A significant rise in illicit money outflows from Bangladesh, as reported by the Global Financial Integrity (GFI), has raised concern among the relevant state agencies, economists and anti-graft activists.
According to them, such illegal capital outflows not only cause a substantial amount of revenue losses to the government but also deprive the country of investment and employment opportunities.
Economists and experts have, however, sought pro-active and coordinated efforts of state agencies like the Bangladesh Bank (BB), the Anti Corruption Commission (ACC), the National Board of Revenue (NBR) and the Office of the Attorney General (AG) and law enforcement agencies to check such illicit money outflows.
Officials at the Bangladesh Financial Intelligence Unit (BFIU) of the Bangladesh Bank (BB) said the capital flight mostly takes place through over-invoicing of imported goods.
They also said they found many instances of getting 'bricks' and 'sands' instead of declared imported goods.
A senior BFIU official said they act upon allegation of a particular consignment.
He said the BB sees only documents of imported and exported goods instead of verifying the consignments. This creates a scope of such trade mis-invoicing.
The central bank has already taken some steps including development of latest version of software and strengthening of its monitoring of overseas money transactions through banking channel to prevent illicit money outflows.
Dr. AB Mirza Azizul Islam, former finance adviser to the caretaker government, told the FE that the capital flight mostly take place in a pre-election year.
He also said uncertain political environment that has been prevailing over the past few years is one of the main reasons behind such type of outflows.
Mr Islam, however, said traders or the businessmen usually send money abroad through over-invoicing of imported goods.
He said the higher volume of capital machinery imports in the context of slow investment trend gives an indication that capital is flowing out of the country.
"We are not seeing any improvement in investment and employment but capital machinery import is on the rise," he noted.
Talking about the issue, Director (Research) of the Bangladesh Institute of Development Studies (BIDS) Dr Zaid Bakht said, "Our resources are limited. So such type of capital flight certainly affects the economy."
Mr Bakht said capital flight takes place in the form of US dollars, causing a loss to the country's hard-earned foreign exchange coffer.
Dr Zahid Hussain, lead economist at Dhaka office of the World Bank (WB), said many have been resorting to capital flight as the country is lacking an investment-friendly atmosphere.
"Land price is high in the country and there is an uncertainty of getting utility connections in time. These ultimately force many to siphon off money," Dr Hussain said.
He said this is a matter of concern as the amount believed to go out of the country is substantial if it is compared to the amount of the yearly foreign direct investment (FDI).
The FDI in the country usually stands at around US$1.0 billion a year. But it stood at $1.6 billion last year.
He also said the amount of capital flight is equal to or more than net inflow of foreign aid.
He suggested strengthening of the recently established Transfer Pricing Unit at the NBR to discourage capital flight.
Voicing deep concern over growing illicit flight of money out of the country, TIB executive director Dr Iftekharuzzaman said the trend is continuing to grow because of lack of any mentionable progress in checking money laundering.
Terming it as a sophisticated crime, he said the public officials concerned lack enough skill and capacity to deal with such criminal activities and suggested a coordinated move among the BB, the ACC, the NBR and the Office of the Attorney General to that end.
"We call upon the government to immediately seek mutual legal assistance from the Swiss and other governments of countries that host corrupt money to bring back the stolen assets," he said.
As a signatory to the UN Convention against Corruption (UNCAC), Bangladesh can secure legal and technical cooperation and support from other state parties of the Convention. The recent repatriation of laundered money from Singapore is an example.
He suggested the government and particularly the BB, the ACC, the NBR and the AG's office to launch coordinated efforts to take advantage of the opportunity created by Bangladesh's membership of the UNCAC.
Mentioning the latest GFI study, he said it showed the unscrupulous businessmen and politicians sent the money abroad through mis-invoicing of both imports and exports. "And they (such businessmen) normally have close links with the politicians. It's not an easy task. Political will is largely required to this effect," he added.
When contacted, ACC Chairman M Bodiuzzaman said the Commission has planned to further intensify its activities in dealing with the issue of illicit financial outflows.
"We will set up a full-fledged Money Laundering Unit (MLU) for the first time from January, 2015 as we've almost disposed of all the unsettled issues," he said.
"We take special care about allegations on money laundering as these are sensitive ones and it also requires time to address it," he said.
The ACC Chairman said the Commission also sent Mutual Legal Assistance Request (MLAR) through the AG's office requesting information on 34 individuals reportedly involved in money laundering.
"We've already started receiving information on them and our officials are working over those," he said.
The Annual Report 2013 of the ACC showed that it investigated 118 allegations about money laundering. The figure was three times higher than that in the previous year.
In 2012, the ACC considered 39 allegations for investigation. The figure was 44 in 2011.
It also showed that the progress in investigation of money laundering cases was very slow. Probe in about 81 per cent of cases remained incomplete in the last three years.
During the three-year period, the Commission received a total of 371 allegations and filed 140 cases. Of them, it disposed of 68 cases only. In 2013, the ACC submitted charge-sheets in 39 money laundering cases.
The Commission filed 254 cases over money laundering during the period from 2007 to 2013. It submitted charge sheets in 76 cases and final reports in 16 cases.
The ACC so far brought back about Tk 233.68 million laundered abroad, the ACC sources said.
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