FINANCIAL CHRONICLE – The Cabinet of Sri Lanka has given its approval for a proposal to publish amendments to the long-standing Trust Ordinance, which have already received clearance from the Attorney General. This step is aimed at enhancing transparency regarding ownership in trust arrangements, as announced by the Cabinet Spokesman.
The Financial Action Task Force (FATF), which oversees global efforts in anti-money laundering and counter-terrorism financing (AML/CFT), has stressed the importance of transparency in legal entities like trusts. The decision comes in response to concerns that trusts can potentially be misused to obscure illicit profits, hide ultimate beneficial ownership (UBO), and facilitate tax evasion or money laundering activities.
Sri Lanka has pledged to the FATF to reform its legal framework governing trusts to meet international standards. This includes ensuring that relevant authorities can access timely, accurate, and comprehensive information about trust creators, trustees, and beneficiaries.
According to Cabinet Spokesman Nalinda Jayatissa, the recent Cabinet decision was influenced by recommendations from the Task Force on the Prevention of Money Laundering and Financing of Terrorism, as well as a cabinet endorsement for the 2024 amendments to the Trust Ordinance No. 9 of 1917, which incorporates suggestions from the Financial Intelligence Unit of the Central Bank.
“The Attorney General has approved the draft bill for the Trust (Amendment), which was prepared by the Legal Draftsman,” said Jayatissa, who also serves as the Minister of Health and Media, while addressing reporters during the weekly post-Cabinet media briefing.
He further stated, “As a result, the Cabinet of Ministers has sanctioned the resolution put forth by the Minister of Justice and National Integration to publish this draft bill in the government gazette and forward it to Parliament for approval.”
The proposed amendments are considered a vital component of Sri Lanka’s strategy to reform its legal framework concerning money laundering and terrorism financing. This initiative coincides with a scheduled evaluation by the Asia/Pacific Group on Money Laundering (APG), making the successful completion of these assessments crucial to avoiding Sri Lanka’s placement on the FATF “Grey List.” Such a designation could adversely affect the nation’s access to international banking, credit ratings, and foreign trade.
Addressing the outdated provisions of the 1917 Trust Ordinance is essential for closing existing legal loopholes. The suggested amendments will mandate the identification and registration of ultimate beneficial owners, settlors, trustees, and beneficiaries of express trusts. Additionally, these changes will improve the processes for the legal registration of trusts and enhance cooperation in information-sharing among the Financial Intelligence Unit, law enforcement, and tax authorities.
Furthermore, the amendments will establish clear responsibilities for trustees to acquire and maintain accurate information regarding basic and beneficial ownership and to supply this information to financial institutions during the customer due diligence (CDD) process. (Colombo/September 29/2026)
