Actions taken against money launderning and terriest financing
Target markets of National Gem & Jewellary Authority are the high end markets that always look for delicate and unique presence of styles in jewellery as well as in Gems. To remain successfull in holding our position, National Gem & Jewellery Authority has to address both customers’ needs and regulatory needs as the sole statutory Authority in Sri Lanka for Development, regulation and promotion of the Gem & jewellery Industry.
In order to expand our business locally and internationally Authority shall adopte and as a result of it, Authority is in the process of moving into internationally recognized standerds.
The powers and functions of the National Gem and Jewellery Authority are interpreted by Section 14 of the National Gem & Jewellary Authority Act No: 50 of 1993. According to that section we are expected to carry out following tasks for the Development, regulation and promotion of the Gem & jewellery Industry.
Sri Lanka is currently working to strengthen its Anti Money Laundering (AML) and terrorist financing regulations. In 2006, Sri Lanka underwent a Mutual Evaluation from the Asia/Pacific Group on Money Laundering (APG).
Sri Lanka’s Anti Money Laundering (AML) and Countering the Financing of Terrorism (CFT) regime comprises with three pieces of legislations as follows.
- Conventions on the Suppression of Terrorist Financing Act No 25 of 2005 (CSTFA).
- Prevention of Money Laundering Act No 05 of 2006 (PMLA).
- Financial Transactions Reporting Act No. 06 of 2006 (FTRA).
It has been identified that, the most important one is the FTR Act, which established Sri Lanka’s Financial Intelligence Unit (FIU). The Financial Intelligence Unit (FIU) of Sri Lanka was established in March 2006 as an autonomous body under the Ministry of Finance and Planning. The FIU was reorganized as a Department in the Central Bank of Sri Lanka in February 2007 and then functions as an independent institution within the Central Bank’s framework and administrative structure.
The FIU has made some rules by a Gazette No: 1951/13 dated 27.01.2016 under section 2 of the Financial Transactions Reporting Act No. 06 of 2006. These rules shall apply to every Institution which engages in Finance Business. Specially these rules said “Every Financial Institution shall take the measures specified in these rules for the purpose of identifying, assessing and managing money laundering and terrorist financing risks posed by its customers, by conducting ongoing customer due diligence based on the “risk based approach.”
National Gem & Jewellary Authority is not an Institution which engages in Finance Business under the Financial Transactions Reporting Act No. 06 of 2006 and above Gazette. But recently FIU has published some new rules by a Gazette moderating the above said Gazette No: 2053/20 – Wednesday, January 10, 2018 cited as Designated Non-Finance Business (Customer Due Diligence) Rules, No. 1 of 2018
Accordingly the above mentioned new Proposed Rules said that the National Gem & Jewellary Authority is an Institution which engages in Non-Finance Business under the section 2 (c) as follows.
(c ) “dealers in precious metals and dealers in precious and semi-precious stones, including but not limited to, metals and stones covered by the Gem and Jewellery Act, No. 50 of 1993 when they engage in cash transactions with a customer, equal to or above the prescribed threshold ;”
In these circumstances National Gem & Jewellary Authority shall take the measures specified in these rules for the purpose of identifying, assessing and managing its money laundering and terrorist financing risks in relation to its customers, countries or geographical areas and products, services, transactions or delivery channels.
To provide the necessary measures to combat and prevent money laundering and to provide for matters connected therewith or incidental thereto National Gem & Jewellary Authority has scheduled its activities on year 2018 as follows.
1 Process of moderating the independent Gem Laboratory which comprised of specialized specialty workers
2 Process of moderating the independent Jewellery Laboratory.
3 Process of the administration of any scheduled written law.
4 Enhanced Customer Due Diligence.
5 Appointment of the Compliance Officer.
In November 2017, the National gem and Jewellery Authority (NGJA) has conducted an awareness meeting to the Directors of NGJA on the Draft “CDD Rules for Designated Non-Finance Businesses”
In December 2017, the NGJA appointed a coordinating officer to deal with the FIU requirements with the approval of the Board of Directors of NGJA.
In January 2018, the NGJA has conducted an awareness meeting to the officials of regional offices in Rathnapura, Naula, Mathara, Eheliyagoda, Monaragala and Colombo. In that meeting, regional staff was instructed to make awareness on the CDD requirements for gem and jewellery dealers of their regions, when they conduct field visits to gem and jewelry dealers.
In February 2018, NGJA has conducted a meeting with Regional Managers and the NGJA had inquired the progress of making awareness on AML/CFT requirements on field visits.
In March 2018, NGJA has conducted a half day awareness programme to the Export Division and Export Promotion Division of the NGJA, in regarding the AML/CFT compliance obligations to be met by the gem and jewellery dealers.
