Trade-based money laundering: The reality of Bangladesh16 November 2022
Unsurprisingly, the exponential growth in trade-based money-laundering (TBML) and by other means has become a serious threat to Bangladesh's economy, hindering economic good governance and social justice. It has turned into a safe avenue for white-collar criminals, that is, business tycoons, corrupt politicians, government officials and their scandalous enterprises. Allegedly, individuals and institutions with such heinous criminal records are politically and socially influential and roaming freely without remorse.
Experts have identified major factors of money-launderings that include undue political influence of the launderers, a poor environment for investment, massive corruption in the governance system, absence of rule of law, poor public transparency and accountability, inefficiency in surveillance of the state apparatus, lack of coordination among responsible institutions, as well as lack of enforcement of existing laws.
A spokesperson of Bangladesh Bank (BB) at a media briefing just on Monday said some entities inflated their price at the range of 20-200 per cent than the actual cost of the products under the method called over and under-invoicing. The entities open letters of credit (LCs) by overstating the price of goods concealing the actual price in order to launder money abroad. It usually happens when either the importer or exporter wants to reduce a tariff or if they want to lower their profits to pay low taxes.
The central bank, however, had not monitored the under and over-invoicing in the financial sector as instability hit the global market before the post-pandemics and Russia-Ukraine war. The monitoring has been geared up recently after the foreign currency reserves nosedived due to escalated import payments, causing volatility in the foreign exchange of Bangladesh, forcing the taka to dip against US dollar and sending inflation to a decade high. According to Global Financial Institute (GFI) - a Washington-based think tank - in December last year said Bangladesh lost $8.27 billion every year on average between 2009-2018 resulting from mis-invoicing of values of imported and exported goods by traders to evade taxes and illegally move money across international borders. The Swiss National Bank (SNB) in its annual report also disclosed deposits of Bangladeshi nationals totalling Swiss Francs 563 million (about Tk 52.15 billion).
There is hue and cry about zero tolerance of corruption, money laundering and other financial crimes. In practice, however, no sustained initiatives or actions are paving the way for good economic governance and rule of law. About 408 money laundering cases are pending in various courts. There is no visible success of the BFIU, ACC and NBR in bringing back the laundered money, underscoring the need for the enhancement of their capability, skills, and professionalism along with institutional autonomy.
We want to ensure that every trade transaction undergoes strict sanction screening in order to effectively combat money laundering. We also want the authorities concerned must bring fraudulent traders to book irrespective of their political affiliations.