Global Financial Integrity (GFI) – a Washington DC-based think-tank that focuses on illicit financial flows – has published a number of reports on money laundering in Bangladesh. These reports found that Bangladesh is a major source of illicit financial flows, with billions of dollars being laundered out of the country each year. The main methods of laundering include trade misinvoicing, over-invoicing, under-invoicing, and hundi. Trade misinvoicing, which involves falsifying the value of imports and exports to move money illegally across borders, is the most common.
According to a GFI report, $61.6 billion was smuggled out of Bangladesh from 2005 to 2014. Bangladesh loses $8.27 billion annually to trade misinvoicing. By 2030, GFI predicts this could exceed $14 billion per year. The Central Bank of Switzerland calculated that the amount of money deposited by Bangladeshis in the country’s banks in 2016 increased by about 20 percent from the previous year. Bangladeshis are third on the list of those applying for the Malaysian second home programme. Money laundering to Canada hit a new height, as is evident from the existence of Begum Para. This year, Bangladesh’s customs found that 33 readymade garment factories and buying houses had laundered at least Tk 821 crore over the last six years.
However, former finance minister AMA Muhith, during his tenure, had not taken into account the allegations of money laundering. He’d said in parliament, “I won’t say no money is sent out of the country. But the amount as reported by the media can be considered exaggerated in reality.” The current finance minister said he does not have any mechanism to glean information about laundering! In such a context, the political will of the government to prevent money laundering is constantly being questioned.
While there is no single international authority responsible for recovering laundered money, several mechanisms and institutions work together to address this issue. There are a number of international laws and conventions that can be used to claim laundered money. These agreements provide a framework for cooperation between countries in combating money laundering, terrorist financing, and other financial crimes. Bangladesh itself has the Money Laundering Prevention Act, which criminalises laundering and authorises the confiscation of laundered assets.
Sadly, the country does not seem to be effectively using any of the tools to recover laundered money. The process of claiming money back typically involves identifying laundered money, the persons or groups behind the crime, and the location; gathering evidence; filing lawsuits in the country the money has been located in; obtaining a judgement from the court; and enforcing the judgement in the specific country.
The standard international process for returning laundered money is through mutual legal assistance (MLA), a mechanism by which countries can request and provide assistance to one another in criminal matters. This can include assistance with gathering evidence, interviewing witnesses, and freezing or seizing assets. Bangladesh has signed a number of mutual legal assistance treaties (MLATs) with other countries, including India, the US, the UK, China, Singapore, South Korea, Malaysia, Russia, Vietnam, Sri Lanka, and with Myanmar. Among Bangladesh’s popular money laundering destinations, Canada, Cyprus, Switzerland remain missing from this list. Switzerland has shown an interest, but for some reason Bangladesh is yet to sign an MLAT with them.
Aside from MLATs, the United Nations Office on Drugs and Crime (UNODC) provides a number of resources to help countries combat money laundering and recover laundered assets. These resources, known as asset recovery networks, provide technical assistance and capacity-building support to countries. They include Stolen Asset Recovery (StAR) Initiative, Asset Recovery and Asset Management Program (ARAMP), and the UNODC Global Programme on Money Laundering.
There’s also the United Nations Convention against Corruption (UNCAC), a global treaty that addresses corruption-related issues, including the recovery of assets obtained through corrupt practices. It establishes principles and guidelines for the return of stolen assets to their countries of origin. UNCAC requires countries to cooperate with each other in investigating and prosecuting money laundering cases.
The UNCAC Review Mechanism is a peer-review mechanism that assesses the implementation of UNCAC by its state parties. Bangladesh has been reviewed twice, in 2010 and 2016. The CRM has identified a number of areas where the country needs to improve its implementation of UNCAC: strengthening the independence of the Anti-Corruption Commission, improving the transparency of public procurement, and increasing the accountability of law enforcement officials.
Bangladesh is committed to implementing UNCAC and fighting corruption, but unfortunately, the government has not taken visible steps to address the concerns raised by the CRM.
While Bangladesh has asset forfeiture laws and mechanisms in place, there is no independent institution, so lawsuits are basically non-functional. The top appointments in the Anti-Corruption Commission and the Financial Intelligence Unit (FIU) are considered on the basis of political affiliation. Officials are subject to political will and many are alleged to be involved in corruption and smuggling themselves.
Amid all the issues, Bangladeshi banks and financial institutions lack robust anti-money laundering (AML) and know-your-customer (KYC) procedures in place. They do not report suspicious transactions on a routine basis, and the law enforcement agencies also do not conduct regular investigations.
Recovering laundered money involves a complex, multi-jurisdictional process that requires cooperation between countries, law enforcement agencies, financial institutions, and international organisations. It is crucial for countries to have effective legal frameworks, strong AML measures, and the political will to combat money laundering and facilitate the return of stolen assets. While there is no guarantee of success in every case, international efforts are continually evolving to enhance the effectiveness of asset recovery mechanisms. Even the most successful countries only recover a small fraction of the money that is laundered each year. Yet, the US and the UK have had some success in recovering laundered money in recent years. The UK has a number of specialised agencies that are dedicated to combating money laundering, and it has a strong track record of working with other countries to this end.
It is widely believed that money laundering is politically motivated in Bangladesh, facilitated by politicians and as well as politicised banking administrators, businesspeople, regulators and bureaucrats. Hence, there should be a strong political will to start the recovery of laundered money. The country needs to initiate recovery efforts, seeking expertise locally and abroad.
Faiz Ahmad Taiyeb is a Bangladeshi columnist and writer living in the Netherlands.
Views expressed in this article are the author’s own.
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