Four officials from four leading private banks in Sri Lanka have been remanded until August 20 over their alleged involvement in an Undiyal money transfer operation involving approximately US$1 billion transferred illegally to foreign countries.
The four suspects were produced before the Colombo Magistrate’s Court today (17), following their arrest by the Financial Crimes Investigation Division of the Criminal Investigation Department (CID).
According to investigators, the alleged Undiyal operation involved transferring large sums of money overseas without corresponding imports of goods into Sri Lanka.
Police said the arrests represented the first known instance of bank officials being arrested at their respective banks in connection with such an investigation.
The investigation was initiated following the arrest of a suspect identified as Jeffrey Mohamed, who is alleged to have links to organized crime and bank-related financial fraud.
Investigators told court that Jeffrey Mohamed had established approximately 36 companies, claiming that they were involved in importing goods into Sri Lanka. He had allegedly approached the four private banks to open accounts for the companies.
However, although money was reportedly transferred overseas under the pretext of paying for imports, investigators said the goods in question were never brought into Sri Lanka.
Bank officials allegedly received weekly payments
The CID alleged that the four bank officials had personally met Mohamed and assisted him with banking transactions. Investigators told court that such meetings reportedly took place almost every Friday.
The officials were also allegedly paid regularly for their assistance. According to investigators, the payments ranged from Rs. 30,000 to Rs. 100,000 per week, while one of the officials had allegedly received approximately Rs. 1 million on a single occasion.
The CID further alleged that the officers had failed to properly verify whether the companies were legitimately registered before assisting with the opening of bank accounts.
Investigators told court that approximately Rs. 6.5 million of the money transferred out of the country was believed to have reached drug traffickers, adding another dimension to the ongoing investigation.
Defence challenges allegations
Lawyers representing the suspects argued that the arrested officials were primarily junior-level banking employees and that their duties were limited to obtaining required information from customers.
They maintained that verifying whether companies had actually imported goods and whether their activities complied with corporate requirements was the responsibility of senior bank officials.
The defence argued that holding junior employees responsible for an alleged multi-billion-rupee financial operation would be unjust and requested that the suspects be released on bail.
The court, however, rejected the bail requests after considering the submissions and ordered the four suspects to remain in custody until August 20.
Investigations into the alleged US$1 billion Undiyal money-transfer operation are continuing.
