Sri Lanka’s Anti-Money Laundering Authority fines LCB Finance and Orient Finance for failing to comply with Customer due diligence rules
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By virtue of the powers vested under Section 19 (1) read together with section 19 (2) of the Financial Transactions Reporting Act, No. 6 of 2006 (FTRA), the Financial Intelligence Unit (FIU) imposed financial penalties on Orient Finance PLC and Lanka Credit and Business Finance Limited (LCB Finance) in the fourth quarter of last year amounting to Rs. 1.5 million for non-compliance with the provisions of the FTRA.
Orient Finance PLC
Date of Imposition: 14 September 2021
Amount: LKR 500,000.00 (Rupees five hundred thousand)
Reason for the imposition of the penalty:
The administrative penalty was imposed for non-compliance with the Financial Institutions (Customer Due Diligence) Rules, No. 1 of 2016 (CDD Rules) in relation to procedures of United Nations’ sanctions screening.
The FIU observed during the on-site examination that Orient Finance PLC had failed to implement systems and procedures to maintain the complete list of designated persons and entities under relevant United Nations Security Council Resolutions (UNSCRs), screen its prospective customers at the time of onboarding as required by the CDD Rules and to screen the existing customer base or existing business
relationships when any of the relevant UNSCR lists were updated in order to ensure that no business relationship was held by or linked to any of the entities or individuals included in the updated designated lists.
Although lapses in systems and procedures were observed, instances of business relationships with designated individuals or entities by Orient Finance PLC were not revealed during the on-site examination. Since then, Orient Finance PLC has taken action to rectify the identified deficiencies and significant improvement has been made on the implementation of a sanctions screening process in the company.
Lanka Credit and Business Finance Limited
Date of Imposition: 14 September 2021
Amount: LKR 500,000.00 (Rupees five hundred thousand)
Reason for the imposition of the penalty:
The administrative penalty was imposed for non-compliance with the Financial Institutions (Customer Due Diligence) Rules, No. 1 of 2016 (CDD Rules) in relation to procedures of United Nation’s sanctions screening.
The FIU observed during the on-site examination that Lanka Credit and Business Finance Limited had failed to implement systems and procedures to maintain a complete list of persons and entities designated under the United Nations Regulations, No. 1 of 2012, to screen its prospective customers against UNSCR lists of designated persons or entities at the time of on-boarding and to screen the
existing customer base or existing business relationships when any of the UNSCR lists are updated to ensure that no business relationship is held by or linked to any of the entities or individuals included in the updated designated lists as required by the CDD Rules.
Although lapses in systems and procedures were observed, instances of business relationships with designated individuals or entities by Lanka Credit and Business Finance Limited were not revealed during the on-site examination. Since then, Lanka Credit and Business Finance Limited has taken initiatives to rectify the identified deficiencies.
