• Saturday, February 28, 2015

Stockmarket: a weakness in money-laundering battle

Banking secretary speaks on capital market

Star Business Report

The Financial Action Task Force has warned Bangladesh to step up its vigilance in the capital market to prevent terrorist financing and money laundering.
M Aslam Alam, secretary of the Banking Division, said the global watchdog pointed out that the stockmarket is a major weakness in the country's monitoring system.
Due to the non-practice of maintaining know-your-customer (KYC) and suspected transaction (STR) reports in the capital market, keeping a watch on terrorist financing and money laundering becomes difficult, FATF said.
“Unless the issues are addressed, Bangladesh might be grey-listed by the FATF again,” he said, while requesting the stock exchanges and the brokerage houses to maintain KYC and STR reports.
Bangladesh got out of the global financial watchdog's grey list in January, due to which there has been a great reduction in the cost and time of financial transactions with the rest of the world.
Alam made the comments while speaking at a meeting between the finance minister and officials of the twin bourses at the secretariat yesterday.
At the meeting, Finance Minister AMA Muhith blamed the “fatkabaz” (speculators) for volatility in stockmarket.

“Lots of people who are investing in the markets are not investors. They are fatkabaz, that's all,” he said.
Khairul Hossain, chairman of Bangladesh Securities and Exchange Commission, said the regulator and the government are blamed whenever the market falls.
“But we have no fund, we do not sell or buy shares, we do not make profit. So it's not possible for us to give instant support to the market.”
The twin bourses urged the finance minister to scrap the tax on capital gains from share sales for individual investors in the upcoming fiscal year.
Stock investors are set to be slapped with a 3 percent tax on capital gains upwards of Tk 10 lakh in the next fiscal year. Furthermore, for gains above Tk 20 lakh, a 5 percent tax will be applicable.
As the finance minister proposed tax exemption for five years at a graduated rate for the demutualised stock exchanges, the bourses sought the benefits at a fixed rate.
The exchanges also requested the finance minister to increase the limit of tax-free dividend income to Tk 50,000, whereas the minister in his budget speech proposed Tk 15,000 from the existing Tk 10,000.
The DSE and CSE also urged the finance minister to reduce the tax on capital gains for exchanges' shareholders to 5 percent from the proposed 15 percent.

Published: 12:00 am Friday, June 13, 2014

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