-By Lanka-e-News Investigations Desk - In collaboration with the International Fraud Detection Network (IFDN)
(Lanka-e-News - 06.Oct.2025, 10.45 PM) When investigators in Singapore first stumbled upon a string of suspicious bank accounts linked to a former Sri Lankan diplomat , they never imagined it would unravel into one of the largest offshore asset scandals in the island’s history.
But that single lead — a dormant account belonging to a former High Commissioner in Malaysia turn into Governor— has now exploded into a dossier containing the names of over 12,000 Sri Lankan citizens holding undeclared bank accounts across Singapore, Malaysia, Thailand, Indonesia, the Maldives, and the offshore haven of Labuan (Malaysia).
The accounts, many of them active, collectively hold an estimated USD 2 billion, according to confidential reports shared exclusively with Lanka-e-News by international fraud investigators.
What began as a diplomatic money-laundering probe has now become an unprecedented exposé — revealing a hidden ecosystem of politicians, senior bureaucrats, customs officials, lawyers, businessmen, and even members of the clergy quietly moving vast sums beyond Sri Lanka’s reach.
The trail started innocuously in early 2024 when financial regulators in Singapore flagged a series of transactions linked to a former Sri Lankan ambassador who had previously served as a Central Bank governor.
The funds — routed through shell entities in Labuan and parked in investment vehicles in Singapore — appeared inconsistent with his declared assets during his tenure in public office.
Upon deeper inspection, international investigators discovered dozens of associated accounts belonging to other Sri Lankan nationals. Within weeks, the web had expanded to thousands.
An investigator from the International Fraud Detection Network (IFDN), speaking on condition of anonymity, told Lanka-e-News:
“We initially thought we were tracking a single case of embezzlement. But the data leak we obtained showed hundreds of linked account holders — a pattern that could only exist if there were systemic abuse of power and offshore concealment.”
At the heart of the investigation lies Labuan, a small Malaysian island off Borneo that has become a preferred offshore banking centre for South Asian elites.
Regulated under Malaysia’s Labuan Financial Services and Securities Act, the island allows non-residents to open international business accounts with minimal disclosure and zero taxation on foreign income.
For Sri Lankans seeking to hide wealth, Labuan’s banking secrecy laws have proven irresistible.
Documents reviewed by Lanka-e-News reveal that at least 2,300 Sri Lankan citizens — including several former customs directors, retired permanent secretaries, and politically exposed persons (PEPs) — hold active accounts in Labuan.
The accounts were often opened through intermediaries or “nominated companies” registered in Singapore or Malaysia, making ownership almost impossible to trace without cross-border cooperation.
Singapore’s clean image has long made it a magnet for questionable funds from neighbouring countries. According to internal banking documents, nearly 5,000 Sri Lankan nationals have active or dormant accounts in Singaporean banks.
Many of these were established by exporters, freight companies, and real estate developers, ostensibly to facilitate “international trade settlements.”
But the IFDN’s forensic analysis paints a different picture — one of systematic capital flight.
Funds were siphoned from Sri Lanka through false invoicing, inflated import contracts, and transfer pricing schemes, then rerouted to Singapore under the guise of legitimate trade revenue.
Malaysia, too, features prominently in the leak — especially Kuala Lumpur and Penang, where private banks with offshore subsidiaries have quietly serviced South Asian clients.
The dossier reads like a social x-ray of post-war Sri Lanka — exposing a culture of financial escapism that spans political affiliations and professional classes.
Among the account holders are:
• Former ministers from both major political parties;
• President’s Counsels (PCs) and senior attorneys;
• Current and retired customs officers;
• Ex-Central Bank employees;
• Provincial council members and local politicians;
• Prominent Buddhist and Catholic clergy running schools and charities; and
• Over 300 businessmen linked to construction, pharmaceuticals, and garment exports.
One investigator summarised grimly:
“This isn’t just corruption. It’s institutionalised offshoring - a parallel economy that robs the state of billions in revenue while the public struggles with inflation and taxation.”
While the Southeast Asian accounts form the core of the current investigation, a parallel probe has revealed an additional 9,000 accounts held by Sri Lankan nationals in Dubai, Abu Dhabi, and other Gulf jurisdictions.
These accounts, together estimated at USD 3 billion, are primarily controlled by exporters and shipping agents who exploit legal loopholes in foreign exchange repatriation laws.
In many cases, export revenues from tea, spices, and rubber are deliberately under-invoiced in Sri Lanka - with the balance diverted into personal accounts in Dubai.
Investigators also found that several businessmen close to the Rajapaksa family and a handful of senior officials linked to former Prime Minister Ranil Wickremesinghe’s administration are among the Dubai account holders.
Adding to the complexity is evidence that a group of Sri Lankan businessmen have parked assets in San Marino, a microstate surrounded by Italy known for its lenient tax regime.
