Sri Lanka Must Modernise Proceeds of Crime Laws to Match Global Standards in the Fight Against Organised Crime and Political Corruption
Colombo, January 6 — Sri Lanka’s long and uneven battle against organised crime, illicit financial flows, and politically protected corruption has reached a decisive legal crossroads. With the enactment of the Proceeds of Crime Act, No. 5 of 2025, the country has taken a significant step toward aligning its domestic legal architecture with international best practices adopted by jurisdictions such as the United Kingdom, the European Union, and China. Yet, legal experts and policymakers caution that legislation alone will not suffice unless it is rigorously implemented, continuously updated, and insulated from political interference.
Against this backdrop, a special awareness and capacity-building programme on the new Proceeds of Crime Act was held today (06) at the Ministry of Defence, signalling the state’s intention to operationalise the law as a cornerstone of Sri Lanka’s national strategy to combat organised financial crime.
A Strategic Shift from Punishing Crime to Confiscating Wealth
The programme, organised under the guidance of Defence Secretary Air Vice Marshal Sampath Thuyacontha, focused on educating senior officials from the defence, legal, and civil administrative sectors on the mechanisms for identifying, tracing, freezing, and confiscating assets derived from criminal activity.
This marks a fundamental shift in Sri Lanka’s crime-control philosophy. Traditionally, enforcement agencies concentrated on prosecuting individuals, often allowing the economic foundations of criminal enterprises to remain intact. The new law, by contrast, recognises that crime survives not through ideology or violence alone, but through money.
Organised criminals, narcotics traffickers, human smugglers, arms dealers, and corrupt politicians rarely store their wealth in obvious forms. Instead, illicit proceeds are systematically laundered into legitimate-looking businesses, including real estate developments, luxury apartments, casinos, hotels, export–import companies, logistics firms, construction projects, and even charitable foundations.
Disclosure Obligations and Criminal Liability for Silence
Delivering the keynote address, Air Commodore Sudarshan de Silva, President’s Counsel, who serves as Additional Solicitor General and Director General (Legal) of the Sri Lanka Air Force, provided an in-depth analysis of the new legal framework, which came into force on 1 June 2025.
He emphasised that the Act introduces mandatory disclosure obligations unprecedented in Sri Lankan criminal law.
“Any person or public official who becomes aware of information suggesting that assets constitute proceeds of crime is legally obliged to report such information to the relevant authorities,” he stressed.
Under the Act, wilful blindness, deliberate omission, or failure to disclose is no longer a bureaucratic lapse—it is a serious criminal offence, punishable by severe legal consequences. This provision mirrors the UK’s Proceeds of Crime Act 2002 (POCA) and the EU’s Anti-Money Laundering Directives, which criminalise non-disclosure and impose personal liability on professionals and officials who facilitate or ignore financial crime.
Learning from the United Kingdom and the European Union
In the United Kingdom, the Proceeds of Crime Act (POCA) has transformed law enforcement by enabling authorities to seize assets without requiring a criminal conviction, provided the civil standard of proof is met. Tools such as Unexplained Wealth Orders (UWOs) have forced politically exposed persons (PEPs) and suspected criminals to account for assets grossly disproportionate to their known income.
Similarly, the European Union has adopted a “follow the money” doctrine, strengthening asset recovery offices, cross-border cooperation, and beneficial ownership transparency. EU law now allows for non-conviction-based confiscation, particularly where criminal networks shield themselves behind proxies, shell companies, and family members.
Sri Lanka’s new Act moves cautiously in this direction, but experts argue that regulatory courage and judicial independence will determine whether the law becomes a genuine enforcement tool or another symbolic statute.
China’s Zero-Tolerance Approach to Illicit Wealth
China’s experience offers another instructive comparison. Over the past decade, Beijing has pursued an aggressive campaign against corruption and financial crime, focusing heavily on asset tracing, overseas recovery, and repatriation of illicit funds.
Through initiatives such as Operation Fox Hunt and Sky Net, Chinese authorities have demonstrated that political position does not confer immunity when illicit wealth is involved. While Sri Lanka operates within a democratic and constitutional framework distinct from China’s system, the underlying principle is relevant: crime collapses when financial incentives are removed.
Organised Crime and Political Patronage in Sri Lanka
Sri Lanka’s vulnerability to financial crime is exacerbated by decades of political patronage networks, weak enforcement, and selective prosecution. Organised criminal syndicates often enjoy protection through political connections, while illicit funds are routinely laundered into mainstream economic activity, distorting markets and undermining legitimate entrepreneurship.
Legal analysts note that drug trafficking profits, illegal sand mining revenues, customs fraud proceeds, and defence procurement kickbacks have historically found safe harbour in urban property markets and large-scale infrastructure projects.
The new Proceeds of Crime Act directly targets this ecosystem by empowering authorities to trace assets across sectors, regardless of whether they are held directly or indirectly.
Transparency, Accountability, and National Security
The Ministry of Defence underscored that the awareness programme forms part of a national effort to suppress organised financial crime, which is increasingly recognised as a national security threat rather than merely a law-and-order issue.
Illicit financial networks often intersect with terror financing, transnational crime, and foreign intelligence operations, making asset recovery a strategic imperative. By enhancing transparency and strengthening inter-agency cooperation, the Ministry aims to identify, disrupt, and dismantle illegal financial structures that operate beneath the surface of the formal economy.
Institutional Capacity and Cultural Change
Participants at the programme included the Additional Secretary (Administration) of the Ministry of Defence, senior tri-forces officers, legal professionals, and senior civil servants. An interactive session followed the main presentation, highlighting practical challenges in implementation, including:
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Inter-agency coordination
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Protection for whistleblowers
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Financial intelligence analysis capacity
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Judicial delays and evidentiary standards
Several speakers noted that laws do not enforce themselves. Effective implementation will require institutional courage, professional integrity, and a cultural shift away from tolerance of “grey money” in business and politics.
The Road Ahead
Sri Lanka’s decision to update its Proceeds of Crime legislation reflects growing recognition that economic crime corrodes democracy, distorts markets, and erodes public trust. Aligning domestic law with UK, EU, and international standards is not about external pressure—it is about internal survival of the rule of law.
If enforced without fear or favour, the new Act has the potential to strike at the financial heart of organised crime and corruption, ensuring that illicit wealth can no longer be laundered into legitimacy under political cover.
The real test, however, lies ahead: whether Sri Lanka’s institutions are prepared to apply the law against the powerful as rigorously as against the powerless. Only then will the promise of the Proceeds of Crime Act translate into genuine reform rather than another missed opportunity.