Published:  02:50 AM, 17 February 2022

Central bank takes tough stance against trade-based money laundering

Central bank takes tough stance against trade-based money laundering From Left: Dr. Wahid Uddin Mahmud, Dr. Hossain Zillur Rahman, Professor Anu Muhammad, Dr. Iftekharuzzaman, Dr. Nazneen Ahmed and Dr. Badiul Alam Majumder. -AA
Bangladesh Bank (BB), the country's central bank, has taken up a tough stance against trade-based money laundering. A big portion of the laundered money is being spent to finance separatist groups, terrorist organizations and militants in various countries. For this reason global institutions like International Monetary Fund (IMF), World Bank, United Nations Conference on Trade and Development (UNCTAD), Global Financial Integrity (GFI), Egmont Group and World Economic Forum have come up with the recommendation that Bangladesh government should take up strong steps to halt money laundering and execute effective actions against the people who are siphoning off money from Bangladesh to foreign countries through unlawful channels.

Bangladesh Bank has meanwhile scrutinized the information about money laundering disclosed by Panama Papers, Paradise Papers and Pandora Papers. Bangladesh Financial Intelligence Unit (BFIU) has in the meantime communicated with 151 countries to know latest facts and figures about laundered money and to trace out the individuals who launder money from Bangladesh to foreign countries.

 The central bank has also provided relevant information to Anti Corruption Commission (ACC) to track down money launderers. Around 80% of trade-based money laundering takes place through over-invoicing and under-invoicing. The authorities concerned will also expand vessel tracking capability by banks. Bankers will be trained up with necessary skills to do this job.

Required steps will be taken to identify to what extent private banks' owners are involved in trade-based money laundering. Economists have stated that the monopolist system is also responsible for the rise in trade-based money laundering.

Money launderers sometimes resort to shell banking for illegal money transfer. Shell banking stands for financial companies which do not have any physical presence. Many countries prohibit shell banking to prevent money laundering.

Money laundering from Bangladesh to foreign countries has increased on an unnaturally egregious scale, financial sources have informed. Reportedly 4 lakh 36 thousand crore taka have been illegally transferred from Bangladesh to overseas locations during last six years. On an average every year nearly 73 thousand crore taka is being laundered from Bangladesh to foreign destinations.

Bangladesh is now facing a trade deficit of 9.09 billion dollars. Money laundering is one of the major reasons behind the burgeoning trade deficit in the country.

Financial experts have said that the list of the top money launderers of Bangladesh and the amounts they transferred abroad illegally should be exposed. At the same time required steps should be taken by Bangladesh government without delay to retrieve the laundered funds from overseas, economists have commented.

Bangladesh's banking sector is inflicted with nearly 2 trillion taka defaulted loans including written off debts. Economists have remarked that most of the defaulted loans might have been laundered to overseas locations.

Financial scholars have blamed extreme lack of good governance and accountability in the country's financial and banking sectors for the extensively rising figures of unlawfully transferred money from Bangladesh to foreign countries.

Financial experts have referred to political influence and inefficiency of Finance Ministry and Bangladesh Bank as principal causes behind money laundering. In recent times it has been exposed by relevant sources that a powerful group of money launderers are making false shipment papers and fake invoices to facilitate illegal money transfer from Bangladesh to overseas destinations. Under-invoicing and over-invoicing are another two ways utilized by financial culprits for transferring money to foreign countries through unauthorized conduits.

Financial sources have said that Bangladesh became a member of Egmont Group headquartered in Canada in 2013 to exchange information about money laundering and terror finance. Egmont Group has 147 member countries. Bangladesh can seek cooperation from Egmont Group for bringing back laundered money.

Caretaker government's former adviser Dr. Wahid Uddin Mahmud said to The Asian Age, "These money laundering allegations should be investigated immediately. Finance ministry, National Board of Revenue and Bangladesh Bank can jointly conduct this scrutiny. Illegal money transfer cannot be stopped if stern actions against money launderers are not taken quickly."

Dr. Badiul Alam Majumder, Secretary of Sushashoner Jonno Nagorik (SUJAN), said to The Asian Age, "A great deal of graft and anomalies are going on in the financial sector. Defaulted loans and money laundering are increasing by leaps and bounds but no strong initiative has been yet taken to stop these evil things."

Caretaker government's former adviser Dr. Hossain Zillur Rahman told The Asian Age, "The government should try hard to establish an investment-friendly atmosphere in the country to stop capital flight. Local entrepreneurs should be further encouraged to invest money at home."

Professor Anu Muhammad of Jahangirnagar University said, "The regulatory institutions have failed to constitute good governance and accountability in banking and financial sectors. For this reason money laundering is going up and up."

Dr. Nazneen Ahmed, Senior Research Fellow of Bangladesh Institute of Development Studies (BIDS) said to The Asian Age, "Money laundering allegations should be investigated seriously to establish good governance in banking and financial sectors. Bangladesh Bank should clarify what steps have been taken to restrain money laundering."

Dr. Iftekharuzzaman, Executive Director of Transparency International Bangladesh (TIB) said to The Asian Age, "Bangladesh is a member of United Nations. Money launderers from Bangladesh are sending money to some specified countries which are UN members too. So, Bangladesh can identify those money launderers through UN. Moreover, Bangladesh government can resort to international money laundering laws for nabbing financial scammers. Besides, Bangladesh Bank, National Board of Revenue and Anti-Corruption Commission can take strong actions against the culprits who are committing such monetary rackets."

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