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Banking sector on the brink : TIB

Loan scams, money laundering

06 December 2022

Staff Reporter :
The Transparency International Bangladesh (TIB) has expressed its deep concern over the withdrawal of thousands of crores of taka in the name of loans against false addresses and non-existent companies from at least three private banks, including Islami Bank.
In a written statement issued the TIB on Monday said, "It has pushed the banking sector, which already plagued by skyrocketing bad loans, on the brink of default, anonymous loan and money laundering."
 In order to prevent a deeper crisis, the TIB strongly urged the government to enact a law titled 'Beneficial Ownership Transparency' immediately.
At the same it is needed to join the 'Common Reporting Standard (CRS)' to monitor financial transactions in the privately owned sector.
Referring the media reports, TIB in its statement said, withdrawal of thousands of crores taka in the name of loans from several private banks is very alarming for the country's economic structure.
Executive Director of TIB Dr Iftekharuzzaman said, "Even, if a normal customer goes to take a minimum amount of loan from the bank, they have to submit huge documents. It is wonder, how is it possible to withdraw thousands of crores of taka in the name of fake or non-existent institutions?"
The total amount of defaulted loans has increased by almost six times in the last 14 years, he said adding that the defaulted loans cannot be recovered despite changing the definition of defaulted loans or rescheduling.
Then in whose interest or by whom such aggressive loans are given with unusual speed?, he asked and added who actually benefits from this huge amount of money?
"Citizens have the right to know the answer to this question," he said.
Dr Iftekharuzzaman observed that after the widely discussed Basic Bank scam and PK Haldar fraud in the recent past, why was no lesson learned and why no effective initiatives have been taken to restore the safety and order in the banking sector.
In the case of money laundering through invoicing fraud in the import-export trade, the Bangladesh Bank itself says that there have been more than 100 cases of increased prices of goods imported from 20 to 200 per cent.
On the other hand, the latest published calculation of Global Financial Integrity (GFI) says that the average amount of money smuggled out of Bangladesh under the guise of trade is about $827 billion, TIB executive director said.
"Instead of taking any measures to prevent the money laundering rather it has suspended to prevent disclosure of money laundering information to the relevant UN agencies," he added.
The TIB executive director said, "Appropriate measures should be taken immediately so that these funds cannot be smuggled out in any way of the country. The department concerned must investigate into the matter giving utmost importance. To get specific information about laundered money, all types of transactions should be immediately joined to the Common Reporting Standard (CRS) which facilitates the exchange of information in the country and abroad."
At the same time, in order to prevent fake and anonymous loan fraud, in the light of international experience, the 'Beneficial Ownership Transparency' law should be enacted immediately in the privately owned sector, he added.
TIB believes that, from time to time, politically motivated changes in the bank's ownership or top positions help in the loss of deposits of these banks. The owners or the board of directors of the bank are then involved in the loan fraud and the opportunity to engage in robbery by abuse of power increases manifold.

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