Illicit Financial Flows: A Major Concern for Bangladesh

Bangladesh has been identified as a significant source of illicit financial flows, with billions of dollars being laundered out of the country each year. According to Global Financial Integrity (GFI), a Washington DC-based think-tank, Bangladesh loses around $8.27 billion annually to trade misinvoicing and by 2030 this figure is expected to exceed $14 billion per year.

The Methods of Laundering

The main methods of laundering in the country include:

• Trade Misinvoicing: This involves under- or over-invoicing of goods in international trade, which allows criminals to transfer funds out of the country without detection.
• Over-Invoicing: This occurs when a company invoices for more goods or services than it actually supplies, allowing the launderer to receive excess payment.
• Under-Invoicing: The opposite of over-invoicing, where a company invoices for less goods or services than it actually supplies, resulting in underpayment to the government.
• Hundi: A traditional method of money laundering in Bangladesh, hundi involves using a network of agents to transfer funds out of the country.

The Scale of the Problem

Between 2005 and 2014, GFI found that $61.6 billion was smuggled out of Bangladesh. Despite these findings, former Finance Minister AMA Muhith claimed in parliament that no money is sent out of the country and that reports of laundering are exaggerated.

Government Response

The current finance minister has said he does not have a mechanism to gather information on money laundering, raising questions over the government’s political will to combat this issue. Bangladesh has laws and mechanisms in place to recover laundered money but they are not being effectively used.

Mechanisms for Recovery

• Mutual Legal Assistance Treaties (MLATs): Bangladesh has signed MLATs with several countries, including India, the US, China, and Singapore.
• Asset Forfeiture Laws: The country has asset forfeiture laws in place but they are not being used effectively due to lack of an independent institution to handle these cases.

Addressing UNCAC Concerns

Bangladesh is committed to implementing the United Nations Convention against Corruption (UNCAC) but it has failed to address concerns raised over its implementation. The UNCAC Review Mechanism has identified several areas where Bangladesh needs to improve, including strengthening the independence of the Anti-Corruption Commission and increasing accountability among law enforcement officials.

Conclusion

Recovering laundered money is a complex process that requires cooperation between countries, law enforcement agencies, financial institutions, and international organisations. Bangladesh needs effective legal frameworks, strong anti-money laundering measures, and the political will to combat this issue in order to recover stolen assets. The country should initiate recovery efforts by seeking expertise locally and abroad to tackle this problem effectively.