Sri Lanka Moves to Strengthen Anti-Money Laundering Framework with Amended Trust Law

Sri Lanka is preparing to submit an amended Trust Law as part of a broader effort to combat money laundering and the financing of terrorism, authorities have confirmed.

A Legislative Push for Financial Accountability

The proposed amendments to the country's Trust Law represent a significant step in Sri Lanka's ongoing campaign to align its financial regulatory framework with international standards. The move is aimed at closing legal loopholes that have historically made trust arrangements vulnerable to exploitation by those seeking to conceal illicit funds or channel money toward terrorist activities.

Trusts, which allow assets to be held and managed by one party on behalf of another, have long been identified by global financial watchdogs as instruments that can be misused when proper oversight mechanisms are absent. Sri Lanka's decision to revisit its Trust Law signals the government's recognition that existing legislation is insufficient to meet contemporary threats in financial crime.

Compliance with Global Standards

The amendments are expected to bring Sri Lanka closer to full compliance with the recommendations of the Financial Action Task Force, the international body that sets global standards for combating money laundering and terrorism financing. Sri Lanka has faced pressure in recent years to demonstrate concrete legislative and institutional progress in these areas.

Strengthening transparency around beneficial ownership — identifying who ultimately controls or benefits from a trust arrangement — is anticipated to be a central feature of the revised law. Such measures are considered essential by international regulators to prevent the misuse of legal structures for financial crime.

Broader Reform Context

This legislative initiative forms part of a wider package of financial and legal reforms Sri Lanka has been undertaking amid its economic recovery efforts. Demonstrating robust anti-money laundering controls has also become increasingly important for Sri Lanka's engagement with international financial institutions and foreign investors.

• The amended Trust Law targets vulnerabilities in trust arrangements used for money laundering
• Terrorism financing through trust structures is a key concern being addressed
• The reforms are aligned with Financial Action Task Force global recommendations
• Greater transparency on beneficial ownership is expected to be a core element

The submission of the amended legislation to parliament is anticipated in the near term, though an exact date has not yet been officially announced. Legal and financial sector observers will be watching closely to see how comprehensively the revised law addresses the identified gaps.