Sri Lanka Fines Casinos and State Bank for Money Laundering Violations

Enforcement Actions Highlight Serious AML and CTF Violations in Sri Lanka

The Financial Intelligence Unit (FIU) has taken decisive steps against two major casino operators and a prominent state-owned bank in Sri Lanka for significant failures in adhering to anti-money laundering (AML) and counter-terrorist financing (CTF) regulations. During the first half of 2025, a total of Rs.6.5 million in fines—approximately US $22,000—was imposed on these entities. These penalties underscore the importance of strict compliance with financial regulations, especially in high-risk sectors like banking and gaming.

AML and CTF laws are crucial in preventing illegal funds from infiltrating the financial system and ensuring that businesses do not inadvertently assist criminals or terrorists in moving money. These regulations apply to all sectors, but particularly to industries such as banking and gaming, which are more susceptible to misuse.

The Central Bank of Sri Lanka, which oversees the FIU, announced the penalties as part of broader efforts to enhance financial discipline and oversight in vulnerable sectors. The enforcement actions reflect a growing emphasis on accountability and transparency within the country’s financial institutions.

Casinos Fined for Neglecting Customer Due Diligence

In March 2025, the FIU imposed fines of Rs.1.5 million each on Bally’s Limited and Bellagio Limited, two of Sri Lanka’s licensed casino operators. These penalties were issued due to their failure to conduct basic customer due diligence procedures. The casinos did not properly verify customer identities or cross-check them against the United Nations (UN) sanction lists, which is essential for identifying potential ties to terrorism or criminal activities.

Additionally, both casinos lacked systems for monitoring suspicious behavior, failed to reassess risks when UN sanctions were updated, and did not maintain proper records of customer identity and business transactions. These deficiencies are considered high-risk given the gaming industry's vulnerability to money laundering activities.

The fines were enforced under the Financial Transactions Reporting Act, which mandates strict compliance for financial and non-financial institutions to prevent the flow of illicit funds. According to the FIU, these actions aim to enforce adherence to regulations and safeguard the financial system from exploitation.

State-Owned Bank Faces Heavier Penalties for Multiple Breaches

In a separate incident, the National Savings Bank (NSB), a state-owned institution, was fined Rs.3.5 million in April 2025 for multiple regulatory violations. The bank failed to report large-scale cash and electronic fund transfers exceeding Rs.1 million. Under existing regulations, such transactions must be reported to the FIU within 31 days, but the NSB repeatedly missed this deadline.

More concerning was the fact that the NSB continued to process transactions through accounts that had been suspended by the FIU, directly violating compliance protocols. The bank also failed to update or maintain its UN-designated sanction lists, which are critical for screening clients and transactions that could pose financial or security risks.

These lapses resulted in a higher penalty compared to the casino operators, emphasizing the responsibility placed on state-run institutions to lead by example in following AML laws and preserving public trust.

Fines Allocated to Government Fund

The total fines collected from the casinos and the National Savings Bank during the first half of 2025 amounted to Rs.6.5 million, or roughly US $22,000. All these funds have been credited to the government’s Consolidated Fund, as reported by the Central Bank of Sri Lanka.

Although the investigations did not reveal any direct links to internationally sanctioned individuals or groups, the FIU stressed that the fines serve to reinforce institutional controls and promote stricter compliance in the future. Both the financial and non-financial sectors are expected to implement robust systems for risk assessment, transaction monitoring, and updating sanction lists to protect the country from being exploited for illegal financial flows.

The FIU, in collaboration with the Central Bank, continues to take regulatory actions to ensure that all organizations—whether private casinos or public banks—adhere to the laws designed to prevent money laundering and terrorist financing in Sri Lanka.