First published on The Daily FT
Sri Lankan regulators, including the Central Bank and a newly formed NGO Secretariat, are leveraging FATF’s anti-money laundering (AML) and counter-terrorism financing (CTF) protocols to impose invasive financial controls on civil society organizations. Mandating exhaustive disclosure of foreign funding sources, pre-approval for projects, and real-time bank account monitoring, these measures are framed as adherence to FATF standards—particularly Recommendation 8, which urges oversight of nonprofits to prevent terrorist exploitation. In practice, however, the requirements have enabled systematic harassment of NGOs, with reports of frozen assets, arbitrary deregistration, and prolonged delays in accessing funds.
These policies disproportionately target groups focused on human rights, environmental advocacy, and governance reforms, conflating legitimate activism with terrorism risks. While FATF advocates a “risk-based approach” to avoid blanket restrictions, Sri Lankan authorities have weaponized these guidelines to suppress dissent and consolidate state control over civic space. The Central Bank’s collaboration with the NGO Secretariat to centralize financial oversight reflects a broader trend of exploiting international compliance frameworks to legitimize domestic repression.
