As the regulator, we believe that share ownership in banks needs to be broadbased to strengthen corporate governance and to avoid ownership concentration, dominance in the boards, conflict of interest and risks associated with related party transactions. Therefore, the existing requirements on share ownership will be reviewed and certain additional measures will be brought in. In addition, fit and proper assessment criteria for appointment of Directors, CEOs and Key Management Personnel of banks will be strengthened further to appoint the most suitable and qualified individuals to the top positions in banks. Only persons with proven track records of good conduct and financial integrity would be considered for such appointments. Moreover, a broad-based policy on employment of expatriate staff considering the needs for external expert contribution will be introduced. Considering the significant developments in the banking environment and the professional accounting/auditing landscape, the minimum criteria for appointment of external auditors has already been reviewed and the panel of Qualified Auditors will be amended accordingly. With a view to further strengthening the market conduct and practices of treasury operations of licensed banks, the Central Bank intends to establish a new regulatory framework to ensure that treasury operations of licensed banks are carried out prudently and in line with the international best practices. The Central Bank will also formulate a crisis preparedness plan for the banking  25  industry, to minimise the adverse impact on troubled banks and mitigate spillovers. A consultation paper will be issued to banks in this regard.

38  Financial Intelligence Unit We will also act towards strengthening the national Anti-Money Laundering and Countering the Financing of Terrorism policy framework of the country. Considerable progress has been made in completing the Action Plan agreed with the FATF, and our expectation is that Sri Lanka will be taken off the FATF’s ‘grey list’ by mid 2019. We have also expanded our reach by way of entering into Memoranda of Understanding with several agencies such as the Securities and Exchange Commission, Insurance Regulatory Commission and the Department of Motor Traffic. Moving ahead, several progressive policies will be adopted with the coordination of all stakeholders to deepen financial intelligence services. Regional Development With a view to enhancing inclusive and balanced economic growth through effective credit delivery and financial inclusion in the country, we continued to develop and implement new development finance policy strategies during 2018. We continued to coordinate, facilitate and implement various refinance, interest subsidy and credit guarantee schemes, while providing a range of credit supplementary services. Individuals and the Micro, Small and Medium Enterprises (MSME) scattered across the country were served by providing affordable finance through these schemes. 39  To increase the level of financial inclusion, a series of financial literacy and skill development programmes were also conducted, with a special focus on those who have not accessed the formal financial sector. We intend to continue these initiatives in 2019 as well.