On 5 April 2025, the Sri Lankan Parliament enacted the Proceeds of Crime Act No. 05 of 2025 (the “Act”). The legislation marks a significant departure from the country’s existing legal framework on financial crime. Where previous statutes addressed individual offences or specific regulatory obligations, the Act establishes a comprehensive, integrated regime for tracing, restraining, seizing, and forfeiting assets derived from unlawful activity, with particular emphasis on bribery, corruption, drug trafficking, terrorist financing, and organised financial crime.

The Act’s overarching purpose is deterrence. It seeks to strip away the financial benefits of crime and, where identifiable victims exist, to restore value to them. Where they do not, the State stands as beneficiary. The legislative impetus behind the Act was, in significant part, externally driven. Sri Lanka’s commitments under the United Nations Convention Against Corruption (UNCAC), to which it is a signatory, as well as the United Nations Convention Against Transnational Organised Crime and the standards of the Financial Action Task Force (FATF), required a legislative response that the existing statute book could not adequately provide.

International financial institutions added further weight to the process. The IMF and World Bank, both of which have provided critical financial assistance to Sri Lanka during its economic recovery, made anti-corruption reform a precondition for continued support. The Act was therefore framed not merely as a matter of domestic criminal policy, but as an instrument essential to restoring investor confidence and ensuring that aid flows were not compromised by systemic corruption.

This article focuses on one of the more consequential and operationally significant dimensions of the Act: the breadth of its intelligence gathering and information sharing framework, the novel investigative techniques it authorises, and the statutory obligations it imposes on public and private sector functionaries to disclose information, notwithstanding any duty of confidentiality they might otherwise owe.

Scope of Application

The Act applies broadly. It extends to any person, citizen, resident, or diplomatic or consular officer of Sri Lanka, who commits an unlawful activity, whether within or outside Sri Lanka, whether before or after the Act’s commencement, where the legitimate interests of Sri Lanka or its citizens are or may be affected. The extraterritorial reach is deliberate: proceeds of crime do not respect borders, and the Act’s utility would be substantially diminished if it were confined to conduct occurring within the island.

The Enforcement Architecture

The Act recognises two primary enforcement agencies: the Police Proceeds of Crime Investigation Division (PCID) and the Commission to Investigate Allegations of Bribery or Corruption (CIABOC). The architecture reflects the dual nature of the offences the Act targets. CIABOC’s mandate under Article 156A(1)(c) of the Constitution already encompasses UNCAC compliance, and the Act extends and formalises that mandate by empowering CIABOC to authorise its Director General to function as a Designated Officer, either generally or on a case-by-case basis.
CIABOC is empowered to institute criminal proceedings for offences under the Act, apply to the High Court for forfeiture orders, and refer matters (not related to bribery or corruption) to the Attorney General for prosecution under the Act and the Code of Criminal Procedure Act. Where CIABOC encounters conduct falling outside the Anti-Corruption Act, it must refer the matter to the Inspector General of Police. This cross-referral mechanism reflects a deliberate attempt to avoid jurisdictional gaps that organised criminal enterprises might otherwise exploit.

Jurisdiction and the Role of the High Court

The High Court sits at the apex of the judicial framework established by the Act. Upon an indictment filed by the Director General of CIABOC or by the Attorney General, the High Court is empowered to prosecute persons suspected of unlawful activity and those who have benefitted from such activity. Beyond its existing jurisdiction under the Judicature Act and the Code of Criminal Procedure, the Act vests the High Court with specific powers to issue, extend, vary, or vacate judicial freezing orders; make orders for the protection, preservation, and management of proceeds of crime; conduct forfeiture proceedings, including orders relating to substituted property and substituted money; make disposal or release orders; and adopt such other procedures as it considers fair and appropriate in achieving the Act’s objectives. That last provision, the grant of a fair sui generis procedure, is significant. It gives the High Court meaningful flexibility in a domain where rigid procedural formalism could otherwise frustrate recovery.

Offences and Penalties

The acquisition, possession, or use of proceeds of crime constitutes an offence under the Act, attracting fines exceeding Rs. 10 million and imprisonment of up to fifteen years. Ancillary offences include the concealment or disguise of proceeds, destruction of evidence, failure to disclose knowledge of such proceeds, and obstruction of investigations. These provisions cast a wide net, extending criminal liability well beyond the primary offender to those who knowingly facilitate the retention of unlawfully derived assets.

Intelligence Gathering and Information Sharing

It is in this domain that the Act is at its most expansive, and, for those subject to its reach, most consequential. The intelligence gathering framework has been designed to give investigation officers access to the full financial and digital footprint of a suspect, drawing on sources that were either previously unavailable or accessible only through fragmented and cumbersome legal processes.

