NYSDFS seeks guarantee paper for operation of Janata Exchange

New York State Department of Financial Services (NYSDFS) has sought a guarantee paper or a strategic business plan for operation of Janata Exchange Company, USA following alleged financial discrepancies amounting to Tk 51 million, sources said.
The operation of Janata Exchange Company Inc. (JECI), a subsidiary of state-run Janata Bank, has remained halted for nearly two months due to closure of Money Services Business (MSB) account by Habib American Bank, they added.
Remittance collection and operation of any exchange house are prohibited in New York without MSB account.
The state-owned bank has decided to prepare the strategic business plan urgently which is now in the process.
NYSDFS requested the plan or Janata Bank's guarantee to provide regular financial assistance to JECI in May last, bank document reads.
JECI's discrepancies came to surface after the newly appointed chief executive officer of the subsidiary took charge of the company in February, 2020.
On February 11, Md Mahbubur Rahman, the newly appointed president and CEO of JECI, took charge from interim in-charge Sushmita Tabassum. She took charge of JECI, USA after July 2019.
While taking charge, the new CEO initially found a mismatch between recorded fund balance and practical fund balance by reviewing the books of account of the company.
He informed the head office of the inconsistencies in the cash position via e-mail on February 15. The head office then instructed him to submit a detailed report after a proper investigation.
At the time of his takeover, the new CEO found only US$45,847 in cash while recorded cash balance showed $649,021 in cash, denoting a cash deficit of $603,947, according to Janata Bank documents.
Immediate-past officer in-charge Sushmita Tabassum informed the new CEO that she could not update the cash position of JECI due to her sickness and her work in preparing the year-ending account balance for 2019, according to e-mail.
She assured the CEO of updating the cash position properly by February 22, 2020. She also gave a written undertaking to the CEO in this regard.
On February 17, 2020, Ms. Tabassum claimed to have deposited US$509,820 into the bank account of JECI and produced three deposit receipts dated 14/01/2020, 15/01/2020 and 21/01/2020 in this regard.
But the latest bank statement of JECI did not show any such deposits as claimed by Sushmita Tabassum, according to e-mail.
On February 18, Mahbubur Rahman and Sushmita Tabassum met with the assistant manager of Hab Bank, Jackson Heights branch, and showed him the deposit receipts and wanted to know why the money was not shown on the bank statement.
The assistant manager of Habib Bank said there were no records of the money in their accounts and that they would inform JECI of the issue after an investigation.
On the same day, Sushmita Tabassum lodged a written complaint with the head office of Hab Bank, e-mail reads.
After receiving her complaint, the Jackson heights Branch of Hab Bank called a meeting with Ms Tabassun on February 21 and after the meeting told her that an investigation report will be sent to her through e-mail by February 25, 2020.
On the same day, the head office of Hab Bank informed her that they conducted an investigation and examined the transaction records but they found that no money was deposited in the relevant bank account on the dates mentioned in the receipts.
So, the claim of depositing the money was not acceptable to them and that is why they had closed the matter, the Janata Bank documents added.
The bank has already informed the financial institutions division and the central bank of the matter, seeking their necessary guidance and advice for taking next course of action in May last.
A Janata Bank official said, "The JECI has already appointed a lawyer. The lawyer is keeping communication with the New York police department for expediting the investigation in this regard."
When contacted, CEO and Managing Director of Janata Bank Md. Abdus Salam Azad said, "We have a plan to continue the operation of JECI and recover that disputed money."
He, however, mentioned that an investigation has already started in this regard and Sushmita Tabassum is now under observation.
"Necessary process is going on for taking new MSB account for resuming operation of the exchange company," he added.
"We hope that the exchange company will resume operation in late July as the building is now locked down where the activities of JECI are operated," he said.
Habib American Bank informed its decision to close the MSB account to JECI on March 5, 2020. Finally, it suspended the account on May 01, 2020.
Currently, different exchange companies in New York are collecting remittances. But the Janata Bank's subsidiary can't collect remittances in absence of the MSB account by JECI.
According to the approval of the 378 board of directors' meeting, JECI appointed Sushmita Tabassum as a "teller-cum-customer care attendant" in hour basis wages in 2015.
There are three exchange companies of state-owned Janata Bank. They are Janata Exchange Co. SRL, Milan Branch, Italy, Janata Exchange Co. SRL, Rome Branch, Italy, and Janata Exchange Company Inc. USA.
JECI,(New York, USA) started its operation in 2014.
The Janata Exchange Company at Milano and Rome in Italy started operation in June 2002. It was a profit-making exchange company between 2002 and 2008.
The exchange suffered a loss of Tk 131.31 million from 2009 to 2014 due to increase in income tax, limited network, formulation of new anti-money laundering act and rise in regulatory and compliance related cost, a bank source said.
The state-run bank has already adopted a two-year action plan to recoup the loss incurred, they added.
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