Globalisation as a catalyst or constraint: evaluating the effectiveness of anti-money laundering and counter-terrorism financing strategies in Sri Lanka

Strategies for combating illicit financial flows have evolved with globalisation, presenting serious challenges for developing countries navigating international compliance norms. This study provides an evaluation of how globalisation moderates Anti-Money Laundering (AML) and strategies for Countering the Financing of Terrorism (CFT) in Sri Lanka’s licensed commercial banking sector. Utilising responses from 150 risk management specialists, the research uses principal component analysis and multiple regression to yield insights into the legislative, technical, and institutional challenges posed by global integration. Findings reveal that banking professionals perceive strong institutional commitment to AML/CFT compliance and hold positive views on existing frameworks. Transaction Monitoring Systems and Training/Awareness emerge as critical factors in reducing money laundering and terrorism financing risks. The study underscores the necessity of strengthening risk-based approaches, enhancing due diligence, fostering global collaboration, and investing in continuous capacity building to ensure resilient financial crime prevention systems in a globalised environment.