According to financial data obtained by Lanka-e-News, funds were transferred to San Marino from Dubai through intermediaries operating under European Investment Residency Programs.
A senior Sri Lankan financial crime expert commented:
“San Marino is rarely on anyone’s radar. But for those with access to private banking channels in Europe, it’s the perfect vault - small enough to be discreet, yet connected enough to allow investment migration.”
Among the most striking revelations are the number of Sri Lankan customs officers and Finance Ministry staff who appear on the list.
Many of these individuals were responsible for enforcing foreign exchange regulations - yet quietly violated them by transferring personal funds abroad.
Investigators identified multiple customs officials who, while earning under LKR 250,000 per month, maintained dollar accounts exceeding USD 200,000 in balance.
One such officer, now retired, had over USD 1.4 million spread across accounts in Bangkok, Singapore, and Dubai - allegedly funded by bribes collected during import clearance operations between 2012 and 2019.
Perhaps the most intriguing — and troubling — discovery involves a former political aide to ex-President Maithripala Sirisena.
Now residing in Dubai under British citizenship, he and his family reportedly operate several care homes in England, funded by money siphoned through offshore accounts.
The transactions, investigators say, were laundered through UK limited liability companies registered under nominee directors, before being reinvested into the British care sector.
The pattern - laundering via UK-based family businesses - mirrors techniques used by corrupt elites from Russia, Nigeria, and China over the past decade.
Economists estimate that the total value of undeclared offshore accounts held by Sri Lankans could exceed USD 5 billion - equivalent to nearly 10% of the country’s GDP.
If repatriated, these funds could drastically reduce Sri Lanka’s dependence on IMF loans and foreign aid.
Dr. Perera, a Colombo-based economist, told Lanka-e-News:
“This is not just about corruption; it’s about national economic sabotage. The foreign exchange crisis, the rupee depreciation — they’re all amplified because our own citizens are hoarding dollars offshore.”
The National People’s Power (NPP) government, which came to office promising an uncompromising crackdown on corruption, now faces its toughest challenge yet.
While Sri Lanka has anti–money laundering (AML) and exchange control laws, reclaiming offshore funds requires cooperation from foreign jurisdictions under mutual legal assistance treaties (MLATs).
The NPP administration is reportedly exploring the establishment of a Joint Asset Recovery Task Force (JARTF) to coordinate with Singapore, Malaysia, Thailand, and the UAE.
An NPP spokesperson said:
“It doesn’t matter whether you’re a President’s Counsel, a retired secretary, or a Buddhist monk - if you have undeclared assets abroad, you will face justice.”
New legislation, expected to be introduced later this year, may also empower authorities to prosecute dual citizens and foreign passport holders of Sri Lankan origin who engaged in financial crimes while resident in Sri Lanka.
Critics, however, warn of the thin line between legitimate offshore holdings and illicit ones.
Some Sri Lankans working abroad have opened accounts in foreign jurisdictions for practical reasons — remittances, savings, or business expansion.
But the investigators insist that the current dossier concerns non-declared accounts held by politically exposed persons (PEPs) and public servants, not ordinary workers or expatriates.
A compliance expert in Singapore explained:
“The distinction is clear. These accounts are not linked to employment or business operations abroad. They’re dormant or minimally active, designed purely to store undeclared capital.”
Much of this offshore ecosystem took root during the Rajapaksa administrations (2005–2015), when large-scale infrastructure projects were often financed through opaque procurement deals and commissions.
Officials and intermediaries allegedly used foreign contractors to funnel kickbacks into offshore accounts, often in the names of spouses or children.
The Central Bank bond scandal under the subsequent Wickremesinghe government further entrenched public cynicism, signalling that corruption was bipartisan and systemic.
The release of the dossier - expected in phases over the coming months - could mark a turning point in Sri Lanka’s struggle against financial corruption.
Lanka-e-News and the IFDN plan to publish redacted extracts from the leaked account list, focusing on major political figures and senior public officials, once verification is complete.
Sources close to the investigation confirm that at least five former cabinet ministers, three President’s Counsels, and multiple senior bureaucrats are among the first names to be disclosed.
The revelations are expected to trigger a wave of asset freeze orders, interpol requests, and possibly criminal indictments under Sri Lanka’s Proceeds of Crime Act.
For decades, Sri Lankans have watched as corruption scandals came and went, each leaving the public poorer and the guilty unpunished.
This time, however, the data trail is too comprehensive — the money too visible — for silence to be an option.
As the NPP government prepares to confront the offshore empire built by decades of political complicity, one question looms over Colombo’s corridors of power:
Will Sri Lanka finally reclaim its stolen billions - or will the hidden accounts of Labuan and Dubai continue to define the island’s moral bankruptcy?
Either way, the numbers don’t lie.
And this time, the world is watching.
-By Lanka-e-News Investigations Desk - In collaboration with the International Fraud Detection Network (IFDN)
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by (2025-10-07 01:30:38)
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