The Microfinance Act, No. 6 of 2016 was enacted with the objective of providing a regulatory framework to cover microfinance institutions that are not regulated at present. The purpose of the Act is to improve the delivery of financial services to low income persons and micro enterprises, increase financial inclusion, strengthen the soundness and systems of microfinance institutions, facilitate microfinance institutions to access wider sources of funding, promote consumer protection and promote a safe and stable financial system.
The Microfinance Act came in to operation on 15 July 2016. Accordingly, the Monetary Board of the Central Bank of Sri Lanka is empowered to issue licences for applicant companies carrying on microfinance business, issue rules and directions for Licensed Microfinance Companies (LMFCs) and issue guidelines to the Registrar of Voluntary Social Services Organisations for the regulation and supervision of Microfinance Non-Governmental Organizations (MNGOs).
In terms of the provisions of the Financial Transactions Reporting Act, No. 6 of 2006 (FTRA), the Financial Intelligence Unit (FIU) of Sri Lanka entered into a Memorandum of Understanding (MOU) with the Department of Inland Revenue on October 19, 2016 at the Central Bank of Sri Lanka to exchange information in order to facilitate investigations and prosecutions on money laundering and terrorist financing. Mrs. Kalyani Dahanayake, Commissioner General, Department of Inland Revenue and Mr. H. Amarathunga, Director, FIU signed the MOU on behalf of the respective institutions in the presence of Dr. Indrajit Coomaraswamy, the Governor of the Central Bank of Sri Lanka, who is also the Chairman of the Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) National Coordinating Committee.
