Sri Lanka has been classified as a “medium risk” country for money laundering and terrorist financing by the Financial Action Task Force (FATF), despite the involvement of NGOs in such activities.
In response, the National NGO Secretariat signed a Memorandum of Understanding (MoU) with the Finance Intelligence Unit of the Central Bank on Tuesday to strengthen national efforts against these unlawful activities.

FATF, the global watchdog for money laundering and terrorist financing, has outlined 42 recommendations for Sri Lanka, including measures to better regulate NGOs. Currently, there are 1,851 registered NGOs in Sri Lanka, though only 618 are active. Some of these NGOs contribute positively to the country's social and economic development, while others have been linked to suspicious financial activities.

Central Bank Governor Nandalal Weerasinghe, who attended the MoU signing, said that Sri Lanka’s progress will be reviewed by FATF in April 2025. The country is also moving towards enacting new legislation to monitor NGO operations more effectively, following steps taken by the previous government.