Regulatory reforms for securities market operations

Following is a letter to Ministry of Finance Secretary Dr. Harshana Suriyapperuma, Central Bank Governor Dr. Nandalal Weerasinghe, and SEC Chairman Prof. Hareendra Dissabandara, urging essential regulatory reforms to minimise securities market risks

- By Chandra Jayaratne

Dear Sirs, Essential regulatory reforms for securities market operations to minimise money laundering and other securities market risks

Media reports published over the last nine months have reported significant investments made by high net worth local and foreign investors in Government securities, the stock market and as Board of Investments approved private investments.

These high-profile news making investments raise questions as to whether essential and optimum regulatory reviews and controls are in place, to ensure compliance with 'know your customer', and 'source of funds' legitimisations under the existing regulatory framework. Similar questions also arise as to whether effective regulatory processes are in place mitigating risks of round tripping, insider dealings, proxy investments via trusts where ultimate beneficial ownerships are not duly declared and other risks under securities market offenses.

A collective, prima facie risk review carried out by an accredited team of regulators together with law enforcement agency representatives has thus become a priority in eliminating any residual risks due to regulatory systems weaknesses to prevent potential significant money laundering and other securities market offenses which may be embedded within the current operational and regulatory compliance validations.