Sunday, 2 April, 2023

Preventing money laundering

Money laundering or “cleaning of black money” has become one of the greatest global issues of current times. It undermines the integrity of financial systems, contributes to the destabilisation of economies and enables criminals to benefit from their illegal activities. Most importantly, it finances terrorism. Recent reports released by Global Financial Integrity (GFI) suggest Bangladesh being among the worst affected countries plagued by trade-based money laundering (TBML). Over the years, the State has taken several preventive measures to combat this grave issue that has been described as “the most damaging economic problems faced by the world's developing and emerging economies” by GFI's President Raymond Baker.

The Money Laundering Prevention Act (hereinafter MLPA) 2012 which is the primary law in Bangladesh concerning Anti-Money Laundering (AML), criminalises money laundering and defines it as knowingly transferring, moving or converting income from criminal activities into legitimate funds. This includes smuggling money or property earned through legal or illegal means to and from a foreign country, and also concluding financial transactions in a manner to avoid reporting requirements. It may be done with the purpose of concealing the illegal nature, source, location, destination, ownership or control of the money, or to assist those involved in evading legal consequences. Using money earned through ‘predicate offence’ or using money to commit or helping to commit such offences will also constitute money laundering. Predicate offences have been enlisted under Section 2(cc) of MPLA 2012, which includes corruption, smuggling, fraud, kidnapping, theft, robbery, murder, extortion, illegal drug trade etc. Hence, for instance, if a person pays another to commit a murder, they might be charged with money laundering along with murder.

A person committing or assisting to commit money laundering will be punished with a minimum 4 years and maximum 12 years imprisonment including a fine that may amount to at least Taka 10 lacs or the double of the value of the involved property. The person may also have to surrender the involved property to the State. The involved property may also get temporarily confiscated by the court and not following the order would result in a punishment of maximum 3 years imprisonment along with a fine equal to the value of the property.

Obstructing the investigation process or providing false information is also punishable under this Act. If an assigned official discloses related confidential information, they would be punished with a maximum 2 years imprisonment with Taka 50000 fine.

The MLPA 2012 made Bangladesh Bank the national central agency and coordinator of all kinds of AML/CFT activities. The Act instructed the formation of a separate unit within Bangladesh Bank called the Bangladesh Financial Intelligence Unit (BFIU). Bangladesh Bank monitors compliance with regulations, conducts inspections, and provides training to relevant organisations and individuals. They analyse cash and suspicious transactions, reporting organisations and providing relevant information to law enforcement agencies. Suspicious transaction refers to any transaction that appears to be different from usual transaction or one that arouses suspicion of being involved with criminal income or sponsoring criminal activity or terrorism.

The Act gives Bangladesh Bank the power to request information from reporting organisations about transactions that may involve money laundering or predicate. It can issue orders to suspend or freeze transactions of accounts suspected of being involved in an offence. Bangladesh Bank is also given the power to penalise any reporting organisation for the failure to comply with the Act with fines of maximum Taka 5 lacs at the rate of Taka 10 thousand per day. The fines can be imposed on the responsible owners, directors, officers, staff, or persons employed on a contractual basis of reporting organisations and may direct relevant organisations to take necessary administrative actions. If an organisation is fined more than thrice in a financial year, their registration or licence - of the organisation or any of its branches, service centres, booths - could be suspended. Additionally, if any person or entity fails to pay any fines imposed by Bangladesh Bank, the bank may recover the fine from relevant accounts and even take legal action if necessary.

Bangladesh Bank has the power and responsibility to take further initiatives from time to time. In the Fiscal years 2021 BFIU issued instructions to scheduled banks to avoid setting up relationships with Shell Bank to prevent TBM. They organised virtual meetings with correspondent banking service providers and a coordination meeting with law enforcement agencies (LEA) to strengthen AML/CFT compliance in Bangladesh, attended by officials from Anti-Corruption Commission, CID, CIID, CIC, and DNC.

In 2019, the government introduced further amendments to the MLPA 2012, which focused on enhancing the investigative and prosecutorial powers of law enforcement agencies. The amendments gave the police the power to conduct investigations into money laundering and terrorist financing offences without a court order. The amendments also established special courts to hear cases related to money laundering and terrorist financing offences. These courts have the power to freeze assets and order the forfeiture of property derived from money laundering offences.

It is unfortunate that despite the numerous preventive initiatives taken by the government, money laundering remains glaringly prevalent in this country. The probable reasons behind it are the improper implementation of the available preventive measures in addition to the lack of awareness. Many LEA officials are not aware enough to charge the criminals of predicate offences with the provisions of MPLA. While inadequate enforcement of the law is an ever present issue in this country, there should at least be more efforts for a widespread awareness of the scopes, aspects and repercussions of money laundering among the officials and general public.


Chowdhury Fauzia Hossain, a

Research intern at the Research Wing of A.S & Associates