Colombo, Sri Lanka – 02 October 2026 – In a pivotal stride towards fortifying the nation’s financial regulatory landscape, the Cabinet of Ministers on September 28, 2026, officially greenlit the Bill to amend the archaic Trust Ordinance No. 9 of 1917. This crucial decision paves the way for modernising trust laws, particularly in line with global efforts to combat illicit financial activities.
Background to the Amendment
The journey to revamp the century-old Trust Ordinance began with an initial Cabinet approval granted on December 18, 2024. The impetus behind these amendments stems from critical observations and proposals put forth by the Financial Intelligence Unit (FIU) of the Central Bank of Sri Lanka. These proposals, in turn, were formulated based on recommendations from the Task Force on Anti Money Laundering and Countering the Financing of Terrorism (AML/CFT).
The existing Trust Ordinance, enacted in 1917, has long been recognised as requiring updates to address contemporary challenges, especially in the context of global financial crime prevention. The amendments are designed to integrate robust measures that align Sri Lanka’s legal framework with international standards for transparency and accountability in financial trusts.
Legal Process and Ministerial Proposal
Following the initial approval, the legal drafting process commenced. The Legal Draftsman meticulously prepared the Trust (Amendment) Bill, incorporating all necessary revisions as suggested by the FIU and the AML/CFT Task Force. Subsequently, the Bill received the crucial clearance from the Attorney General, ensuring its legal soundness and compliance.
The recent Cabinet approval on September 28, 2026, was a direct outcome of a proposal submitted by the Minister of Justice and National Integration. The Minister sought the Cabinet’s endorsement to proceed with publishing the prepared Bill in the Government Gazette. This publication is a mandatory step before the Bill can be presented to the Parliament for its deliberation and final approval.
Implications for Sri Lanka’s Financial Sector
This amendment is expected to significantly bolster Sri Lanka’s legal infrastructure against money laundering and the financing of terrorism. By modernising the Trust Ordinance, the nation aims to enhance its compliance with international financial regulations, which is vital for maintaining the confidence of global investors and financial institutions. It also underscores Sri Lanka’s commitment to combating financial crime and safeguarding the integrity of its financial system.
The revised legislation will likely introduce more stringent requirements for the creation, registration, and operation of trusts, potentially increasing transparency regarding beneficial ownership and financial transactions. This move is anticipated to make it harder for illicit funds to be channeled through trusts, thereby strengthening the overall financial oversight mechanism.
Next Steps
With Cabinet approval secured, the next critical phases involve the publication of the Trust (Amendment) Bill in the Government Gazette. Following its gazetting, the Bill will then be formally presented to Parliament. Debates and discussions among lawmakers are expected before the Bill can be passed into law, marking a significant legislative update for Sri Lanka.
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