Bangladesh’s battle against money laundering has gained attention from Global Financial Integrity (GFI), a Washington DC-based think-tank specializing in illicit financial flows. GFI has released multiple reports shedding light on the significant issue of money laundering in Bangladesh, where billions of dollars are illicitly funneled out of the country annually. The primary methods employed for money laundering include trade false invoicing, over-invoicing, under-invoicing, and hundi, with trade false invoicing being the most prevalent.
According to a GFI report, an alarming $61.6 billion flowed out of Bangladesh between 2005 and 2014. Trade false invoicing alone accounts for an annual loss of $8.27 billion, a figure that GFI predicts could exceed $14 billion by 2030. Further exacerbating the issue, the Central Bank of Switzerland reported a 20 percent increase in deposits made by Bangladeshis in Swiss banks in 2016. Bangladeshis rank third among those applying for the Malaysian second home program, highlighting the global nature of money laundering activities.
Even Canada has not been immune to the reach of money laundering, as exemplified by the presence of Begum Para. Recent investigations by Bangladesh’s customs reveal that 33 readymade garment factories and buying houses laundered at least BDT 821 crore over the last six years.
However, during his tenure, former finance minister AMA Muhith downplayed allegations of money laundering, suggesting that media reports may have exaggerated the issue. The current finance minister has lamented the lack of mechanisms for gathering information about money laundering, raising concerns about the government’s commitment to combating this illicit activity.
To effectively combat money laundering, Bangladesh must leverage international mechanisms and institutions. While there is no single international authority responsible for recovering laundered money, various tools and agreements exist for this purpose. These include international laws and conventions that establish a framework for cooperation between countries in combating money laundering and other financial crimes. Bangladesh itself has the Money Laundering Prevention Act, criminalizing money laundering and enabling the confiscation of laundered assets.
Regrettably, Bangladesh appears to underutilize these tools for recovering laundered money. The process typically involves identifying laundered money, identifying the culprits and their locations, collecting evidence, initiating lawsuits, obtaining judgments, and enforcing them. Mutual legal assistance (MLA) plays a crucial role in this process, allowing countries to seek and provide assistance in criminal matters. Bangladesh has signed MLATs with several countries, but notable money laundering destinations like Canada, Cyprus, and Switzerland remain absent from this list.
Additionally, the United Nations Office on Drugs and Crime (UNODC) offers resources such as asset recovery networks, including the Stolen Asset Recovery (StAR) Initiative and the Asset Recovery and Asset Management Program (ARAMP), to support countries in combating money laundering and recovering assets. The United Nations Convention against Corruption (UNCAC) establishes principles and guidelines for returning stolen assets to their countries of origin, necessitating cooperation in investigating and prosecuting money laundering cases among countries.
Bangladesh has been reviewed twice under the UNCAC Review Mechanism (CRM), highlighting areas for improvement in implementing UNCAC. These areas include strengthening the independence of the Anti-Corruption Commission, enhancing transparency in public procurement, and increasing law enforcement officials’ accountability. Despite Bangladesh’s commitment to implementing UNCAC and combating corruption, little progress has been made in addressing the CRM’s concerns.
Moreover, Bangladesh’s asset forfeiture laws and mechanisms are in place, but their functionality is hindered by a lack of an independent institution. Political affiliations often dictate appointments within the Anti-Corruption Commission and the Financial Intelligence Unit (FIU), raising concerns about their effectiveness in tackling money laundering.
Bangladesh’s banks and financial institutions also lack robust anti-money laundering (AML) and know-your-customer (KYC) procedures, hindering their ability to report suspicious transactions and leading to infrequent investigations by law enforcement agencies.
Addressing money laundering and recovering laundered assets require complex, multi-jurisdictional cooperation among countries, law enforcement agencies, financial institutions, and international organizations. Effective legal frameworks, strong AML measures, and political will are essential. Although success is not guaranteed in every case, international efforts continually evolve to improve asset recovery mechanisms. Countries like the US and the UK have achieved some success in recovering laundered money, largely due to specialized agencies dedicated to combating money laundering and a history of collaboration with other nations.
It is widely believed that money laundering in Bangladesh is politically motivated, involving politicians, banking administrators, businesspeople, regulators, and bureaucrats. Therefore, a robust political will to initiate and sustain efforts to recover laundered money is imperative. Bangladesh must seek expertise locally and abroad to address this pressing issue and work towards a more transparent and accountable financial system.
