Financial Crime World

Regulatory Bodies for Financial Crimes in Bangladesh: A Threat to Economic Governance

The Alarming State of Money Laundering in Bangladesh

Bangladesh has been ranked among the top 30 countries globally with 20% of its international trade value being siphoned out of the country every year, according to a report by the Global Financial Institute (GFI). The alleged hotspots are the UK, USA, Canada, Saudi Arabia, Singapore, Malaysia, Switzerland, Thailand, Australia, Hong Kong and others. This has led to an exponential growth in money laundering, which is a serious threat to Bangladesh’s rising economy.

International Rankings and Reports

  • Bangladesh ranked 38th among 141 countries on the Basel Anti-Money Laundering Index of 2020, according to a report by the Basel Institute of Governance.
  • The US-based International Consortium of Investigative Journalists (ICIJ) published a long list of Bangladeshi money launderers in the Panama Papers and Paradise Papers.

The Scale of Money Laundering

  • The Swiss National Bank disclosed deposits of Bangladeshi nationals totaling CHF 563 million or about BDT 52.15 billion, making Bangladesh third in South Asia after India and Pakistan.
  • The GFI focuses on four ways of money laundering: over-invoicing of imported goods, under-invoicing of exported products, Hundi (informal value transfer system), and Hawala (a system of transferring funds).

The Need for Action

Theoretically, there is a hue and cry about zero tolerance of corruption, money laundering and other financial crimes. However, no sustained initiatives or actions are paving the way for good economic governance and rule of law. About 408 money laundering cases are pending in various courts.

Potential Solutions

  • Bangladesh can take concerted initiatives as a founding member of the Asia Pacific Group (APG) and implement stringent compliance with the 40 recommendations suggested by the G7-based Financial Action Task Force (FATF).
  • The country can also seek help from destination member countries to recover stolen assets under the UN Convention against Corruption (UNCAC), 2003.

Bangladesh’s Economic Progress

Bangladesh has made significant progress in its economy over the last five decades, rising from a “basket case” to the 37th largest economy in nominal terms and the 31st based on Purchasing Power Parity (PPP). However, controlling money laundering is crucial for the country’s economic growth.