Published:  01:45 AM, 13 February 2020

Exogenous shock of casinos and sanchayapatra

Exogenous shock of casinos and sanchayapatra

Apparently the casino game is over. But is anyone think where the illegal money now rolling that earlier rolled in 60 casinos of the country. Yes, definitely the launderer used that amount of money elsewhere,another new methods. Many reports says the amount is BDT 1.2 billion.

This amount now goes in another place either another form of gambling or illegal forms or trying to make it legal by sequence of Placement, Layering and Integration in a banking channel. Being all casinos are currently shut down by law enforcement agency due to anti casino drive or drive against illegal wealth by the Govt. Few gamblers caught handed, but most of the casino players hide themselves for time being until another methodsof gaming found.

Hence launderer or gambler will try to makes their illegal money into legal in different ways. Besides previously Bangladesh Bank did not imposed any limitation on purchasing Sanchayapatra by placing cash money and the tax was 5% only. So illegal money rushed in purchasing Sanchayapatra to make it legal. But from July 2019 govt. has imposed limitations on purchasing Sanchayapatra(30 lac in individual name and 60 lac in joint name)as well as bank cheque must be used to buy it. Hence sale of Sanchayapatra decreasing sharply and launderers leaves this methods and finds new wayto white their black money…

Online gambling provides an excellent method of money laundering for cyber criminals because transactions are conducted principally through credit or debit cards. Site operators are typically unregulated offshore firms. This can affect a financial institution because the internet gambling sites often have accounts in offshore banks that, in turn, use reputable domestic correspondent banks.

Tracing the source and ownership of illegal money that moves through these accounts can be difficult for enforcement and regulatory agencies.Addicted casino players will definitely play the casino game through online casino which are more complex to identify, monitor and control.So placement through credit card will be increased than earlier.

Though by issuing a caution notice Bangladesh Bank banned the buy, sale or investing in crypto currency like (Bitcoin, Litecoin, Ethariumetc). But many people still engaged in buy sale of crypto currency informally. Illegal money of casino and Sanchayapatra may rush to this banned, risky, profitable business. It means money can easily cross the boundary through crypto value.

Insurance product, such as life insurance and annuities with investment values, are a primary target of criminals engagingin money laundering.Life insurance products, such as whole or permanent life insurance, have an investment value, which can create a cash value above the original investment if it is canceled by the policy holder.

An annuity is an investment that provides a defined series of payments in the future in exchange for an up-front sum of money.Annuity contracts may allow criminals to exchange illicit funds for an immediate or deferred income stream, which usually arrives in the form of monthly payments starting on a specified date. In both cases, a policyholder can place a large sum of illegal money into a policy with the expectation that it will grow based on the underlying investment, which can be fixed or variable.  Shut out, casino money and black money of Sanchayapatra may be used to buy insurance policy or annuity.

Real estate is an attractive channel for laundering illicit funds because it can be purchased with cash, the ultimate beneficial ownership can be disguised, it is a relatively stable and reliable investmentand Value may be increased through renovations and improvements. Money laundering through real estate can be relatively uncomplicated compared to other methods and requires little planning or expertise.

Large sums of criminal proceeds may be integrated into the legitimate economy through real estate investments (placement and layering phases).Launderer use their illicit money to buy real estate or readymade flat. The rate of flat or plot sale in major cities has raised enormously which is not justified and against the normal trend.

Launderer popularly use credit card to place the illegal money into the financial sector. Legal money will be withdrawn from banking sector with credit card and later loan will be paid by the illegal money. Hence it's an easy method to convert the black money into white one. Again legal money can be cross the border through international credit card. So the rate of credit card issue will raise significantly due the placement of more illegal money through it.

Gold is an extremely attractive vehicle for laundering money. It has high intrinsic value in a relatively compact and easy to transport form. It can be bought and sold easily and often with anonymity. People convert their illegal cash money into secured form by purchasing the gold bar. Different papers reported frequent arrest of illegal bearer of gold bar in airport is an indication of financing of illicit money in gold bar. Very few were caught handed by the law enforcement agency while most of them can freely crossed the airport or border.

Precaution, protection and control
To success the anti-casino drive or drive against illicit wealth of the govt. and to control the money laundering and movement of illegal wealth, respective authorities should take collaborative steps as early as possible. By forming a special team BTRC should strongly identify,monitor, check online platform to deter online game by using virtual currency.IDRA (Insurance Development and Regulatory Authority) can call special report onpolicy sale by placinglarge cash money in form of annuity or investment oriented product and sudden unjustified premature encashment.Respective authorities should call real estate sales report by cash payment.

All suspected real-estate and insurance policy should go under investigation for susceptible money laundering. New policy can be taken by indicating maximum how much can be paid in cash form to buy insurance policy or real estate and the rest amount must be paid by bank check including mandatory CTR and STR reporting for real estate. Credit card issuers must no longer allow the use of its credit cards for online gambling or crypto transection. Immediate policy should also take to protect the investment of illicit money in gold bar, by indicating maximum threshold of cash purchase, mandatory use of bank check for payment above the cash threshold, maximum amount of gold can purchase in singleand joint name like Sanchayapatra demarcation.

CTR, STR may be introduced for this sector too. Customs authority of airport should be more technical in identifying the movement of illicit gold trafficking inside or outside the country. To ensure balanced economic development it is mandatory to ensure proper distribution of wealth through formal economy. In this regard govt. should take all necessary steps to halt the earning, accumulation and movement of illegal wealth to give a grand success of running anti illicit wealth drive and to build a Sonar Bangla.


The writer is CDCS®, CAMS (Member) banker, Trade, AML and Fintech enthusiast .
Email: salim.ahmed@communitybankbd.com

---Salim Ahmed


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