Financial Crime World

Financial Crime Prevention in Bangladesh: A Pressing Concern

Bangladesh is facing a severe challenge in the form of money laundering, which has drained a staggering $61.6 billion from the country between 2005 and 2014. This problem is so widespread that it has affected 25% of the country’s GDP in FY 2016-17.

The Extent of Money Laundering in Bangladesh

According to a recent report by Global Financial Integrity (GFI), trade misinvoicing has resulted in an average loss of $7.53 billion per year for Bangladesh between 2008 and 2017, accounting for 17.95% of the country’s international trade with all its trading partners during the period.

  • Trade-based money laundering (TBML) is a significant concern in Bangladesh.
  • The country loses billions of dollars every year due to TBML.
  • Transparency International Bangladesh (TIB) reported that some $3.1 billion or Tk 26,400 crore is being illegally remitted from Bangladesh every year.

Government Efforts: Criticized by Experts and International Organizations

The government’s efforts to implement anti-money laundering laws have been criticized by experts and international organizations. In 2016, the Asia/Pacific Group on Money Laundering warned the government that Bangladesh was in danger of being branded as a “risky” country when it comes to money laundering and terror financing.

Policies Facilitating Money Laundering

The government’s policies have been criticized for facilitating money laundering. The recent budget announcement has provided an opportunity for people to whiten black money, which experts believe incentivizes money laundering. Additionally, lack of regulatory monitoring and supervision of financial activities of individuals and enterprises is allowing criminals to hide their actual financial reports.

  • The government’s policies have fallen far short of disincentivizing money laundering.
  • The policies have, in fact, facilitated money laundering at times.
  • The perpetrators of the crime are often “tied to the power structure” and hence have often “determined the terms” that have allowed them to get away with it.

The Impact of Money Laundering

Money laundering causes various economic problems, including a rise in the price of the US dollar against the taka. A senior official from the Bangladesh Bank quoted by an English daily said that the price of the dollar has increased due to a rise in money laundering.

Comparative Study: India’s Success in Disincentivizing Money Laundering

The Indian government’s policy reforms and automatic exchange of banking information with Switzerland led to nearly a 50% drop in Indian deposits in Swiss banks over a one-year period. This shows that disincentivizing money laundering can be effective, but Bangladesh needs to take similar steps to address the problem.

Conclusion

It is time for the government to take serious action against money laundering and implement effective policies to prevent it. The country cannot afford to lose billions of dollars every year due to this scourge. The government must work with international organizations and experts to develop a robust anti-money laundering framework that will help to disincentivize money laundering and bring perpetrators to justice.