1.Introduction The growth in money laundering has become a serious threat to Bangladesh’s rising economy, hindering economic good governance and social justice The GFI ranked Bangladesh among the top 30 countries globally with around 20% of its international trade value being siphoned out of the country every year. The alleged hot spots are the UK, USA, Canada, Saudi Arabia, Singapore, Malaysia, Switzerland, Thailand, Australia, Hong Kong and so on. Unsurprisingly, the exponential growth in money-laundering has become a serious threat to Bangladesh’s rising economy, hindering economic good governance and social justice. It has turned into a safe avenue for white-collar criminals, i.e., business tycoons, corrupt politiciains, public officials and their criminal enterprises. Individuals and institutions with such heinous criminal records are politically and socially influential, roaming freely without remorse, which is enabled by questionable political dynamics as well as deplorable enforcement of legal norms in curbing such offence. A not-for-profit Swiss Foundation under Basel University, Bangladesh is among the top 40 countries in the world in terms of risk for money laundering and terrorist financing. [1]The country ranked 38th among 141 countries on the Basel Anti-Money Laundering Index of 2020. Moreover, the US-based International Consortium of Investigative Journalists (ICIJ) published – in the Panama Papers in 2016 and the Paradise Papers in 2017 – a long list of Bangladeshi money launderers. Bangladeshi media also reported many names of money launderers at various times.
2. Definition
Money Laundering is to ensure that the money that has been acquired illegally appears to have been obtained legitimately. In simpler terms, it is the process of turning the profit of illegal activity into a legitimate income. Money laundering, which is the process of concealing the proceeds of crime and integrating them into the legitimate financial system, is also a method used to hide the nature, source, location, situation, and movement of a crime or to give a legal image to the proceeds of crime. Electronic money provides an easy way to transfer value without revealing its identity, such as untraceable banknotes. Money can also be streamed through online auctions and sales, gambling websites and converted into real, usable, and untraceable “clean” money. The newest form of money laundering involves cryptocurrencies like Bitcoin. While not entirely anonymous, they are increasingly used in racketeering schemes, drug trafficking, and other criminal activities due to their relative anonymity compared to more traditional forms of currency.
3. How Does Money Laundering Work?
Money laundering is essential for criminal organizations to use illegally obtained money effectively. The money laundering process usually consists of three steps: placement, layering, and integration.
Placement: The first entry of illegal money into the financial system is its settlement.
Layering: This step hides the source of money through a series of transactions and bookkeeping tricks.
Integration: The money laundered is withdrawn from the legitimate account to be used, and the money is returned to the criminal from the legitimate source.
Not only these three methods of money laundering but also There are methods other than. To illustrate;
Fake Export: It is a method frequently used in recent years in Europe. It can make it appear as exporting to any country on paper.
Stock Market: Money can be laundered and displayed as a business by buying a stock or buying bonds through brokers.
Antiques and Paintings: Antiques or paintings are taken with money that cannot be transferred. Later, these are sold against foreign currency, and money is laundered.
4. Money Laundering Prevention Act
First anti-money laundering legislation of Bangladesh is the Money Laundering Prevention Act, 2002. It was replaced by the Money Laundering Prevention Ordinance 2008. Subsequently, the ordinance was repealed by the Money Laundering Prevention Act, 2009. In 2012, government again replace it with the Money Laundering Prevention Act, 2012. Money laundering is considered an offence, because it has potentially devastating economic, security, and social consequences. It is an avenue for drug dealers, smugglers, terrorists, illegal arms dealers, corrupt public officials, and others to operate and expand their criminal enterprises. It can also adversely affect collection of government revenue and deprives the government of due revenues.
The Government of Bangladesh promulgated the Money Laundering Prevention Act, 2002. Subsequently, in order to meet emerging international standards, subsequent amendments were made in 2008 and 2012. The main objective of the 2012 Act is to tackle the illegal money transfer to different countries. In order to exercise the powers, and perform the duties, vested in Bangladesh Bank, a separate unit named Bangladesh Financial Intelligence Unit (BFIU) has been established within Bangladesh Bank.
The Money Laundering Prevention Act, 2012 has elaborated the types of reporting agencies required to report suspected transactions to Bangladesh Bank. Reporting organizations coming within the purview of mandatory reporting include, among others, banks, financial institutions, insurers, money changers, any company or institution which remits or transfers money or money value, stock dealers and stock brokers, portfolio managers, security custodians, asset managers, non-profit organizations, non-government organizations, cooperatives, real estate companies, dealers in precious metals and stones, trust companies, lawyers and accountants. Bangladesh bank has significant powers and responsibilities in restraining and preventing the offence of Money Laundering.
