Preventing money laundering needs realistic laws
Tuesday, 28 July 2009
Ahmed Showkat Masud
MONEY laundering can be defined in various ways and from different perspectives.
In our country, "Prevention of Money Laundering Act 2002" was enacted and made effective a gazette notification from April 30, 2002. In this connection, this writer would like to present here an example of what would be otherwise be termed, money laundering that took place, before the Act of 2002. At the beginning of the year 2001, few bank accounts were opened in the name of different concerns at five banks, all of which were located at Khatunganj, Chittagong. All the persons who opened those accounts were known faces in that locality. To the bankers, those persons were known as commission agents, or let us for say, brokers of different items -- activities that are common at that business hub. Those agents had offices/shops at different markets/buildings (for example, Elius Market, Old Pak Building, etc., of Khatunganj and Asadganj locality in Chittagong). That was the month of May or June, 2002 when an inspection team from Bangladesh Bank made a sudden visit to those five branches. They came and asked the related bank officials to provide them some specific accounts' information, supported by papers/documents. Before they came to visit Khatunganj, they had already completed the visit at Chapainawabganj. The Bangladesh Bank found abnormal transactions in those accounts compared to normal business.
It was revealed from that investigation that the Indian origin cows/cattle were being smuggled into Bangladesh through Chapainawabganj border. From Chapainawabganj, those were reached at different destinations of Bangladesh. The Indian sellers (smugglers) had been maintaining 'relationship' with those account holders of Khatunganj area who were used to purchase those cattle/cows and give money to the smugglers on the Bangladesh side. Then those smugglers sent the money to Khatunganj. Smugglers of Chapainawabganj were also being treated as commission agents of different consumer items. In the guise of white business, they were laundering money.
It is to be noted that most of those commission agents/brokers of Khatunganj area were non-Bengalis. They used to speak in Urdu among themselves. Sensing investigation by the Bangladesh Bank that was followed by that of anti-corruption officials, those specific groups of commission agents went into hiding for few months until everything became 'normal' since that incident of money laundering occurred, before introduction of "Prevention of Money Laundering Act of 2002". But the related bank officials of Chapainawabgonj and Khatunganj had to suffer. It may be mentioned here that the related bank officials of that area were just respondents of those telegraphic transfer (TTs).
All concerned would eagerly follow as to what would happen now to the fate of the victim bank officials? It can be easily guessed by the all bank officials in the our country; the money laundering issue is a global case now. Because, all the bankers have already been well equipped by the related law.
The above instance has been cited as only one example of what can be called money laundering. There are so many ways by which money laundering activities can take place. For example: Money earned directly or indirectly through illegal means like taking bribe is an example of direct money laundering. A residential plot given to a high government official by a developer to get some unethical benefits from him or her is an example of indirect money laundering; the first one is in cash and the second one is in kind.
Illegal transfer of money or property from one account or one person to many accounts or many persons without any genuine transaction document is money laundering.
This practice has been going on for long many, many years, involving either transactions between or among accounts of clients of banks or through cash. It has been taking place because of what is widely known as a big difference between the actual payments relating to transfers of removable property and the related registered deed values in accordance with the government-fixed rates. Though such transactions within the country are do not conform strictly with the letter of the law, and may otherwise be termed money laundering, it would be quite unfair to treat the same as such, without bringing about drastic changes with regard to administration of registration of land-related transfer deeds.
Property transfers involving money laundering could relate to both moveable and immovable properly. Those who made investments in the stock market having beneficiary owners (BO) accounts but do not show the related transactions in their tax returns may also be 'charged' with laundering money. But will it be fair to do this in a situation where tax compliance in general in this country is very low?
Terrorist activities should better be considered in the context of situation in Bangladesh as cases of money laundering. If funds are given for inducing young generations to be extremists in the guise of pursuing so-called religious studies, that should ideally be an act of money laundering. That involves collecting funds to do, what on the face of it, looks as something better for the society but the actual activities are doing just the opposite. Here, the intention is that the derived funds have been going through a process by which the illicit activities are considered legitimate.
By floating shares in the capital market, the general people could be made to fall victims to deceit and may, thus, be deprived of receiving proper dividends. It is also one kind of money laundering. Property's value may be Tk. 10 million. But it could be shown as Tk. 20 million by the lender. Subsequently, the borrower may get excess money than what he or she deserves. It is also money laundering. The sub-prime sector crisis that has been at the root of the current global economic depression all over the world is such a kind of money laundering.
Thus, one end of an economy is visible -- that is white. But the same economy has an invisible part that is not countable and is black. We can say money laundering will continue to exist in all economies as much as the efforts to prevent the same. But the anti-money laundering drive, to be really effective and to help combat its original intended purpose of combating terrorism, has to be carried forward on pragmatic grounds, by updating from time to time the related legal provisions as an on-going process in order to meet the demand of time.
