Further details have emerged in the Criminal Investigation Department’s probe into an alleged scheme to illegally transfer around US$1 billion overseas under the guise of importing goods into Sri Lanka, with investigators alleging that private bank officials received regular payments to facilitate transactions.
Four officials attached to four leading private banks were arrested by the Financial Crimes Investigation Division (FCID) of the CID at their respective workplaces and later produced before the Colombo Magistrate’s Court. They were remanded until August 20. Police said the arrests were believed to be the first of their kind in an investigation of this nature.
The investigation centres on Jeffrey Mohamed, who was previously arrested in connection with the alleged financial operation.
Investigators told court that Mohamed had allegedly established around 36 companies claiming to be engaged in importing goods into Sri Lanka and had approached four private banks to open accounts linked to the companies.
However, while large amounts of foreign currency were allegedly transferred overseas through the accounts as payments for imports, investigators said the corresponding goods were never brought into Sri Lanka.
The CID alleged that the four arrested bank officials had personally met Mohamed and assisted him with banking transactions, with meetings allegedly taking place almost every Friday.
According to investigators, the officials had allegedly received payments ranging from Rs. 30,000 to Rs. 100,000 per week at different times. One official is alleged to have received around Rs. 1 million on a single occasion.
Investigators further alleged that the officials failed to conduct the required checks when facilitating the opening of bank accounts for companies connected to the transactions.
The CID told court that bank officials were required to verify relevant company registration details when opening corporate accounts and alleged that the suspects had assisted the process without carrying out adequate checks.
The arrests form part of a wider investigation into suspected illegal outward remittances.
Evidence previously presented to court alleged that 89 Sri Lankan-registered companies had transferred more than Rs. 190 billion overseas in US dollars, purportedly to import goods.
Investigators had focused on 36 of those companies and alleged that around Rs. 75 billion had been transferred overseas through 10,151 transactions linked to them without corresponding imports entering Sri Lanka.
The investigation is also examining possible links between the financial operation and drug trafficking.
Investigators have alleged that money generated through drug trafficking may have been channelled through the same network. .
Lawyers appearing for the arrested bank officials rejected the allegations and argued that some of the suspects were junior-level employees whose responsibilities were limited to obtaining information from customers and handling banking procedures.
The defence argued that determining whether companies had actually imported goods and whether their activities complied with relevant requirements was the responsibility of senior officials.
They further argued that responsibility for an alleged operation involving billions of rupees could not be placed on junior bank employees, as such matters were outside their scope of duties, and requested bail.
However, after considering submissions from both sides, the court rejected the bail applications and ordered the four suspects to be remanded until August 20.
The CID is continuing investigations into the overseas transfers, the companies and bank accounts allegedly used in the operation, the role of individuals who facilitated the transactions and possible links to money laundering and drug trafficking. (Newswire)