Anti Money Laundering (AML) in Bangladesh

Although Bangladesh has made several initiatives to combat money laundering, it remains a significant problem in the country. After announcing a state of emergency on January 11, 2007, a caretaker government took authority. The amount of money laundered via the formal banking system has increased under the current regime. As a result, one of the key objects of the caretaker administration in power is to combat corruption. The underground hawala or "hundi" system, which is used to transfer money and valuables outside of the regular banking system, remains the key risk for money laundering. The hundi mechanism is most commonly used to repatriate wages from expatriate Bangladeshi employees. Although banks have lately improved their transfer speed and efficiency, the hundi system continues to thrive due to its ability to evade taxes, customs fees, and currency regulations.


In 2002, the government passed the Money Laundering Prevention Act to combat the problem of money laundering. The government then implemented the UN Convention Against Corruption in 2007. (UNCAC). In 2007, the government designated the Anti-Money Laundering Department (AMLD) of the Central Bank as the government's national Financial Intelligence Unit (FIU). The government passed the Money Laundering Prevention Ordinance (MLPO 2008) and the Anti-Terrorism Ordinance in 2008. (ATO 2008). Both laws make it easier for countries to work together to combat money laundering, including recovering cash that has been unlawfully moved to or from other nations.


The Economy of Bangladesh

Bangladesh's economy has been developing at a rate of 5 to 6% each year since 1996. Bangladesh's economy is powered in part by export sales and remittances from Bangladeshis working in other countries, mostly in the Middle East and East Asia.


Many reasons, including inefficient state-owned firms, delays in harnessing natural gas resources, inadequate electricity supply, and tardy implementation of economic reforms, are hindered the Bangladesh economy. Furthermore, agriculture employs roughly two-thirds of the population, even though the service sector generates more than half of the country's GDP.


Banking in Bangladesh

Bangladesh Bank is the country's central bank, which was founded in 1971. A nine-member Board of Directors oversees the Bank's affairs and operation, comprising the Governor, Deputy Governor, three government officials, and four people with specialized banking, trade, and finance experience.


The Bangladesh Bank's broad objectives include controlling currency issuance and reserve installation, organizing the Bangladesh monetary and credit system, sustaining domestic economic value, safeguarding the Bangladesh Taka's par value, and promoting and maintaining increased employment, manufacturing, and real income Bangladesh.


Bangladesh's Currency

Bangladesh's official currency, the Taka, overtook the Pakistani rupee at par in 1972. The term "taka" is derived from the Sanskrit word "tanka," which refers to an old silver currency. There are 100 poisha in a Taka. Bangladesh's Central Bank, the Bangladesh Bank, issues both banknotes and coins.


Latest FATF Statement: February 14, 2014

Bangladesh has made significant progress in enhancing its anti-money laundering and counter-terrorist financing regime, according to the FATF, and has established the legal framework to fulfill its commitments in its action plan regarding the strategic insufficiencies classified by the FATF in October 2010. As a result, Bangladesh is no longer monitored by the FATF as part of its ongoing worldwide AML/CFT compliance process. Bangladesh will continue to engage with APG to address the entire spectrum of anti-money laundering and counter-terrorist financing concerns mentioned in its mutual evaluation report. 

Compliance with FATF Recommendations

In 2020, a follow-up Mutual Evaluation Report was completed on Bangladesh's implementation of anti-money laundering and counter-terrorist financing criteria. Bangladesh was found to be compliant with 9 of the FATF's 40 recommendations and partially compliant with some other 27. For 0 of the Effectiveness & Technical Compliance ratings, it was rated Highly Effective, and for 3 of the Effectiveness & Technical Compliance ratings, it was rated Substantially Effective.​

 

US Department of State Money Laundering Evaluation 

​The US Department of State's 2016 International Narcotics Control Strategy Report designated Bangladesh as a Jurisdiction of Concern (INCSR). The following are some of the report's foremost insights:

Despite knowing that Bangladesh is not a regional economic capital, its geographical region, shipping ports, and long border controls with India and Burma make it a transshipment hub for narcotics manufactured in both Southeast Asia's "golden triangle" and Central Asia's "golden crescent." The primary sources of illegal revenues include drug trafficking, bribery, fraud, counterfeit money, gold smuggling, and human trafficking. Terrorist finance, mainly that which goes through the hawala/hundi system and by cash transport, is also a threat to Bangladesh. Jamaat-ul-Mujahideen Bangladesh, a terrorist group, located in Bangladesh, has officially stated that it receives funds from Saudi Arabia.

Bangladesh's economy is significantly reliant on remittances, with official remittances exceeding $15.3 billion in the calendar year 2015. Despite widespread usage of the underground and illegal hawala/hundi alternative remittance system, the central bank claims that the percentage of remittances transferred through the official sector is rising.


Because of the restricted convertibility of the national currency, the cash-based economy, and the monitoring of foreign currency transactions performed through official channels, black market money exchanges remain popular. To evade taxes and customs duties, alternative remittance and value transfer techniques are also employed. There are other ways to fund terrorism, including the use of non-governmental organizations (NGOs), charities, counterfeiting, and unregulated private banks.



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