Sri Lanka tightens financial net by reinforcing targeted financial sanctions aimed at disrupting terror financing, strengthening national security, and protecting the integrity of the country’s financial system, according to the Ministry of Defence.
Sri Lanka tightens financial net through targeted sanctions on terror funding
Sri Lanka has significantly reinforced its counter-terrorism framework by intensifying the use of Targeted Financial Sanctions, a mechanism designed to disrupt the flow of funds linked to terrorist activity and protect the stability of the country’s financial system. The Ministry of Defence said the renewed focus reflects heightened national security priorities amid evolving global and regional threats.
Targeted Financial Sanctions are specialised restrictive measures imposed on individuals or entities suspected of involvement in terrorism or the financing of terrorist activities. These measures aim to isolate designated parties from the financial system by freezing assets, restricting access to banking services, and preventing the use of economic resources for any purpose within the country.
In Sri Lanka, the implementation of these sanctions is grounded in United Nations Security Council Resolution 1373 of 2001. The resolution is enforced locally through Regulation No. 01 of 2012, enacted under the United Nations Act, No. 45 of 1968. This legal framework enables authorities to take swift and binding action against designated individuals or organisations through formal Gazette notifications.
Once a designation is published, a legally enforceable Freezing Order is issued. This order results in the immediate freezing of bank accounts and the suspension of all financial transactions linked to the designated party. It also extends to non-financial assets, restricting the use, sale, transfer, or rental of property such as land, vehicles, housing, jewellery, and other valuables.
The Ministry of Defence emphasised that these measures are not symbolic but operationally robust. All actions are carried out based on tangible evidence and assessed within the broader context of national security considerations. This ensures that enforcement remains precise while avoiding undue disruption to lawful financial activity.
Authority over the imposition of Targeted Financial Sanctions rests with the Minister of Foreign Affairs, while the Secretary to the Ministry of Defence serves as the Competent Authority for administrative and operational matters. This division of responsibility highlights the strategic importance placed on counter-terrorism financing at the highest levels of government.
Sri Lanka tightens financial net not only to disrupt terrorism at its source but also to strengthen the resilience of its financial system. Effective sanctions enforcement helps prevent misuse of banking channels and reinforces confidence among international partners, particularly at a time when regulatory compliance and transparency are under increased global scrutiny.
The sanctions framework also supports Sri Lanka’s obligations under international standards set by the United Nations and the Financial Action Task Force. Compliance with these standards is critical for maintaining correspondent banking relationships and safeguarding the country’s access to the global financial system.
To improve transparency and public awareness, the Office of the Competent Authority has launched a dedicated official website. The platform provides access to Gazette notifications, freezing orders, and related information, allowing financial institutions and members of the public to stay informed about current designations and enforcement actions.
Authorities note that terrorism often operates through concealed financial channels rather than overt activity. Illicit transactions, hidden assets, and informal networks can sustain extremist operations unless proactively identified and disrupted. Strengthening the legal and administrative mechanisms surrounding financial sanctions is therefore viewed as a preventative measure rather than a reactive one.
Public access to information is also intended to encourage vigilance across the financial sector and wider society. Banks, businesses, and individuals play a role in ensuring compliance by reporting suspicious activity and adhering strictly to freezing orders once issued.
As Sri Lanka tightens financial net, officials say the broader objective remains safeguarding peace, financial stability, and public confidence. By reinforcing targeted sanctions and enhancing institutional coordination, the country signals its commitment to countering terrorism through lawful, transparent, and internationally aligned measures.