Money laundering hinders growth

The richer nations of the world have long been pushing a misplaced perception that they were keeping the poorer countries alive by providing necessary assistance including employment for their poorer working people. Seemingly it was credible as resources are likely to flow from richer to poorer nations as water flows from high to low. But from the recent trend of money laundering indicates that contrary to the common perception, wealth and resources now flow from poorer to richer nations.  
Reports released by various organizations, including the World Bank, confirm that wealth is now flowing from poor to rich nations also. Plight of money in modern times from a developing country like Bangladesh to developed countries of North America and West Europe, can not be categorized as an act of looting by the strong from the weak. It is happening more due to insatiable thirst for money of some immoral politicians and dishonest businessmen who divert their illegal money secretly to other countries through unofficial channels. In one of its recent reports, Centre for Policy Dialogue (CPD) released some information on the extent of illegal money transfer from Bangladesh. The report which was based on the findings of a research conducted by Washington based research organization Global Financial Integrity (GFI), made some startling revelations on the issue. According to the report, about US$56 billion were siphoned out from Bangladesh illegally over the last 10 years.
In local currency the amount is over Tk.4414.20 billions which is about one third higher than the current year's budget and is equivalent to about one fourth of our GDP. The report stated that among the LDCs highest amount of money was laundered from
Bangladesh. According to GFI, during the last 10 years maximum money was illegally sent abroad in 2012 and 2013. The amounts were Tk.578.00 billions and Tk.773.28 billions respectively. The amount laundered in 2013 was about 3 times our  budgetary allocation for education sector and 8 times of the budgeted amount for health sector. If only 25 per cent of tax could be collected against these amounts, allocation to education sector could have been doubled and three times of the actual allocation could be made to the health sector. More importantly, the money sent abroad this way was three and a half times more than the total foreign aid received by Bangladesh for the year and was equal to 5.5 per cent of its GDP.
CPD report also revealed that the number of accounts of Bangladesh citizens in different Swiss Banks has doubled in last two years and all these accounts were opened with illegally transferred money. According to another report, 3061 persons from Bangladesh sent money to Malayasia under its 'my second home' programme. Only China and Japan are ahead of Bangladesh in this respect. Some Bangladeshis have bought homes in USA, Canada, Singapore, Dubai and other places with illegally transferred money and some of them now own businesses worth billions of Taka in these countries and many other places in Europe during the last one and a half decade. Some of them are known to have opened Banks also.
A newspaper report has revealed that during the last 10 years MLM companies, along with some other dishonest companies and fake NGOs, have plundered Tk.2500.00 billion. Bulk of the amount was sent abroad through illegal channels. Another chunk of big money earned from illegal share trading was also sent abroad. It is reported that Tk.2500.00 billion was removed from the country during the share scam in 1996 and the latest share scandal had cost us among other things illegal transfer abroad of Tk.1850.00 billion apart from pauperizing and frustrating the innocent investors, some of whom went to the extent of committing suicide.
Every year Tk.250.00 billion is being siphoned from the country through illegal VOIP business. Besides an amount of Tk.2000.00 billion was smuggled out through 'hundi' system. Three business groups took away Tk.120.47 billion by illegal borrowing from public sector banks.
To prevent money laundering Bangladesh enacted the Anti-Money Laundering Act in 2002 which was modified later by The Money Laundering Prevention Ordinance 2008.
Both the ordinances contained clear and unambiguous definitions of money laundering and laid down processes to handle the same. Due mainly to lack of enforcement of anti laundering laws, the problem is in full flow.  
The main vulnerability for money laundering remains the use of the underground hawala or "hundi" system, used to transfer money and valuables outside of the formal banking system. Although banks in Bangladesh have recently stepped up their speed and efficiency in making remittances, hundi remains a thriving system due to its ability to avoid taxes, customs duties and currency controls.
According to our law, money laundering includes offences to illegally conceal, retain, transfer, remit or invest in immovable property or provide assistance to an individual or entity to do any of the above. It is an offence if Banks and financial institutions do not maintain transaction records of their customers or do not report the knowledge or suspicion of money laundering to the central Bank.  
Bangladesh has an expanding economy, with a gross domestic product (GDP) growth of 5.0 to 6.0 per cent every year since 1996. However, there are many factors impeding our growth potential. As can be easily understood, lot of money which could have otherwise contributed to accelerated growth, is being secretly laundered out of the country and thus hindering the growth prospects of the economy.
Money laundering has become an open secret in the country. Proper regulations are in place to fight the evil. All that is needed is to ensure enforcement of these regulations, otherwise damages already inflicted on the economy will turn from bad to worse.
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