Mr. Speaker [The Hon. (Dr.) Jagath Wickramaratne]

¶ 01 Financial Transactions Reporting (Amendment) Bill: Determination of the Supreme Court

¶ 02 I wish to inform that I have received the Determination of the Supreme Court in respect of the Bill titled “Financial Transactions Reporting (Amendment)”, which was challenged in the Supreme Court under Article 121(1) of the Constitution.

¶ 03 The Supreme Court has determined that the Bill could be passed by the simple majority of Parliament, except Clause 22 and Clause 39, which Clauses shall be passed by the special majority of Parliament. However, if Clause 22 and Clause 39 are amended as proposed by the Court, the said Clauses too could be passed by the simple majority of Parliament.

¶ 04 I order that the Determination of the Supreme Court be printed in the Official Report of today's Proceedings.

¶ 05 Determination of the Supreme Court:

¶ 06 IN THE SUPREME COURT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA

¶ 07 “FINANCIAL TRANSACTIONS REPORTING (AMENDMENT) BILL”

¶ 08 SC (SD) Nos. 18/2026, 19/2026, 21/2026, 22/2026

¶ 09 Petitioners and Counsel: - Centre for Policy Alternatives (Guarantee) Limited — Mr. Viran Corea, PC with Mr. Luwie Ganeshathasan, Ms. Thahira Cader, Ms. Michelle Handy and Ms. Shabnam Mohammed. - Bar Association of Sri Lanka: Rajeev Amarasuriya (President), Nalin De Silva (Secretary) — Mr. Saliya Peiris, PC with Mr. Pulasthi Hewamanne, Mr. Harith De Mel, Ms. Fadhila Fairoze and Ms. Linuri Munasinghe. - Ambika Sathkunanathan — Mr. Pulasthi Hewamanne and Ms. Fadhila Fairoze. - Swastika Arulingam; Duminda Nagamuwa — Mr. Nuwan Bopage.

¶ 10 Respondent and Counsel: - Hon. Attorney General — Mr. Sudharshana De Silva, PC, Additional Solicitor General with Mr. Malik Azeez, State Counsel and Mr. Senal Senevirathne, State Counsel.

¶ 11 Before: Achala Wengappuli, J; Arjuna Obeyesekere, J; K.M.G.H. Kulatunga, J.

¶ 12 Court assembled at 10.00 a.m. on 29 April 2026.

¶ 13 Context and jurisdiction: Petitions filed under Article 121(1) challenging the Bill gazetted on 17 March 2026 and placed on the Order Paper on 9 April 2026. The Court outlined its pre-enactment review jurisdiction under Articles 120–123 and noted Article 83 thresholds.

¶ 14 Background on FATF: The Court set out the role of the Financial Action Task Force (FATF), its Recommendations (updated 2025), and Sri Lanka’s AML/CFT framework, including the Financial Transactions Reporting Act, No. 6 of 2006 (the Act), Prevention of Money Laundering Act, No. 5 of 2006, and Convention on the Suppression of Terrorist Financing Act, No. 25 of 2005.

¶ 15 Key features of the Bill (39 clauses): - Risk-based approach and customer due diligence (Clause 4); procedures when CDD cannot be completed (Clause 5); record-keeping (Clause 6); updating customer records (Clause 7). - Reporting thresholds, suspicious transaction reports, terrorism-related property disclosures to FIU (Clauses 8–10). - Confidentiality and tipping-off prohibitions (Clause 11); disclosures related to proliferation offences and judicial proceedings (Clauses 12–13). - Legal protections and privileged communications (Clauses 14–15). - Compliance Officer (Clause 16). - Establishment, powers, independence, and information exchange of the FIU (Clauses 17–20); entry and examination powers (Clause 21). - Administrative sanctions (Clause 22). - National Committee on AML/CFT and Financing of Proliferation (Clause 24) with composition and advisory duties. - Minister’s regulation-making (Clause 34); FIU Head’s rule-making (Clause 35). - Other operative and procedural provisions including Clause 39 (addressed in the determination as requiring special majority unless amended per Court’s proposals).

¶ 16 Principal challenges and Court’s analysis: - Overbreadth and Article 12(1): Petitioners argued excessive powers to Minister/FIU and vagueness/overbreadth in multiple clauses (including Clauses 4, 8, 9, 15–22, 24, 34, 35, 39) leading to arbitrariness. The Court, reiterating prior tests (e.g., Sri Lanka Electricity Bill; Welfare Relief Benefits Bill; Bureau of Rehabilitation Bill; PTA Amendment Bill), held that adequacy of safeguards and clarity are the benchmarks, and speculative abuse is insufficient. - Delegation and Article 76: The Court held that empowering the Minister to make regulations and the FIU Head to make rules constitutes permissible subordinate legislation under Article 76(3), circumscribed by the Act’s purposes, FATF alignment, and parliamentary oversight. Clause 34’s power to prescribe additional “finance business” or “designated non-finance business or profession” is limited by ejusdem generis and the interests of the national economy, with regulations subject to parliamentary approval. - FIU rule-making (Clause 35 introducing Sections 29A–29C): Rules may address CDD documents, timing, thresholds, simplified measures, record-keeping/reporting/screening, risk-based approaches, beneficial ownership verification, originator/beneficiary data, and inter-institution information sharing; must consider FATF Recommendations; published in the Gazette. The Court found these operational, not rights-infringing, and necessary for responsiveness. - Privileged communications and attorneys (Clauses 15, 18–20, 22): The Act already protects privileged communications (Section 13). Clause 15 amends Section 13 but retains the core protection for confidential attorney–client communications not made to further illegality; records related to trust accounts remain excluded from privilege. The inclusion of certain legal services within “designated non-finance businesses or professions” reflects FATF standards; the Court did not find a violation of attorneys’ privileges or professional regulation, given existing and maintained safeguards.

¶ 17 Conclusion of determination (as announced by the Speaker): The Bill may be passed by a simple majority of Parliament, except Clause 22 and Clause 39, which require a special majority unless amended as proposed by the Court, in which event they too may be passed by a simple majority.