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Rambukwella said cabinet of minister had given the nod to draft necessary changes to an existing Convention on Suppression of Terrorist Financing Act No 25 of 2005 to comply with international standards.
"You need a legal framework and the legal system has to be in place to move forward," Rambukwella said.
The amendments are based on recommendations by the Financial Action Task Force (FATF), an inter-governmental body incorporated by the G7 group of advanced countries to work as global policy setter on anti money laundering(AML) and combating the financing of terrorism(CFT), it said.
In 2011 Sri Lanka's parliament passed changes to laws against money laundering and terrorist financing, enabling the police to freeze funds.
Financing of terrorism has been a serious concern for the international community.
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The FATF says revisions of its recommendations include transparency requirements, international cooperation, operational standards and new threats such as proliferation of weapons