Money laundering continues to thrive with rising illegal VoIP

Illegal call termination of international calls (through illegal VoIP) has assumed the proportion of a national problem.  After all, as one of the primary channels for hundi costing GOB over BDT 30 billion annually in foreign remittance that largely evades our legal banking channels, rise in illegal VoIP should raise an alarm. The sheer negative impact on our society that illegal VoIP facilitates, apart from the whopping price tag of $400+ million/year of lost foreign remittance -- through financing drugs, arms to terrorism -- makes the case for addressing this growing cancer with all seriousness.
The reason behind my call for increased vigilance for illegal VoIP at the national level is twofold. First, addressing money laundering is a national priority. Second, illegal VoIP facilitates money laundering by evading the formal banking channels resulting in a loss of some BDT 30 billion in potential annual foreign earning, settled through hundi.
International Gate Way (IGW) operators in the telecom sector, like other export sectors that bring remittance into the country, are the only BTRC licensed entity allowed to terminate (connect) international calls originating from expatriates living and working abroad to their loved ones in Bangladesh. IGW facilitate remittance inflow into the country by bringing FX payment from foreign operators through formal banking channels. It is projected that the potential revenue from this sector could easily cross $1.2 billion annually making it an easy and effective way to increase remittance inflow into the country.
However, this remittance generating sector in Bangladesh is now in dire threat with the increase of illegal VoIP.  Last year, according to the ministry of finance, even though labour migration increased by some 35 per cent, remittance inflow increased by some 11 per cent.  Our Finance Minister rightly attributed this to hundi -- a form of money laundering that Illegal VoIP operators facilitate -- as a contributing factor behind this increase in remittance inflow compared to the rise in labour migration last year.
When an international call originating from a foreign country is connected to a local phone subscriber, FX payment that IGWs receive from the foreign carrier is routed through formal banking channel into the country. However, illegal VoIP operators help bypass IGW network completely and facilitate money laundering by masking international call as a local call. And by faking the international call as a local number payment, the phone bill is settled in taka, thereby, never bringing in the FX payment into the country.  
International calls terminated illegally can be easily detected. The phone number of the international caller often shows up on the local receiver as a local number -- sometimes, a sequential number like 123456 or even a fixed number like 11111 instead of a valid international number.  An almost guaranteed litmus test to detect illegal bypass of international calls is to go to your call logs and try calling back the number that shows up on your caller ID for an international call.  If your international call is connected, it came through an IGW operator. If your call fails to reach the international subscriber, it's most likely because the international call was routed through an illegal VoIP network.  
Industry insiders estimate that even by most conservative standards some 30 to 4o million minutes are illegally terminated daily out of a total country-wide international call volume of 100 million per day. Given Bangladesh Telecom Regulatory Commission (BTRC) international call volume data and current BTRC approved termination rate, IGW Operators Forum (IOF), an industry trade association of IGW operators, the state is losing more than Tk 10 billion per year.
According to newspaper reports, an influential quarter is allegedly involved in illegal call termination business. And despite repeated efforts from government and demands from IGW operators, concerted and combined effort from the government has been largely missing.  
The money movement from illegal VoIP operations, untraceable money that totally evades our banking system, can potentially wreck devastating impact on both our economy and the society. This whopping amount of BDT 30 billion/year lost to illegal VoIP operators can be potentially used to fund a host of criminal activities ranging from drugs, arms to terrorism.  
It's high time for government to stomp out this menace of illegal call termination of international calls (illegal VoIP) before its evils manifest brutally in our society. Our past efforts to get rid of illegal VoIP have taught us that this menace can only be eradicated by taking a focused, concerted and deliberate effort at the national level.  
The writer is Research Associate at North Carolina State University
kabeer.foysal@gmail.com