The writer works with AB Bank Ltd., Anderkilla Branch, Chittagong
MONEY laundering can be defined in various ways and from different perspectives.
In our country, "Prevention of Money Laundering Act 2002" was enacted and made effective a gazette notification from April 30, 2002. In this connection, this writer would like to present here an example of what would be otherwise be termed, money laundering that took place, before the Act of 2002. At the beginning of the year 2001, few bank accounts were opened in the name of different concerns at five banks, all of which were located at Khatunganj, Chittagong. All the persons who opened those accounts were known faces in that locality. To the bankers, those persons were known as commission agents, or let us for say, brokers of different items -- activities that are common at that business hub. Those agents had offices/shops at different markets/buildings (for example, Elius Market, Old Pak Building, etc., of Khatunganj and Asadganj locality in Chittagong). That was the month of May or June, 2002 when an inspection team from Bangladesh Bank made a sudden visit to those five branches. They came and asked the related bank officials to provide them some specific accounts' information, supported by papers/documents. Before they came to visit Khatunganj, they had already completed the visit at Chapainawabganj. The Bangladesh Bank found abnormal transactions in those accounts compared to normal business.
It was revealed from that investigation that the Indian origin cows/cattle were being smuggled into Bangladesh through Chapainawabganj border. From Chapainawabganj, those were reached at different destinations of Bangladesh. The Indian sellers (smugglers) had been maintaining 'relationship' with those account holders of Khatunganj area who were used to purchase those cattle/cows and give money to the smugglers on the Bangladesh side. Then those smugglers sent the money to Khatunganj. Smugglers of Chapainawabganj were also being treated as commission agents of different consumer items. In the guise of white business, they were laundering money.
It is to be noted that most of those commission agents/brokers of Khatunganj area were non-Bengalis. They used to speak in Urdu among themselves. Sensing investigation by the Bangladesh Bank that was followed by that of anti-corruption officials, those specific groups of commission agents went into hiding for few months until everything became 'normal' since that incident of money laundering occurred, before introduction of "Prevention of Money Laundering Act of 2002". But the related bank officials of Chapainawabgonj and Khatunganj had to suffer. It may be mentioned here that the related bank officials of that area were just respondents of those telegraphic transfer (TTs).
All concerned would eagerly follow as to what would happen now to the fate of the victim bank officials? It can be easily guessed by the all bank officials in the our country; the money laundering issue is a global case now. Because, all the bankers have already been well equipped by the related law.
The above instance has been cited as only one example of what can be called money laundering. There are so many ways by which money laundering activities can take place. For example: Money earned directly or indirectly through illegal means like taking bribe is an example of direct money laundering. A residential plot given to a high government official by a developer to get some unethical benefits from him or her is an example of indirect money laundering; the first one is in cash and the second one is in kind.
Illegal transfer of money or property from one account or one person to many accounts or many persons without any genuine transaction document is money laundering.
This practice has been going on for long many, many years, involving either transactions between or among accounts of clients of banks or through cash. It has been taking place because of what is widely known as a big difference between the actual payments relating to transfers of removable property and the related registered deed values in accordance with the government-fixed rates. Though such transactions within the country are do not conform strictly with the letter of the law, and may otherwise be termed money laundering, it would be quite unfair to treat the same as such, without bringing about drastic changes with regard to administration of registration of land-related transfer deeds.
Property transfers involving money laundering could relate to both moveable and immovable properly. Those who made investments in the stock market having beneficiary owners (BO) accounts but do not show the related transactions in their tax returns may also be 'charged' with laundering money. But will it be fair to do this in a situation where tax compliance in general in this country is very low?
Terrorist activities should better be considered in the context of situation in Bangladesh as cases of money laundering. If funds are given for inducing young generations to be extremists in the guise of pursuing so-called religious studies, that should ideally be an act of money laundering. That involves collecting funds to do, what on the face of it, looks as something better for the society but the actual activities are doing just the opposite. Here, the intention is that the derived funds have been going through a process by which the illicit activities are considered legitimate.
By floating shares in the capital market, the general people could be made to fall victims to deceit and may, thus, be deprived of receiving proper dividends. It is also one kind of money laundering. Property's value may be Tk. 10 million. But it could be shown as Tk. 20 million by the lender. Subsequently, the borrower may get excess money than what he or she deserves. It is also money laundering. The sub-prime sector crisis that has been at the root of the current global economic depression all over the world is such a kind of money laundering.
Thus, one end of an economy is visible -- that is white. But the same economy has an invisible part that is not countable and is black. We can say money laundering will continue to exist in all economies as much as the efforts to prevent the same. But the anti-money laundering drive, to be really effective and to help combat its original intended purpose of combating terrorism, has to be carried forward on pragmatic grounds, by updating from time to time the related legal provisions as an on-going process in order to meet the demand of time.
The writer works with AB Bank Ltd., Anderkilla Branch, Chittagong