Published:  12:23 AM, 17 September 2023

Why regulatory authorities fail to stop money laundering

A number of reports released by Global Financial Integrity (GFI) in recent times have pinpointed Bangladesh as being among the worst affected countries to the scourge of trade-based money laundering or capital flight. According to GFI's President Raymond Baker, "Illicit financial flows are the most damaging economic problems faced by the world's developing and emerging economies." This means we are among the countries worst plagued by one of the biggest problems out there that developing countries are having to deal with.

According to GFI, USD 61.6 billion were siphoned out of Bangladesh between 2005 and 2014, which is equivalent to 25 percent of its GDP in FY 2016-17. Between 2008 and 2017, Bangladesh lost a staggering USD 7.53 billion per year on average to over-invoicing and under-invoicing, which accounted for 17.95 percent of Bangladesh's international trade with all its trading partners during the period.

In a report in 2020, GFI revealed that USD 5.9 billion was siphoned out of Bangladesh through trade misinvoicing in 2015—and that Bangladesh is one of the top 30 countries in terms of illicit financial flows.

Similarly, Transparency International Bangladesh (TIB) reported in 2020 that some USD 3.1 billion or Tk 26,400 crore is being illegally transferred from Bangladesh every year. Though it is lower in comparison to the GFI's estimates between 2008 and 2017, even this amount would have deprived the government exchequer of about Tk 120 billion as revenue each year, which is significant.

In 2002, Bangladesh became the first country in South Asia to promulgate the Money Laundering Prevention Act in line with the recommendations from the Financial Action Task Force (FATF), an intergovernmental organization which combats money laundering. But experts have criticized the government's effort to implement the recommendations. Among those that are unconvinced with the government's work is the Asia-Pacific Group on Money Laundering, the global body that ranks countries. In 2016, the organization even warned the government that Bangladesh was in danger of being branded as a "risky" country when it comes to money laundering and terror financing.

Yet, according to Dr Iftekharuzzaman, Executive Director of Transparency International Bangladesh (TIB), money laundering still enjoys impunity in Bangladesh. In a recent article he wrote "Any crime is bound to flourish when laws and regulations are not enforced and violators are not held accountable. This is exactly what has been happening with money laundering in Bangladesh." Financial experts have frequently stated that money laundering from Bangladesh should be restrained with an iron hand.

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