Bangladesh Struggles to Implement Effective Banking Laws and Regulations

A Recent Assessment by the Financial Action Task Force (FATF)

A recent assessment by the Financial Action Task Force (FATF) has revealed that Bangladesh is still grappling with implementing effective laws and regulations to combat financial crimes. The country’s mutual evaluation in 2016 highlighted several areas of concern, including a lack of cooperation between government agencies and inadequate supervision of financial institutions.

Key Issues Identified

Strengthening Anti-Money Laundering (AML) Regime

The FATF criticized Bangladesh for failing to properly implement measures to prevent money laundering and terrorist financing. The country lacks a comprehensive AML/CFT law that covers all aspects of the crime, including confiscation and provisional measures.

Effective Targeting of Financial Sanctions

While Bangladesh has imposed some targeted financial sanctions related to terrorism and terrorist financing, they are not always effectively enforced. Furthermore, the lack of transparency in the country’s beneficial ownership regime makes it difficult to identify and track down individuals involved in suspicious transactions.

Additional Areas of Concern

Supervision of Non-Profit Organizations (NPOs)

The FATF highlighted the need for Bangladesh to improve its regulations to ensure that NPOs do not engage in money laundering or terrorist financing activities. This creates a risk of these organizations being used for illicit purposes.

Customer Due Diligence Requirements and Record-Keeping Practices

Financial institutions in Bangladesh often fail to properly verify the identity of their customers, which makes it easier for individuals involved in financial crimes to operate undetected.

Reliance on Third-Party Risk Assessments

The country lacks a robust system to monitor and report suspicious transactions, making it difficult to identify and prevent financial crimes.

Government Commitment to Reforms

To address these concerns, the Bangladeshi government has committed to implementing several reforms, including strengthening its AML/CFT regime and improving supervision of financial institutions. However, the FATF has emphasized that significant progress is still needed to meet international standards.

Conclusion

Bangladesh’s struggle to implement effective banking laws and regulations to combat financial crimes highlights the need for continued international cooperation and assistance. The country’s efforts to address these concerns will be closely monitored by the FATF and other international organizations to ensure that it meets its commitments to prevent money laundering and terrorist financing.