General investigative powers

In addition to conventional criminal investigatory powers, a Designated Investigation Officer is empowered to obtain:

•    information on banking relationships and facilities, including accounts, deposits, loans, and online banking usage;
•    details of financial instruments, products, services, and transactions from regulated and unregulated financial institutions alike;
•    information relating to digital and virtual transactions, including cryptocurrencies, blockchain-based assets, virtual trading, and other technology-enabled financial activities;
•    copies of declarations made to the Commissioner General of Inland Revenue, the Director General of Customs, the Registrar General, or the Registrar of Titles;
•    copies of deeds, conveyances, and other records maintained in land or title registries, and information available to the Department of Foreign Exchange;
•    telecommunications and digital usage data, including telephone and mobile records, traffic and transmission data, internet access logs, and use of digital services; and
•    information relating to equity ownership, shareholdings, and equity transactions.

The breadth of these powers is notable. Taken together, they give an investigation officer a nearly comprehensive picture of an individual’s financial life, their banking relationships, their land holdings, their tax declarations, their digital footprint, and their corporate interests. The Act does not require a criminal charge to have been laid before these powers are exercised; it is sufficient that a person is under investigation.

Special investigative techniques

Upon obtaining judicial authorisation from a Magistrate, a Designated Investigation Officer may employ a range of special investigative techniques. These include controlled delivery, digital surveillance (encompassing the interception and recording of digital, voice, or video communications), undercover operations (including the use of decoys), the laying of traps, and forensic extraction of data, information, and images from computers, mobile phones, digital storage devices, and other digital equipment.

Judicial oversight is built into this framework. The Magistrate may impose conditions on the use of any of these techniques, and the investigation officer must report progress to the Magistrate every fourteen days. This reporting obligation is not merely procedural, it creates a structured accountability mechanism that is intended to prevent investigative overreach. In addition to these surveillance powers, an investigation officer may obtain a judicial order requiring any person to conduct a forensic audit, a digital forensic extraction, a property valuation, the copying and storage of data in digital devices, a forensic analysis of property transactions, or any other activity necessary to achieve the Act’s objectives.

Use of third-party professional services

An investigation officer may lawfully act upon material and information gathered by local or foreign professionals, institutions, or organisations in the fields of money flow analysis, financial investigation, forensic accounting and auditing, and asset tracing. Such third-party material may be used to carry further investigations, to form opinions regarding property under investigation, or to take any action authorised under the Act. This provision effectively integrates the private financial intelligence sector into the State’s investigative apparatus, a development that is likely to be of particular relevance in complex cross-border investigations.

Mutual legal assistance and international cooperation

The Act’s information sharing regime extends far beyond Sri Lanka’s borders. It provides for mutual legal assistance under the Mutual Assistance in Criminal Matters Act, with any request received by the Central Authority to be forwarded directly to the relevant Designated Officer.

A Designated Officer may seek and obtain assistance from administrative, law enforcement, and judicial authorities of foreign countries for the investigation of property suspected to be proceeds of crime; the location and identification of witnesses, documents, records, and suspected proceeds; the facilitation of witness interviews, including via contemporaneous audio-visual link; the seizure, judicial freezing, and forfeiture of proceeds of crime and their return to Sri Lanka; the transmission, service, and enforcement of judicial orders issued by Sri Lankan courts in foreign jurisdictions; and the conduct of joint investigations with foreign authorities.

Equally, foreign authorities may request and obtain corresponding assistance from Sri Lankan Designated Officers, pursuant to the international, regional, multilateral, and bilateral conventions, agreements, and ad hoc arrangements to which Sri Lanka is party. The framework is, in other words, reciprocal, and it positions Sri Lanka as both a user and a provider of cross-border intelligence.

Non-Conviction Based Forfeiture

One of the more structurally distinctive features of the Act is its provision for non-conviction based forfeiture. Unlike traditional forfeiture regimes that require a criminal conviction as a precondition to asset recovery, the Act permits civil in rem proceedings against property suspected to be proceeds of crime, operating on a balance of probabilities standard. This is a significant departure from the established norm, and it enables recovery in precisely those cases where a conviction is impractical to obtain, whether because the accused has died, fled, or cannot be located.
These proceedings may be initiated where property suspected to be proceeds of crime has been investigated and prima facie material has been collected establishing that character, and where such property has been restrained, seized, and frozen under the Act. It is not a substitute for prosecution: where sufficient evidence exists, the offender must still be prosecuted. However, forfeiture proceedings may run in parallel with criminal proceedings, and, critically, may be maintained even where the accused has been acquitted or discharged, whether at trial or on appeal. The Act is explicit on this point, and it reflects a deliberate policy choice: the failure of a criminal prosecution should not, of itself, insulate unlawfully derived assets from recovery.

These proceedings may also be triggered where proceeds of an unlawful activity committed in Sri Lanka are found outside the country, or where the unlawful activity is committed abroad but the proceeds are located within Sri Lanka.

The Proceeds of Crime Management Authority and the Victims of Crime Reparation Trust Fund

The Act establishes the Proceeds of Crime Management Authority (PCMA) as the central administrative body responsible for overseeing mutual assistance, inter-agency cooperation, and international collaboration in the tracking and recovery of proceeds of crime. The PCMA is also charged with managing, protecting, and preserving restrained assets pending final judicial determination, a function that is operationally critical, given that the value of such assets may deteriorate significantly between restraint and forfeiture if left unmanaged.

