This is the third time the bank has been penalised for covering up militants' transactions.

The BB in a letter directed Islami Bank to pay off the fine by today, and observe the anti-money laundering act strictly from now on.

The letter also asked the Islami Bank management to report to the BB what actions it has taken against 20 officials found assisting the militants in running their accounts.

The central bank had earlier sent probe teams to three branches of Islami Bank following the arrest of JMB chief Abdur Rahman and seizure of some banking documents from the militant kingpin's busted Sylhet hideout.

The teams found lapses in banking norms and suspicious transactions in Sylhet, Gazipur and Savar branches of the bank. On the basis of the probe report, the BB issued a show cause notice on the bank on March 14, and did not find its answer satisfactory.

Yesterday's action followed this.

The BB probe team that visited Islami Bank's Laldighipar branch in Sylhet found that Tk 4 lakh and 17 thousand were deposited through telegraphic transfers (TTs) in an account held by Saidur Rahman. Though the account was opened in 1999, no transactions were made until January this year. But in a few weeks since January 15, the entire amount was withdrawn. The probe team considered this suspicious.

The TTs were made from Savar and Gazipur branches of the bank. But the sender of those apparently concealed his/her identity, which the branch authorities could not or did not notice. This was a clear violation the anti-money laundering act.

After the capture of Abdur Rahman from Surya Dighal Bari in Sylhet, the law enforcers got hold of a cheque book in the name of Saidur Rahman. Saidur is former Ameer of Habiganj district Jamaat-e-Islami and father of JMB's information and technology section chief Shamim.

Sources said Islami Bank was fined twice earlier for hiding information on transactions by militants.

In 2004, the BB fined it Tk 50,000 for hiding information and transacting funds of Al Haramain Islamic Foundation, which is internationally banned for involvement with Islamic militants.

Ameer of Ahle Hadith Andolan Bangladsh Asadullah Al Galib, arrested on charges of involvement with militants, had some suspicious transactions from his account at Islami Bank. The bank concealed these information too. The central bank then fined it in 2002.