Overview: In 2009, the Government of Sri Lanka announced formally the defeat of the Liberation Tigers of Tamil Eelam (LTTE), a U.S.-designated Foreign Terrorist Organization. While there were no terrorist incidents within Sri Lanka in 2010, there were continuing concerns that the LTTE's international network of financial support might still be functioning; therefore, most counterterrorism activities undertaken by the Sri Lankan government were targeted at countering terrorist finance.

Legislation and Law Enforcement: Legislative efforts were focused on limiting financial support for the remnants of LTTE. Domestically, there was a large budgetary allocation (about four percent of Sri Lanka's GDP) for defense and monitoring of Tamil diaspora activity in coordination with foreign governments. The United States provided training for relevant Sri Lankan government agencies and the banking sector in combating the provision of financial support to the LTTE remnants. The Sri Lankan government implemented the Container Security Initiative and the Megaports program at the Port of Colombo.

Countering Terrorist Finance: In February, Sri Lanka provided a high-level written commitment to work with the Financial Action Task Force (FATF) to implement the following corrective measures: (1) adequately criminalizing money laundering and terrorist financing; and (2) establishing and implementing adequate procedures to identify and freeze terrorist assets. The government was drafting amendments to the 2005-2006 laws on money laundering and terrorist financing, in accordance with FATF recommendations, at year's end.

Regional and International Cooperation: In October, the Financial Intelligence Unit (FIU) of Sri Lanka signed a Memorandum of Understanding (MOU) with the FIU of Bangladesh to share financial information to facilitate the investigation and prosecution of persons suspected of money laundering and terrorist financing. Sri Lanka has already signed MOUs with the Philippines, Nepal, Cambodia, Malaysia, Afghanistan, South Korea, and Indonesia.

Countering Radicalization and Violent Extremism: In order to address lingering resentment in areas that were formerly held by LTTE combatants, the Sri Lankan government was working to restore civil administration, resettle Internally Displaced Persons, provide immediate infrastructure development, encourage private sector participation, and promote the development of industries.


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