Financial transaction

Three financial institutions sanctioned for flouting customer due diligence protocols – Business News


  • People’s Merchant Finance, Ideal Finance and Seylan Bank sentenced to a cumulative fine of Rs. 2mn

The Central Bank of Sri Lanka (CBSL) added to the Consolidated Fund a sum of Rs 2 million during the third quarter, which was collected by imposing penalties on three financial institutions for failing to comply with the law on the declaration of financial transactions (FTRA) provisions.

As a result, the Central Bank had imposed sanctions on Peoples’ Merchant Finance PLC, Seylan Bank PLC and Ideal Finance Limited.

Peoples ‘Merchant Finance PLC was fined Rs 1million on July 6, 2021 for failing to comply with customer due diligence protocols under financial institutions’ rules regarding procedures for review of United Nations sanctions.

In a media statement yesterday, CBSL said during the on-site review, the Financial Intelligence Unit (FIU) observed that People’s Merchant Finance PLC did not have systems and procedures in place to maintain the full list of persons and entities designated under United Nations Security Council Resolutions (UNSCR) and screen its potential clients upon onboarding, as required by CDD rules.

Nor did the institution put in place mechanisms to screen existing clientele or existing business relationships when any of the relevant UNSCR lists were updated to ensure that no relationship was business was not owned by or related to any of the entities or individuals included in the update. designated lists. CBSL said that although failures in systems and procedures were observed, instances of business dealings with persons or entities designated by People’s Merchant Finance PLC were not revealed during the review on square. Since then, People’s Merchant Finance PLC has taken steps to correct the identified deficiencies and significant improvements have been made to the implementation of the sanctions selection process in the company, the CBSL said. Ideal Finance Limited was also fined by CBSL for reasons similar to People’s Merchant Finance PLC, where it failed to comply with customer due diligence rules and did not implement systems and procedures to maintain a complete list of persons and entities designated under United Nations Regulation No. 1 of 2012. The entity was fined 500,000 rupees on July 12, 2021.

Meanwhile, Seylan Bank PLC was fined 500,000 rupees on August 12, 2021 for failing to comply with customer due diligence rules and also for failing to establish and maintain procedures and systems to ensure the process of monitoring and implementing appropriate risks. controls and mitigation measures.

CBSL pointed out that the bank failed to fully comply with a transaction stay order issued by the FIU under the FTRA by failing to include banking relationships with a person subject to the FIU stay order. .

However, the regulator said the bank has since rectified the omission and ensured its commitment to prevent any recurrence of such errors.


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