Monies and assets forfeited under the Act are transferred to the Victims of Crime Reparation Trust Fund, from which compensation may be paid to identifiable victims of crime or, failing that, to the State. The establishment of this Fund represents an important normative commitment: that proceeds of crime are not merely a State windfall, but a resource that ought, where possible, to be returned to those who suffered the harm that generated them.

Presumption of Guilt

The Act reverses the ordinary burden of proof in relation to suspected proceeds of crime. The burden lies on the person asserting that a particular property is not derived from unlawful activity to establish, on a balance of probabilities, that it was acquired from lawful income, receipts, or assets. Failure to discharge this burden entitles the High Court to presume that the property constitutes proceeds of crime and to treat that failure as prima facie evidence of its unlawful derivation. This reverse onus is consistent with the approach taken in comparable legislation internationally, and reflects the practical difficulty of proving a negative in the context of asset recovery proceedings.

Statutory Disclosure Obligations Overriding Confidentiality

The Act imposes statutory disclosure obligations on a wide range of public and private sector functionaries, requiring them to provide information to the PCMA on suspected proceeds of crime, notwithstanding any duty of confidentiality to which they might otherwise be subject. The list is extensive. It includes the Commissioner General of Inland Revenue, the Director General of CIABOC, the Director General of the Securities and Exchange Commission, the Chief Executive Officer of any statutory corporation or body corporate, the Registrar General of Companies, the Head of the Department of Foreign Exchange, the Chief Executive Officer of any banking institution or finance company, the Chairman of the Board of Investment, the Director General of Intellectual Property, and the Chairman of the Colombo Port City Economic Commission.

The imposition of these obligations on senior executives of statutory corporations and financial institutions represents a significant development. These individuals are frequently subject to statutory or contractual duties of confidentiality in respect of customer or counterparty information. The Act overrides those duties, placing the obligation to disclose suspected proceeds of crime above any competing duty of non-disclosure. Failure to comply is an offence. A defence is available where the person can establish that they acted in good faith and that the failure to perform the relevant duty was attributable to circumstances beyond their control.

Delegation and Joint Investigation Teams

The PCMA is empowered to delegate its functions to a range of competent agencies, including police units, CIABOC, the Customs and Excise Departments, and the Securities and Exchange Commission. It may also convene Joint Investigation Teams (JITs), including the services of foreign experts, for complex cross-border tracing exercises. Delegation is to be governed by Memoranda of Understanding and standard operating procedures, with the Minister empowered to make regulations governing the conduct of MOUs, JITs, and delegation arrangements. This framework is designed to ensure legal consistency and accountability across what will inevitably be a multi-agency enforcement landscape.

The inclusion of foreign experts in JITs is a particularly consequential provision. Asset recovery in sophisticated transnational cases frequently requires specialist knowledge, of foreign financial systems, offshore holding structures, or jurisdiction-specific legal mechanisms, that domestic agencies may not possess. The Act’s explicit recognition of foreign expert participation brings Sri Lanka’s investigative framework into alignment with international best practice and substantially enhances the practical utility of the cross-border cooperation provisions discussed earlier.

Conclusion

The Proceeds of Crime Act No. 05 of 2025 is, by any measure, a transformative piece of legislation. The investigative powers it confers on Designated Officers, spanning financial records, telecommunications data, digital assets, foreign intelligence cooperation, and court-supervised surveillance techniques, are without precedent in Sri Lanka’s statutory framework. So too are the disclosure obligations it imposes on senior figures in the public and private sectors, the reverse onus it places on those asserting the lawful derivation of their assets, and the non-conviction based forfeiture mechanism it establishes.

The Act’s effectiveness will ultimately depend on how responsibly these powers are exercised. The agencies entrusted with its implementation carry a significant institutional burden: to deploy extraordinary investigative capabilities for the purposes Parliament intended, with the discipline and accountability that powers of this magnitude demand. History offers ample examples of jurisdictions in which analogous powers have been misused, turned to ends that had nothing to do with asset recovery and everything to do with institutional overreach. The safeguards built into the Act, judicial authorisation for surveillance techniques, periodic reporting requirements, the PCMA’s oversight role, and the good-faith defence for compliance officers, are intended to guard against that risk. Whether they prove adequate in practice remains to be seen.

For businesses, financial institutions, and public bodies operating in Sri Lanka, the Act necessitates a careful review of existing compliance frameworks, particularly in relation to disclosure protocols, anti-money laundering procedures, and the management of information requests from investigative authorities. Senior officers of statutory corporations, banking institutions, and other specified entities should be acutely aware that the Act displaces any competing confidentiality obligation they may hold. The cost of non-compliance is criminal liability; the defence of good faith, while available, is narrow. Early compliance preparation is not a matter of caution, it is a matter of prudence.