Some financial institutions at risk: governor

Some financial institutions have reached a vulnerable state due to serious irregularities, Bangladesh Bank Governor Atiur Rahman said yesterday.

Due to failure to establish institutional governance in some financial institutions, loans have been diverted elsewhere in recent times through fraud and forgery, Rahman said at a conference at the Palace resort in Habiganj.

As a result, those financial institutions have reached a vulnerable state, which is not expected in the otherwise stable financial sector, he said.

The BB governor's comments come at a time when the central bank appointed observers to a number of state and private banks following deterioration of internal governance and financial crimes.

At the conference, Rahman was speaking to the chief anti-money laundering officials of 56 commercial banks. The three-day event ended yesterday.

The central bank has recently served notice on the managing director of a state bank for irregularities committed.

Digital transactions are on the rise throughout the world, and the cyber crime gangs are taking advantage of the loopholes in technology to launder money.

“Bangladesh is not out of bounds of cyber attacks,” he said, adding that the entire financial sector will have to be more active in risk management.

Taking advantage of strategic weaknesses and liberal economies, the laundered money easily flows into the foreign shore masquerading as investment from abroad.

“This money is siphoned off very easily and quickly,” Rahman said, while asking bankers to remain alert such that no borrower can launder money from large loans through layering.

Laxity has been found in some financial institutions in carrying out the directives for preventing money laundering and terror financing.

“In the meantime, we have fined many banks and financial institutions for the non-compliance issue,” said the BB governor, while urging banks to be more cautious so that such incidents do not occur in future.

Meanwhile, in the backdrop of recent frauds in ATM booths of a number of banks an eight-point directive has been sent to all financial institutions.

Besides, at the end of this week the BB will hold an exclusive meeting with the heads of the banks' card divisions.