"The Act empowered the NBR officials to unnecessarily poke their noses into the business activities," FBCCI President Mir Nasir Hossain told a discussion on the impact of the law at the FBCCI conference room.

The president of the apex trade body -- The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) -- made the remark on complaints from his business colleagues across the country immediately after the new national budget was declared.

Leaders from the FBCCI, Bangladesh Association of Banks (BAB) and Association of Bankers Bangladesh (ABB) took part in the discussion.

Nasir said the banking sector was facing difficulties in some areas relating to application of money laundering law, corporate income tax and income tax benefit against loans and advances.

He said that as a money laundering prevention measure the commercial banks must report to Bangladesh Bank every transaction in cash amounting to Tk 500,000 or more from March 2006.

He pointed out that the purpose was to safeguard the banking channels from illicit transaction and currency smuggling.

“Although the commercial banks appreciated the Act, it has created some problems for them.”

On corporate tax, the FBCCI chief said the listed and non-listed banking companies are to pay corporate tax of 45 percent as compared to 35 percent being paid by other non-banking companies. “This reduced rate should be applicable for the banking companies too.”

He further pointed out that the income tax benefit against classified loans and advances in the form of allowable deductions change year to year, making it difficult for a bank to calculate the income and to budget the amount of loans and advances.

The devaluation of taka against dollar, liquidity crisis and some policies as imposed by the central bank have created instability in the banking sector, he observed.

ABB Chairman M Aminuzzaman said the Money Laundering Act was totally different than that in the other countries and termed it as the violation of three laws. He criticised that the Act would rather encourage smuggling and support the black money.

BAB chairman and former advisor of the caretaker government Syed Manjur Elahi blasted the Money Laundering Act as it forced banks to inform the central bank about the transactions that cross Tk 500,000 limit in an account.

Officials from the National Board of Revenue (NBR) often visit banks and ask the bankers to give them data of a particular bank account, which is totally against the law, he said, adding that the particular data should be given on the court's order.

Islami Bank Chairman Kazi Harunur Rashid termed transaction of Tk 500,000 was very insignificant for a businessman and due to this provision many potential bank account holders have already closed their accounts fearing harassment under the Money Laundering Act.

FBCCI Director MA Rouf Chowdhury termed the Tk 500,000 provision as a hassle for the businessmen.