Spokesperson Minister Dr. Nalinda Jayatissa said about Rs. 74 billion had been moved through 89 bank accounts in 10,151 transactions as part of an alleged Undiyal operation involving roughly US$1 billion sent abroad.
That investigation began in January 2026 after a complaint by the Additional Director General of Sri Lanka Customs to the Financial Crimes Investigation Division. Four private bank managers were remanded this week over their alleged involvement, following an earlier CID probe into import-advance transfers.
Ada Derana’s report on the Cabinet decision did not itself link the amendment to that case, and this report does not assume the two were formally connected.
A reversal of the 2017 position
The change would restore criminal liability that existed before 2017. Daily FT reported on July 24 that Central Bank officials told Parliament’s Committee on Public Finance the repealed Exchange Control Act had treated foreign exchange violations as criminal offences, and that the 2017 Act retained civil and administrative penalties while removing criminal liability — leaving investigators unable to prosecute the currency offence directly.
Whether the amendments will apply retrospectively was not addressed in the Cabinet decision as reported.
