Colombo Chief Magistrate Asanga S. Bodaragama on March 12 ordered the Central Bank of Sri Lanka to immediately take measures to prevent the outflow of local currency to foreign countries through cryptocurrency smuggling carried out by exploiting loopholes in the Foreign Exchange Act.
The Magistrate told the court that the public has little understanding of the new forms of financial crime being carried out using cryptocurrency technology without approval from the Central Bank. He noted that such cases are increasingly being reported to the court and warned that investigations into these incidents currently appear to be confined largely to the court process.
Emphasizing the seriousness of the situation, the Magistrate instructed both the Criminal Investigation Department and the Central Bank to take steps to educate the public about the risks and illegality of such cryptocurrency transactions. He said authorities should introduce a proper public awareness program to address the growing misuse of digital currency platforms.
The Magistrate further observed that many individuals have been tempted to exploit weaknesses in the Foreign Exchange Act to commit financial fraud and illegally transfer funds overseas. He said the Central Bank must take responsibility for identifying and implementing measures to close these regulatory gaps.
These remarks were made when a case involving an alleged fraud of 290 million rupees at a well-known private bank was taken up before the court. According to the case presented in court, suspects are accused of fraudulently obtaining public funds and transferring them through cryptocurrency trading using Binance accounts.
The Magistrate ordered the Criminal Investigation Department to complete the investigation into the disappearance of the 290 million rupees as quickly as possible and submit a full report to the court. He had previously stressed that the case was not an ordinary financial offense and required urgent action to prevent similar frauds being carried out through cryptocurrency platforms such as Binance.
He also instructed investigators not to limit their actions to repeatedly presenting suspects before the court over several months, but to gather all relevant information related to the private bank fraud and conclude the investigation promptly.
“This is not an ordinary theft like stealing gas in daily life. It involves defrauding the public through Binance accounts,” the Magistrate said earlier during the hearing, urging the Criminal Investigation Department to take decisive steps to halt such crimes.