5. Cases
In Habibur Rahman Mollah vs. State and Another,2010
The appellant Habibur Rahman Mollah, ex-member of Parliament, submitted his statement of wealth including the members of his family to the Durnity Daman Commission in pursuance of its letter under memo dated 29th May, 2007 directing him to submit as such. The Commission upon scrutiny for his wealth statement having suspected the statement as not true, made a thorough enquiry and it was said that he had concealed his wealth and submitted a falls return and that he had acquired property worth Taka 2 crore and odd by corrupt means. Accordingly an officer of the Commission lodged an first information report with the Ramna Police Station on 3rd October, 2007 against him for alleged commission of offences punishable under sections 26(2) and 27(1) of the Durnity Daman Commission Ain, 2004 read with Rule 15Gha (5) of the Emergency Powers Rules, 2007. The Commission investigated into the matter and having allegedly found disproportionate to the appellant’s known source of income was of the opinion that he had committed offence punishable under the said provisions of law and accordingly submitted a police report re-commending for prosecution of the appellant under the aforesaid provision on 20th April, 2008.[2]
In Md Shamsuddin Lambu vs State,it has been argued by Shahabuddin Ahmed, J that this power “may be exercised only in those cases which are not covered by any specific provision of the Court. The inherent power of the Court is undefined and indefinite and, as such, it must be exercised very sparingly and with great caution[3]
Abdul Quader Chowdhury vs State,. In this case it has been reiterated that the inherent jurisdiction should not be invoked where some other remedy is available. The jurisdiction given by section 561A is not an alternative or an additional jurisdiction but it is a jurisdiction preserved in the interest of justice to redress grievances for which no other procedure is available or has been provided by the Code. This power cannot be utilized as to interrupt or divert the Ordinary Course of Criminal Procedure.[4]
6. What Is The Effect of Money Laundering on Society?
If money laundering is not controlled and these crimes continue to be committed, this situation’s social and political costs can be severe. In addition to these costs, money laundering’s economic and political impact can weaken the social fabric, collective ethical standards, and ultimately the democratic institutions of society. In countries transitioning to democratic systems, this criminal influence can undermine the transition process.
In his address to a seminar,[5] Finance Minister Mustafa Kamal said that it is not only that money laundering “creates macroeconomic distortion”, but it is “largely destroying our country in various ways”. Those were some strong words. And if we look at the data, in the context of Bangladesh, using strong words to describe the curse of money laundering is necessary. A number of reports released by Global Financial Integrity (GFI) in recent times have pinpointed Bangladesh as being among the worst affected countries to the scourge of trade-TBML. [6]According to GFI’s President Raymond Baker, “Illicit financial flows are the most damaging economic problems faced by the world’s developing and emerging economies.” This means we are among the countries worst plagued by one of the biggest problems (among all the problems) out there that developing countries are having to deal with.
According to GFI, [7] USD 61.6 billion were siphoned out of Bangladesh between 2005 and 2014, which is equivalent to 25 percent of its GDP in FY 2016-17. Between 2008 and 2017, Bangladesh lost a staggering USD 7.53 billion per year on average to trade invoicing, which accounted for 17.95 percent of Bangladesh’s international trade with all its trading partners during the period. In a more recent report, GFI revealed that USD 5.9 billion was siphoned out of Bangladesh through trade invoicing in 2015 and that Bangladesh is one of the top 30 countries in terms of illicit financial flows. Similarly, Transparency International Bangladesh (TIB) reported this year that some USD 3.1 billion or Tk 26,400 crore is being illegally remitted from Bangladesh every year. Though it is lower in comparison to the GFI’s estimates between 2008 and 2017, even this amount would have deprived the government exchequer of about Tk 120 billion as revenue each year, which is significant.
In 2002, Bangladesh became the first country in South Asia to promulgate the Money Laundering Prevention Act in line with the recommendations from the Financial Action Task Force (FATF), an intergovernmental organisation which combats money laundering. But experts have criticised the government’s effort to implement the recommendations. Among those that are unconvinced with the government’s work is the Asia/Pacific Group on Money Laundering, the global body that ranks countries. In 2016, the organisation even warned the government that Bangladesh was in danger of being branded as a “risky” country when it comes to money laundering and terror financing.
