Sri Lanka gives the green light to IMF-supported legislation allowing seizure of proceeds from criminal activities

Sri Lanka Implements New Law Allowing Seizure of Proceeds from Criminal Activities

Sri Lanka has taken a significant step in combating crime and improving governance by approving a new law that allows the state to seize any proceeds from criminal activities. The law, known as the Proceeds of Crime Act (POCA), was backed by the International Monetary Fund (IMF) and aims to establish a more robust framework for freezing and forfeiting assets obtained through illegal means.

Transport Minister Bandula Gunawardana highlighted the importance of this new law during a cabinet briefing, emphasizing that it is a crucial component of the IMF program aimed at stabilizing the country’s economy. Sri Lanka has been grappling with a severe financial crisis, marked by a sharp decline in foreign exchange reserves and a default on foreign debt earlier this year.

Gunawardana stressed the necessity of completing the debt restructuring process to ensure the long-term stability of Sri Lanka’s economy. The POCA will not only enable the judicial freezing and forfeiture of proceeds of crime but also establish a new authority to manage seized assets, providing a more effective mechanism for combating financial crimes.

The IMF has conducted a governance diagnostic as part of its program with Sri Lanka, marking the first such assessment in Asia. The country’s central bank has underscored the importance of adhering to the IMF agreement and completing the debt restructuring process to pave the way for economic recovery. With projections of 3% growth in 2024, Sri Lanka is poised to experience positive economic growth after two years of contraction.