The finance ministry in a report to the parliamentary standing committee on the ministry said that money laundering has registered substantial rise in Bangladesh with the proliferation of bribery, corruption, forgery, black-marketing and smuggling.
The committee, following the report, recommended that the ministry and the central bank should identify the process of siphoning out huge money and take measures to stop it. It suggested legal actions against a section of Bangladeshi citizens including industrialists and businessmen who have illegal homes and money abroad, formulating a list through the Financial Intelligence Unit of the central bank.
The standing committee at its meeting last week suggested necessary measures to strengthen the capacity of the Bangladesh Bank (BB), the Anti-Corruption Commission (ACC), the National Board of Revenue (NBR) and other agencies to prevent money laundering. It also stressed on enhancing coordination among different government machineries and law enforcing agencies for curbing money laundering.
In fact, a huge amount of money is reportedly being transferred outside the country illegally as a large number of Bangladeshis are building second homes in eight to ten countries. There is a need to identify the persons involved in money laundering activities and take punitive action against them. There should be a review as to whether there are inconsistencies in the existing Money Laundering Prevention Act, 2012, for its effective enforcement.
In recent times, Bangladesh Bank has been trying to identify the persons who had already sent money in Malaysia, Canada and United Arab Emirates through hundi, an illegal ways of money transfer bypassing banking system, but has failed due to alleged non-cooperation from its counterparts in those countries. The central bank also reportedly failed to monitor the state-owned banks which lost billions of taka in forgeries due to errant directors appointed on political consideration by the government.
According to the report submitted to the parliamentary standing committee, Sonali Bank Limited faced forgery cases of more than Tk 36 billion by Hallmark Group in 2012. BASIC Bank, another scam-hit government bank, distributed loans of more than Tk 50 billion violating rules. There is an apprehension that most of the money earned through banking forgeries have been siphoned out through informal channel, the report said.
Voicing deep concern over growing illicit flight of money out of the country, Transparency International Bangladesh (TIB) called upon the government to take advantage of the relevant legal instruments, including UN Convention against Corruption, to bring back stolen assets and bring to justice those involved in money-laundering.
It also requested the governments of host countries to cooperate in sending the stolen money back and strengthening their legal and financial structures to stop hosting corrupt money. Referring to recent disclosures by credible sources like the Swiss banking authority and UNDP, it said illicit flight of capital has reached alarming levels, costing as high as 30 per cent of GDP.
The latest data of Swiss National Bank showed that deposits by Bangladeshi citizens at various Swiss banks rose to Tk 32.36 billion at the end of 2013, from Tk 19.91 billion in 2012. The central bank earlier requested the Swiss Financial Intelligence (SFI) to sign a MoU when Bangladesh became a member country of Egmont Group in July 2013. However, the SFI is yet to make any response.
Very recently, the Financial Action Task Force (FATF) has warned Bangladesh to step up its vigilance in the capital market to prevent terrorist financing and money laundering. It pointed out that the stock market is a major weakness in the country's monitoring system. Due to the non-practice of maintaining know-your-customer (KYC) and suspected transaction (STR) reports in the capital market, keeping a watch on terrorist financing and money laundering becomes difficult, FATF said. Unless the issues are addressed, Bangladesh might be grey-listed by the FATF again.
In fact, Bangladesh got out of the global financial watchdog's grey list recently due to which there has been a great reduction in the cost and time of financial transactions with the rest of the world. From now on, all commercial banks will be randomly inspected by the TATF for compliance to anti-money laundering and counter-terrorist financing measures by the year-end, following Bangladesh's graduation from the global watchdog's grey list. FATF's grey list is otherwise an index of countries identified to have strategic deficiencies in their systems for fighting money laundering and terrorist financing, due to which financial transactions originating from the countries are subject to intense scrutiny. The country had come out of this list as the government could fulfil most of its 28 action items.
Financial analysts say rate of illegal outflow of capital from Bangladesh has become higher than that of any other country, which is a matter of deep disappointment and embarrassment. It is now high time to arrest this ominous trend. Given the necessary political will, it is in fact possible for the government and relevant agencies to bring back the stolen assets and prevent further
The government should immediately seek Mutual Legal Assistance from the Swiss and other governments of host countries so that stolen money and assets could be brought back. As a state party to the UN Convention against corruption, Bangladesh can secure legal and technical cooperation and support from other state parties of the Convention.
In fact, enforcement of laws, effective monitoring and accountability at the supply side through highest level of political commitment without fear or favour are indispensable at this moment.
szkhan@dhaka.net
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