Trade-based money laundering is becoming a growing concern for Bangladesh despite the government’s efforts to prevent this malicious practice in the name of international trade.
Besides, imports of different goods under tax-free bond facilities and illegally re-selling those in the local market has been creating a challenge for the government and affecting genuine importers and manufacturers.Over Tk 4 trillion has been laundered from the country in last 10 years in the name of export-import trade, causing serious harm to the domestic investment and the country’s international trade itself, economic analysts have said.
“If this volume of money is invested in the country, huge employment opportunity could have been created and the local economic strength could have been strengthened more,” said Abdus Salam Murshedy, president of Exporters Association of Bangladesh (EAB).
Abdus Salam Murshedy, also a member of parliament, said some dishonest traders launder money under false declarations, but the government has already taken measures to prevent such financial crimes.
Replying to a query about bond facility abuse, he said a syndicate was involved in misusing the bond facility. “A strong monitoring by both the National Board of Revenue and banking sector can prevent such mishandling of the tax facility,” he said.
Among the trade-based money laundering techniques, over- and under-invoicing of goods and services and misdeclaration of goods are commonly used in Bangladesh, said Shah Md Ahsan Habib, professor and director (training) at Bangladesh Institute of Bank Management (BIBM)
Money laundering is facilitated by collusion between importers and exporters and bank officials are sometimes forced to get involved in the illegal transactions, he said, citing a recent survey.“Misdeclaration of pricing of the imported and exported products is a great concern for trade-based money laundering,” said Dr. AKM Nuruzzaman, commissioner of Customs Valuation and Internal Audit Commissionerate.
“There is a minimum price limit for products but no maximum limit. As a result, fraudsters can easily launder money,” he said.
Of the total laundered amount, 80 per cent is done through trade activities, he said.
A systemic audit from both customs and banks can play a role in the prevention of trade-based money laundering, he added.
Meanwhile, the Bangladesh Financial Intelligence Unit (BIFU) is giving top priority to the prevention of capital flights through overseas trade to check money laundering.
A nine-member committee, led by a deputy general manager, has been appointed to look into the overall issue of capital flights generated by dishonest importers through over and under-invoicing of products.
The decisions were taken in line with the Guidelines for Prevention of Trade-Based Money Laundering finalised by BIFU recently.
The committee will take steps to issue guidelines, train officers on trade-based money laundering and assisting customs intelligence in investigating cases.
The BFIU earlier directed all banks to prepare their modus operandi to implement the guideline by March 10.
Bangladesh ranked 10th among the first 20 countries suffering from capital flights through trade misinvoicing, according to the findings of the Global Financial Integrity report on ‘Illicit financial flows to and from 148 developing countries: 2006-2015’ released in January 2019.
Bangladesh was among the 50 countries receiving illicit fund from outside as per the GFI report.
According to the BFIU, Bangladesh became the first country to announce the guidelines for the banks despite the fact that most capital flights are generated from China and India.
The BFIU, citing researches, said that 80 per cent of money smuggling took place mainly through overseas trade.