Central Bank and FIU sound alarm over unmonitored funds and lack of licensing clarity
As Sri Lanka moves forward with formalizing its gambling industry, serious concerns have emerged around junket operators—the middlemen who facilitate high-roller travel and gambling activities—remaining outside the purview of taxation, licensing, and regulatory oversight. These issues came to light during a recent Committee on Public Finance session, as reported by The Sunday Times.
Junkets Operating in a Legal Grey Area
Officials from the Central Bank of Sri Lanka and its Financial Intelligence Unit (FIU) admitted that existing laws do not grant adequate visibility into junket transactions. Junkets can bring in or extract significant volumes of cash without triggering reporting mechanisms or being subject to real-time financial scrutiny.
This lack of oversight presents not only a regulatory vacuum but a potential risk for money laundering, especially as the country prepares to open its largest integrated resort, the City of Dreams Sri Lanka. Operated by Melco Resorts and John Keells Holdings, the Colombo-based casino project is backed by a 20-year licence and is expected to attract high-value international gamblers, likely through junket networks.
No Licensing or Credit Rules in Draft Gambling Law
The Gambling Regulatory Authority Bill, although gazetted, currently fails to define licensing or compliance requirements for junket operators. Unlike jurisdictions such as Macau, which require junkets to be licensed and ban them from offering credit, Sri Lanka’s draft legislation lacks similar guardrails.
This omission could allow junkets to operate unchecked, posing a challenge for revenue collection and broader financial integrity efforts. A Central Bank representative noted that while casinos are integrated into tax structures, whether junkets will face similar obligations remains “undetermined.”
Additional Vulnerabilities on Cruise Ships and Foreign Transactions
The FIU also warned of unregulated gambling taking place aboard foreign cruise ships docked in Sri Lankan waters, with minimal oversight and no taxation. These vessels present another loophole in gambling oversight, potentially undermining local operators and exposing the country to further AML (Anti-Money Laundering) risks.
Furthermore, the Central Bank addressed concerns over sanctions compliance, particularly involving Russian financial entities. Despite political suggestions of easing restrictions, the Bank reaffirmed that US-led sanctions still apply, and any financial activity involving Russian-linked entities remains prohibited under current frameworks.
Urgent Revisions Needed for a Sustainable Framework
The gaps highlighted during the committee session suggest that Sri Lanka’s gambling bill needs urgent refinement, particularly regarding junket regulation. Without clear licensing requirements, credit issuance controls, and real-time financial monitoring, the country risks replicating the unchecked systems that led to regulatory scandals elsewhere.
With major casinos set to open and attract global clientele, regulators are under pressure to ensure that the industry develops under a transparent, compliant, and enforceable legal structure.
