Check digital money laundering, narrow rising income inequality

An eminent economist cautioned about rampant money laundering allegedly through mobile banking channels while another blamed rising income inequalities for "persistent" poverty in Bangladesh.
"We have a word of caution. Some allegations are coming against mobile financial-service (MFS) providers in matters of money laundering and illegal financial transactions," Khondkar Ibrahim Khaled told a session of the two-day Annual Banking Conference in Dhaka Monday.
"We must find out ways to stop illegal transactions which are a great hindrance towards sound phone or agent banking and consequent financial inclusion," he said.
The former Bangladesh Bank Deputy Governor, in this context, mentioned that the central bank recently closed down over three thousand MFS accounts for alleged involvement in money laundering while the financial-intelligence entity is closely watching over suspect transactions.
Khaled's observations came close on the heels of allegation made by former central bank governor Mohammed Farashuddin that large-scale irregularities are taking place in financial transaction across the country through mobile banking.
"Last year, cell-phone companies applied to the central bank for permission to go for phone banking. But licence to cell-phone companies is given by BTRC who is not authorized to regulate financial dealings," Mr Ibrahim Khaled said.
"On the other hand, the Bangladesh Bank has no authority to regulate phone companies. Hence, it had no way but to reject the proposal," he added.
Speaking on the occasion, Chairman of Palli Karma Sohayok Foundation Dr Qazi Kholiquzzaman Ahmad cautioned that economic inequalities are widening in the country, although that remained lower than that of many other parts of the world.
"Inequality is the reason why poverty is so persistent," the economist told the audience at the bankers' meet. "Although, the scenario is not that bad in Bangladesh, it is still quite high."
The PKSF Chairman also observed that financial inclusion needs to be accompanied by a boost in human capabilities.
"We are trying to do inclusive financing through technology, but it could be a divider also," he said on a note of caution about signs of socioeconomic divide stemming from what is termed digital divide.
"Financial inclusion does not mean only providing a few thousand taka to the downtrodden. Rather, financial inclusion should go hand in hand with enhancing human capabilities," the economist said.
His voice was echoed by Bangladesh Bank Deputy Governor Shitangshu Kumar Sur Choudhury who said that "only the opening of bank accounts does not mean financial inclusion is taking place".
"Rather, a country needs to strengthen other dimensions like national commitment, mobile infrastructure and enabling regulatory environment for boosting its digital financial-service scenario," SK Sur Choudhury added.
He also informed the session that the government is currently drafting a digital financial inclusion strategy and has also taken up plans to digitize all financial services by the year 2021.
Bangladesh Institute of Bank Management (BIBM) Director-General Dr Toufic Ahmad Choudhury also spoke on the occasion.
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