Sri Lanka regulator halts deposit taking by a private forex exchange entity following a Central Bank investigation that found violations of the Finance Business Act, ordering the firm and its operator to repay all remaining deposit liabilities.
Sri Lanka regulator halts deposit taking after Central Bank investigation
Sri Lanka’s financial regulator has moved decisively to protect depositors after determining that a private foreign exchange operation had accepted public funds in violation of existing financial laws. The Central Bank of Sri Lanka announced that it has barred Marlon Fernando International Forex Exchange Unit Pvt Ltd and Kurukulasooriya Firmie Marlon Fernando from accepting any new deposits, while also ordering the repayment of all outstanding deposit liabilities.
The action follows an investigation conducted under Section 42 of the Finance Business Act No. 42 of 2011, a key piece of legislation governing licensed finance business activities in Sri Lanka. According to the Central Bank, the probe established that both the company and the individual had accepted deposits in contravention of the Act, prompting immediate regulatory intervention.
In a formal statement, the Central Bank said it had issued binding directions prohibiting the acceptance of deposits from the public, whether through the issuance of promissory notes or by any other means. The regulator further directed that all remaining deposit liabilities must be repaid in full, reinforcing its mandate to safeguard public funds and uphold financial system integrity.
Regulatory enforcement actions of this nature highlight the Central Bank’s continuing focus on curbing unauthorised financial activities, particularly those that may expose the public to elevated risk. Deposit-taking is a tightly regulated activity in Sri Lanka, restricted to licensed banks and finance companies that meet strict prudential requirements, including capital adequacy, liquidity standards and ongoing supervisory oversight.
The Central Bank has repeatedly warned the public to exercise caution when dealing with entities that promise high or guaranteed returns without proper authorisation. In recent years, authorities have intensified monitoring of unlicensed operators, including those operating in foreign exchange trading, investment schemes and informal finance arrangements that fall outside the regulated financial sector.
By ordering an immediate halt to deposit-taking activities, the regulator aims to prevent further accumulation of public funds under potentially unlawful arrangements. The directive to repay all outstanding deposits is intended to mitigate losses for affected parties and restore confidence in regulatory enforcement, especially at a time when financial stability remains a national priority.
Industry analysts note that foreign exchange-related operations often attract heightened scrutiny due to their complexity and exposure to market volatility. Without appropriate licensing and oversight, such operations can pose systemic risks, particularly if they solicit deposits from the public while operating outside established regulatory frameworks.
The Central Bank’s move also underscores the legal consequences of breaching the Finance Business Act. Section 42 empowers the regulator to investigate suspected violations and issue directions to prevent further harm, including restrictions on business activities and mandatory repayment obligations. Entities found to be in contravention may face additional sanctions, including legal proceedings, depending on the severity of the breach.
For depositors, the announcement serves as a reminder of the importance of verifying whether an institution is licensed or authorised before committing funds. The Central Bank maintains public records and advisories to help individuals identify approved financial service providers and avoid unregulated schemes.
While the regulator did not disclose further details about the scale of deposits involved, the directive sends a clear signal that unauthorised deposit-taking will not be tolerated. The emphasis on full repayment reflects an effort to prioritise depositor protection and reinforce accountability within the financial sector.
As Sri Lanka continues efforts to strengthen financial regulation and restore economic confidence, such enforcement actions are expected to play a critical role. Ensuring compliance with financial laws not only protects individual investors but also supports broader financial stability by reducing the risk of illicit or unsound financial practices.
The Central Bank’s intervention in this case reinforces its role as the country’s primary financial watchdog and highlights the ongoing need for vigilance, transparency and adherence to regulatory standards across all segments of the financial services industry.