Yet, according to Dr Iftekharuzzaman, Executive Director of Transparency International Bangladesh, money laundering still enjoys impunity in Bangladesh. In a recent article for The Daily Star, he wrote: “Any crime is bound to flourish when laws and regulations are not enforced and violators are not held accountable. This is exactly what has been happening with money laundering in Bangladesh.” Though there has been a decrease in total deposits by Bangladeshis in Swiss banks, as recently revealed by the Swiss Banking authorities, Dr Iftekharuzzaman highlighted that it was more likely due to money launderers preferring other destinations, rather than the amount of money being laundered from Bangladesh actually decreasing.
Only recently, the Nikkei Asian Review did a story on how the Directorate General of Health Services quoted prices paid for procurement of medical personnel safety goggles at USD 59 a pair, which is almost five times more than its market rate. Other purchases of medical gowns, software, website development and audio-visual clips under an emergency coronavirus project were similarly excessively billed.
Similarly, grain imports from Canada jumped up from USD 438 million in 2018 to USD 1.08 billion in 2019, representing a 128.31 percent rise. [8]But according to the Bangladesh Bank’s statistics, the country-wise import payments for grain do not match with the Canadian figures. According to the BB,[9] import payments to Canada in the fiscal year 2017-18 stood at around USD 500 million only. Therefore, it is quite likely that at least some part of that huge discrepancy occurred due to money laundering. As the finance minister himself said, money laundering causes various economic problems. According to one senior BB official quoted by an English daily, one such problem came in the form of the price of the US dollar seeing an upward trend in Bangladesh earlier in the year, when its price was actually declining in the international market. In the words of the official, “The price of the dollar has increased against the taka because of a rise in money laundering… The Bangladeshi currency is being sent to Malaysia, Singapore, Australia, and Canada.”
7. What Should Businesses Do, To Prevent Money Laundering?
Tax evasion should be prevented in all steps from production to consumption, and significant money movements should be monitored. Local governments should be fully authorized in the areas of. The media should fully support the fight against organized crime and should not broadcast to legendary mafia members. In the private sector, cartels should be prevented, and the underground economy should be reduced by eliminating tax-free earnings as much as possible. Businesses can protect themselves from financial crimes and strengthen AML compliance processes using AML software such as Sanction Scanner.
Years ago, India used to top the charts of GFI reports. However, after WikiLeaks disclosed its massive offshore banking problem, and following significant criticism of the government’s failure to address it, policy reforms in the country along with an annual automatic exchange of banking information with Switzerland—letting India access information on bank accounts held by Indian citizens in that country—led to nearly a 50 percent drop in Indian deposits in Swiss banks over a one-year period. There is no question that launderers probably found other ways to launder their money. But by increasing their cost of laundering money, the Indian government did disincentives money laundering to some extent. Meanwhile, our government has decided that it will once again provide people the opportunity to whiten black money during the budget announcement. This, according to experts, incentivises money laundering. Besides that, lack of regulatory monitoring and supervision of financial activities of individuals and enterprises is allowing criminals to hide their actual financial reports. And in the absence of proper coordination between agencies (domestic and international), preventing financial crime becomes even more difficult.
Sadly, Bangladesh meets almost all the requirements necessary to make it a perfect victim of large scale money laundering—including the fact that its government’s policies have fallen far short of disincentives money laundering and have, in fact, facilitated it at times. That has mostly happened because, as Dr Iftekharuzzaman wrote, the perpetrators of the crime have usually been “tied to the power structure” and hence have often “determined the terms” that have allowed them to get away with it.
8.Conclusion
It is not only that money laundering “creates macroeconomic distortion”, but it is “largely destroying our country in various ways”. Those were some strong words. And if we look at the data, in the context of Bangladesh, using strong words to describe the curse of money laundering is necessary. A number of reports released by Global Financial Integrity (GFI) in recent times have pinpointed Bangladesh as being among the worst affected countries to the scourge of trade-TBML.According to GFI’s President Raymond Baker, “Illicit financial flows are the most damaging economic problems faced by the world’s developing and emerging economies.” This means we are among the countries worst plagued by one of the biggest problems (among all the problems) out there that developing countries are having to deal with.
[1] Annual report, of the Basel Institute of Governance, 2020
[2] Habibur Rahman Mollah vs. State and Another,2010, 62DLR(AD),233
[3] Md Shamsuddin Lambu vs State, 40 DLR (AD) 69
[4] Abdul Quader Chowdhury vs State, 28 DLR (AD) 38
[5] National Strategy for Prevention of Money Laundering and Combating Financing of Terrorism 2019-2021 in November 2019
[6] Trade Based Money Laundering
[7] Global Financial Integrity
[8] Statistics Canada,2019
[9] Bangladesh Bank