In April 4, 5 and 6 in 2018, the initial Workshop on National Risk Assessment (NRA) 2018 -, conducted by the officials from the World Bank (WB) and few officials of NGJA has participated.
In September 2018, an awareness session has been conducted by the FIU to the officials appointed by the National Gem and Jewellery Authority (NGJA) for joint supervision of gem and jewellery dealers.
In Octomber 2018, officials appointed by the National Gem and Jewellery Authority (NGJA) for joint supervision of gem and jewellery dealers have engaged with the progress review visits of gem and jewellery dealers.
In November 2018, few officials of NGJA have participated in a Technical consultancy session conducted by the officials of World Bank (WB).
To provide the necessary measures to combat and prevent money laundering and to provide for matters connected therewith or incidental thereto National Gem & Jewellary Authority has scheduled its activities on Year 2019 as follows.
Introducing a new license for Exports/Imports Gem & Jewellery under the provisions of National Gem & Jewellery Authority Act No: 50 of 1993
To provide the necessary measures to combat and prevent money laundering and to provide for matters connected therewith NGJA is willing to issue a separate Gem and Jewellery Export/ Import Licence for the individuals or companies who are engaged in the exports activities in near future.
The above Licence shall be issued by Export Promotion Department of NGJA, which is authorized and approved by Chairman and CEO of NGJA for that purpose. Following documents would be mandatory in order to be eligible for proposed Gem and Jewellery Export/ Import Licence.
- Valid Gem Dealer Licence
- Bank Statements of past three months
- Police Report of the Proprietor/ Partners/ Directors
- Certified Copy of the Business Registration
- Photocopy of National Identity Card
- Residency Certificate issued by Grama Niladhari
- Foreign Partners or Directors should submit a Recommendation Letter from Embassy/ High Commission in Sri Lanka of relevant country.
Further, If any licensee has not made any export in the preceding year a fine shall be imposed (Licence Fee will be doubled) from the exporter at the point of renewal. If licensee has not done any exports during preceding two years, the Licence shall not be renewed for the upcoming years. The above procedure will be gazette.
1 Inserting a new condition to the PROPOSED EXPORT Licenseas follows.
“Dealer Licensee is complying with the rules by a Gazette moderating the above said Gazette No: 2053/20 – Wednesday, January 10, 2018 cited as Designated Non-Finance Business (Customer Due Diligence) Rules, No. 1 of 2018 under section 2 of the Financial Transactions Reporting Act No. 06 of 2006.”
2 Introduce a new system for the Export procedure for record keeping.
3 Take necessary actions for the awareness of the rules by a Gazette moderating the above said Gazette No: 2053/20 –Wednesday, January 10, 2018 cited as Designated Non-Finance Business (Customer Due Diligence) Rules, No. 1 of 2018
Under the above said necessary actions for the awareness of the rules by a Gazette moderating the above said Gazette No: 2053/20 –Wednesday, January 10, 2018 cited as Designated Non-Finance Business (Customer Due Diligence) Rules No. 1 of 2018 , NGJA has already taken the action as follows.
Distributed the following Rules and circulars & the awareness leaflets & Advertisement among the Gem & Jewellery Dealers.
- Rules for Designated Non-Finance Business (Customer Due Diligence) Rules, No. 1 of
- Guidelines on AML & CTF Compliance Obligation for Dealers in Real Estate and Precious Metals, Precious and Semi-Precious Stones,No. 03 of 2018.
Compliance Officer Declaration
- Distributing a Handbill among the members of Gem & Jewellery Sector in regarding the AML/CFT compliance obligations to be met by the gem and jewellery dealers.
- Published the Newspaper Articles on
- Irida Diwaina Sinhala Newspaper dated 16th December, 2018
- Silumina Sinhala Newspaperdated 16th December, 2018
- Sunday Observer English Newspaper dated 16th December, 2018
- Thinakaran Waramanjari Tmail Newspaper dated 16th December, 2018
- Conducted an awareness meeting Foundation Institution on 27th December 2018 in regarding the AML/CFT compliance obligations to be met by the gem and jewellery dealers.
- Reporting to the web the findings of Investigations done by the Enforcement & Regional Development Division of NGJA. findings of Investigations done by the Enforcement & Regional Development Division of NGJA.
- Maintaining a high-quality database of Registered Gem Dealer Licensees.
Finally, National Gem & Jewelry Authority is willing to expand its’ targets of year 2019, to comply with the National Gem & Jewellery Authority Act No. 50 of 1993 and Anti-Money Laundering and terrorist financing regulations.
Prepared by:
Janani M.Dayarathne*
Assistant Director (Legal) Actng.
National Gem & Jewellery Authority.
