Bangladesh faces risks of terror finance
Bangladesh should amend laws against money laundering to plug the loopholes that allow international transactions in drug trade, terror finance and corruption, says a global taskforce.
In a draft report to the government, Financial Action Task Force (FATF), the world's lone anti-money laundering organisation, has observed that Bangladesh is a transshipment point for illegal drugs bound for markets in Europe, the USA and Canada.
"Bangladesh faces significant risk of money laundering and some risk of terrorism financing," said the report handed over to the government on September 15.
Prepared by the FATF's Regional Review Group (RRG) to bring about some changes in the related laws and the Anti-Corruption Commission, the report notes, "The majority of illegal proceeds of crime in Bangladesh stem from trafficking of illicit drugs, human trafficking and corruption."
The government has agreed to amend two of the anti-money laundering laws and improve its capacity to detect financial crimes, a finance ministry official said.
The finance ministry yesterday sent the report to the law, foreign, and home ministries, and the Anti-Corruption Commission for their opinion.
Bangladesh will give feedback to the FATF by September 27.
The finance ministry official said the government agrees on most of the observations in the report. But it differs with the issue of transshipment point of drugs, which would be communicated to the RRG.
The report lauds the government's recent steps against money laundering and terrorism but observes that the measures have some deficiencies.
It observes that most of the terrorism in Bangladesh can be classified as domestic. Home-grown groups operating within its boundaries do not require large amount of money to conduct violent acts and their equipment or explosives are reported to be unsophisticated and crude. Financing of such groups is classified as micro-financing.
But some terrorist groups designated by the UN are active in Bangladesh, posing a serious threat for Bangladesh.
These groups are: Al Haramain (Bangladesh Branch), Global Relief Foundation (GRF), Jama'atul Mujahideen Bangladesh (JMB) and Harakatul-Jihad al-Islami (Huji). The report says JMB members have publicly claimed to receive funding from Saudi Arabia.
Corruption is endemic in Bangladesh and is recognised by the government as one of the biggest problems of the country. It has been noted as a source and transit country for trafficking men, women and children for the purpose of forced labour and commercial sexual exploitation, the report says.
Bangladesh has a cash-based economy and bank transactions and bulk cash smuggling are most common methods of laundering. It is a common phenomenon in Bangladesh for sending illegal money abroad. The vulnerability to terror finance stem from foreign remittances sent in the name of charities and the use of cash couriers, it says.
Bangladesh's non-profit organisation (NPO) sector includes 60,000 registered societies, associations, clubs, companies limited by guarantee and foundation.
There is no overall strategy to identify and address money laundering and the risk of terror finance in these NPOs. The supervision of NPO is inadequate and compliance with registration and the obligation to financial reporting is very low, it observes.
The authorities in Bangladesh lack the capacity to investigate and prosecute money laundering offences, and effectively freeze, seize or confiscate proceeds of crime.
The report points out that the ACC has the sole authority to investigate such offences but has little capacity to undertake the role.
Bangladesh government has already informed the FATF about the measures it would take to overcome the deficiencies, said a high official of finance ministry.
The report was handed over to the government on September 15 after a meeting between RRG representatives and a Bangladesh delegation in Sydney, Australia.