BB probing into forex-related irregularities in bank branches

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Siddique Islam
The Bangladesh Bank (BB) has started country-wide inspection to find out whether foreign exchange-related irregularities have been committed by bank branches and authorised dealers or not.
"A good number of teams are now investigating into foreign exchange related irregularities of the authorised dealer (AD) branches of the commercial banks and the money changers," a BB senior official told the FE.
He also said the officials concerned of nine branch offices of the central bank are working along with the officials of head office in this connection.
Sources, however, said a total of 50 teams are probing into foreign exchange-related irregularities across the country.
During the investigation, the teams will give emphasis on export-import related transactions along with other deals like foreign exchange selling and buying.
The newly constituted division - Foreign Exchange Inspection and Vigilance Division - is conducting the inspections to oversee the implementation status of foreign exchange risks in line with the core risk management guidelines.
The central bank earlier provided guidelines on five core risk factors to the banks for improving their management through such policy guidelines.
The risk factors include credit, asset and liability, foreign exchange, internal control and compliance and money laundering risk.
The probe team will check the implementation of the core risk guidelines in the head office as well as branch level offices of the commercial banks.
"The team will monitor the implementation status of the guidelines on day-to-day affairs particularly in the branch level," another BB senior official told the FE Saturday.
He also said that if irregularities are found, the central bank will seek explanations from the banks concerned.
If the banks fail to come up with satisfactory clarification, the BB will take action in the line with the existing rules and regulations, he added.
In 2006, the central bank established the separate division to investigate into foreign exchange related irregularities, misappropriations and forgery.
The probe teams will thoroughly match the bills of entry against import business to check 'illegal' transfer of funds by fake importers using false documents.
Under the existing provisions, the banks will collect the bills of entry, attested by the customs authority from the importers within the stipulated timeframe for assessing the actual import.
In all cases of remittances against imports into Bangladesh, the importer must submit, within four months from the dates of remittances, the relevant exchange control copy of the customs bill of entry.
On the other hand, the team will also look into the matter of unrealised export bills that may become a burden on the banking sector.
For delay in repatriation or non-payment of export proceeds, exporters and the authorised dealers or banks and their officials, who certified the export forms, are all liable to punitive action under the existing foreign exchange regulation act.
Therefore, in their own interest, both exporters and banks should be alert in respect of ensuring timely repatriation of export proceeds, according to the act.
According to the BB guidelines for foreign exchange transactions, the exporters should be in receipt of the total export bills within four months.
If the receipt of the full proceeds of any shipment is delayed beyond this period without a special or general authorisation from the BB, the exporter will be liable for punishment under the Act.
"While releasing foreign exchange for travel aboard, AD should verify and satisfy itself that any foreign exchange released for an earlier travel was utilised with the journey being actually undertaken or was duly encashed unutilised," the BB said in its guidelines for foreign exchange transactions.
The amount released is endorsed on the passport and air ticket (where applicable) of the traveller with indelible ink, with the signature and the name of the AD branch embossed in the passport and ticket (where applicable), it added.
Besides, the probe team will scrutinise the transactions of foreign exchange accounts and foreign exchange resident accounts.