Govt agencies yet to initiate study though deadline ends

Three government entities have failed to carry out a study to find out the amount of illicit financial flow from Bangladesh, where they were siphoned and how as part of the country's efforts to contain cross-border money laundering.

As per the National Strategy for Prevention of Money Laundering and Combating Financing of Terrorism 2019-21, the study was scheduled to be completed by December last year.

But the Bangladesh Financial Intelligence Unit (BFIU), the National Board of Revenue, and the Anti-Corruption Commission were unable to initiate the investigation.

Their inaction has come to the fore as the Global Financial Integrity (GFI) on Thursday revealed that Bangladesh lost approximately $8.27 billion on an average annually between 2009 and 2018 due to money laundering.

The illicit financial flow (IFF) was mainly perpetrated in the form of mis-invoicing of values of import-export goods by traders to evade taxes and illegally move money across international borders, the Washington-based organisation said.

The average loss of customs and taxes during the decade was 17.3 per cent of Bangladesh's international trade, said the GFI in its report, "Trade-Related Illicit Financial Flows in 134 Developing Countries 2009-2018."

Abu Hena Mohd Razee Hassan, who retired from the post of the head of the BFIU in September, said that a multilateral lender agency had committed to providing financial and technological assistance to perform the study.

But the organisation later backtracked, causing the delay in carrying out the study on time, he said.

"The study will have to be conducted with the guidance of a well-reputed global organisation so that we can learn from other countries that have done similar types of research," he said.

An NBR official said a perception study was conducted initially on the IFF. "But no detail study has been carried out so far." 

Later, the Bangladesh Institute of Bank Management (BIBM), a national training, research, consultancy and education institute on banking and finance, was later selected to do the research.

Shah Md Ahsan Habib, a professor of the BIBM, said that the organisation had received the proposal three to four months ago.

"It is difficult to formulate a research methodology to conduct the study given the characteristics of the country's IFF. There is no scope to follow the methodologies of other countries as the IFF from Bangladesh is distinct."

Meanwhile, the United Nations Office on Drugs and Crime (UNOCD) has initiated a study on six countries, including Bangladesh, to measure the IFF centring drug smuggling.

Various organisations, including the BIBM, have taken part in the study, scheduled to be completed by December next year.

Habib, also a research member of the UNOCD's study, said that the study might help create a research methodology for Bangladesh. "This will help investigate the country's IFF in an accurate manner."

The National Strategy for Prevention of Money Laundering and Combating Financing of Terrorism also planned to establish database at every bank to confirm the competitive price of imported items and the fair price of exportable items to prevent trade-based money laundering.

Banks were scheduled to create the database by December 2019. But most banks are yet to set up the database.

Syed Mahbubur Rahman, managing director of Mutual Trust Bank, said it was difficult to prepare such a database accurately.

"But, we have already taken initiatives and purchased a piece of software from a foreign company. The database will go live by the middle of next year," he said.

The software will display the prices of products and services on a real-time basis.

"The customs department should publish the prices of the imported and exported products. This will help banks verify the prices," said Rahman.

Towfiqul Islam Khan, a senior research fellow of the Centre for Policy Dialogue, says that the country should take strong initiatives to clamp down on the trade-based money laundering.

"The government entities should have conducted the study on time in order to prevent money laundering."

Bangladesh will have to carry out the study by 2030 as part of its efforts to attain the Sustainable Development Goals.