Four private-bank officials have been arrested and remanded as investigators widen a sensational probe into an alleged network that moved vast sums of foreign currency out of Sri Lanka using purported imports that investigators say never arrived.
COLOMBO – Four officials attached to some of Sri Lanka’s best-known private commercial banks have been arrested as investigators intensify a major probe into the alleged illegal transfer of as much as US$1 billion overseas through banking channels.
The Financial Crimes Investigation Division of the Criminal Investigation Department arrested the four officials in connection with an investigation into a Colombo Fort-based operation that allegedly transferred foreign currency abroad while presenting the payments as settlements for imported goods. Police say no corresponding goods were brought into the country in relation to the transactions under investigation.
The four suspects have since been remanded until August 20.
Published reports have identified the officials as:
- Dharmalingam Prasad – Union Bank
- Shiran Mario – Seylan Bank
- Amila Udara – Nations Trust Bank
- Umesh Randika Fernando – Sampath Bank
The names have been reported publicly in connection with the court proceedings. All allegations remain subject to investigation and judicial determination, and none of the four should be regarded as guilty unless convicted by a court.
Managers Allegedly Received Weekly Payments
What makes the investigation particularly serious is the allegation that the banking irregularities were not merely the result of administrative failures or weaknesses in compliance procedures.
Investigators reportedly believe the principal figure behind the operation made regular payments to bank officials in return for assistance in processing transactions.
According to information reported following the arrests, payments of Rs.30,000, Rs.50,000 and Rs.100,000 per week were allegedly made to officials associated with the transactions.
Investigators have also reportedly uncovered evidence that one of the arrested officials received approximately Rs.1 million in a single payment.
Authorities are now attempting to determine exactly how the transactions passed through banking controls and whether internal procedures were deliberately circumvented.
The arrests were reportedly carried out at the officials’ respective workplaces, with police describing the development as unprecedented for an investigation of this nature involving private-bank managers.
The ‘Imports’ That Investigators Say Never Arrived
At the centre of the investigation is an alleged system in which foreign currency was transferred overseas under the stated purpose of paying for imported goods.
However, when investigators examined the transactions against Customs records, they allegedly found that goods corresponding to thousands of those payments had never entered Sri Lanka.
Earlier court submissions revealed that investigators had examined the accounts of dozens of companies suspected of participating in the operation.
In July, the CID informed the Colombo Chief Magistrate’s Court that money had been transferred overseas on 10,156 occasions in one segment of the investigation, with investigators saying there were no Customs records showing the corresponding goods had been imported.
The inquiry has since widened considerably, with authorities examining a much larger network of transactions and companies.
Investigators are also probing whether import values were manipulated to avoid taxes and whether the network was used by businesses seeking to transfer foreign currency out of Sri Lanka outside legitimate trade channels.
Jeffrey Mohamed at Centre of Investigation
A central figure in the investigation is Jeffrey Mohamed, who investigators allege operated as a facilitator while presenting himself as a director of A.Y. Investment, a business operating from the Colombo Fort area.
Mohamed was arrested earlier in the investigation and has repeatedly been produced before the Colombo Chief Magistrate’s Court.
The CID has alleged that more than US$700 million was transferred overseas through the broader operation under investigation.
Investigators told court that foreign currency was recovered when Mohamed was arrested.
Authorities also seized luxury vehicles reportedly worth more than Rs.200 million, together with a quantity of gold, which investigators allege may be connected to proceeds generated through unlawful activity.
Mohamed’s lawyers have disputed the prosecution’s position and have argued in court that imports connected with the transactions were carried out through lawful procedures.
House of Fashions Mall Named in Court
The investigation has also moved beyond the alleged facilitator to companies suspected of using the network.
The CID previously informed court that it was examining the involvement of 21 leading companies in the alleged foreign-currency transfer operation.
Among the companies specifically named in court was House of Fashions Mall.
Investigators said at the time that six companies had already been identified during their inquiries, while investigations were continuing into others.
Importantly, being named as part of an investigation does not establish criminal liability. The CID is still examining whether the companies concerned knowingly participated in illegal transfers and the extent of any involvement.
Money Laundering and Drug-Trafficking Links Also Probed
The investigation has expanded beyond suspected breaches of foreign-exchange and Customs regulations.
Authorities are also examining possible connections to money laundering and drug trafficking, according to reports on submissions relating to the case.
That line of inquiry raises the possibility that the alleged import mechanism may have served not only companies attempting to move foreign currency overseas, but other sources of illicit funds seeking access to the international financial system.
Investigators have not yet established criminal responsibility for all the entities being examined.
How Did So Much Money Pass Through the Banks?
One of the biggest questions now facing investigators and regulators is how such a large volume of foreign-currency transfers could allegedly have passed through Sri Lanka’s banking system without corresponding imports being detected earlier.
The case places renewed scrutiny on the verification of Telegraphic Transfers, import documentation, trade-finance transactions and Customs declarations.
It also raises questions over how quickly commercial banks can verify whether goods for which foreign currency has been released actually arrive in Sri Lanka.
The Financial Intelligence Unit of the Central Bank already works with commercial banks and state agencies as part of Sri Lanka’s anti-money-laundering and counter-terrorist-financing framework. The expanding criminal investigation is now testing how effectively those safeguards operated in the transactions under scrutiny.
For investigators, however, the immediate focus has shifted from shell companies and transaction records to the people allegedly positioned inside the banking system itself.
Four banking officials are now in custody.
Major private banks have been publicly identified.
Hundreds of millions of dollars are under scrutiny.
And as investigators follow the money, what began as an inquiry into suspicious import payments is rapidly developing into one of the most consequential financial-crime investigations Sri Lanka has seen in recent years.
