A 19-year-old has been arrested by the Criminal Investigation Department under the Money Laundering Act after officers found Rs. 10,467,000 in cash he could not account for, police said.
The raid was carried out within the Dam Street Police Division by officers attached to the CID’s Homicide and Organised Crime Investigation Division, acting on information about a person allegedly moving money illegally through the undiyal system.
Police said the suspect, a resident of Colombo 05, was unable to provide satisfactory evidence establishing a legitimate source for the money. A counterfeit Rs. 1,000 note was also found in his possession. The Homicide and Organised Crime Investigation Division is continuing investigations.
What undiyal is
Undiyal, and the related hawala system, move money across borders through informal broker networks that settle balances between themselves rather than transferring funds through the banking system. Senders hand cash to an agent in one country and a counterpart pays out the equivalent in another, with no cross-border transfer recorded.
The channels are widely used by migrant workers because they are cheaper and faster than formal remittance services, but they sit outside exchange-control and anti-money-laundering supervision, and the same networks are used to move criminal proceeds.
A widening enforcement push
The arrest lands in the middle of a sustained crackdown on informal transfer channels. The Cabinet on Tuesday approved amending the Foreign Exchange Act of 2017 so that unauthorised outward transfers become a criminal offence rather than a matter for Central Bank fines alone.
Investigators have moved against several alleged networks in recent weeks, including the arrest of bank managers over an import scam and a CID probe into 21 companies linked to hundreds of millions of dollars in questionable transfers.
Authorities have separately sought to reassure migrant workers that legitimate remittances are unaffected, with the Inland Revenue Department confirming there is no separate tax on money sent home through formal channels. Worker remittances reached US$5.38 billion in the year to July.
