Bankers to face stern action for connivance: BB

Investigations have revealed connivance of certain commercial bank branches in hundi transactions, a Bangladesh Bank executive disclosed and warned of stern action against those having links with such illegal operations.

In a forewarning, the central bank strongly advised commercial banks to exercise caution in handling fictitious accounts used in money laundering.

"Many investigations have proved that the bank branches concerned have extended covert support in hundi transaction...In such cases bankers won't be spared," general manager of Bangladesh Bank's Anti-Money Laundering Department Harunur Rashid Chowdhury told a function here yesterday.

Bangladesh Shilpa Bank organised the daylong workshop on "Money Laundering and Prevention" in association with American Express Bank. BSB Chairman Prof Abu Ahmed chaired the inaugural session.

The GM reminded all concerned of tough punitive actions as per an anti-money laundering law enacted last year.

The Money Laundering and Prevention Act passed in parliament in April 2002 made hundi and other modes of money laundering to be serious offences in Bangladesh like in many other countries of the world. In line with the act, the central bank last year issued a number of circulars asking commercial banks to maintain five-year records of all fictitious accounts.

Opening unnamed account as well as maintaining accounts by one individual with several banks have been restricted, general manager of the central bank's Anti-Money Laundering Department Harunur Rashid Chowdhury told the function.

He urged the bankers of different commercial banks in a district town to coordinate among themselves to detect people whose incomes from known sources do not match with volumes of transactions they make with different banks.

Every six months, banks are obliged to furnish reports to the central bank with specific explanations of accounts holding over one crore taka. But in some cases, cunning hundi traders are found maintaining accounts with several banks, keeping each account much below the ceiling, the central bank executive pointed out, urging the bankers to cooperate with Bangladesh Bank in its hectic drive against hundi.

He felt that commercial banks, if they wish, can also help check foreign currency flight in external trade through over-and under-invoicing.

"You (bankers) can check currency flight through LCs...You won't be spared if found helping the offence in any way," the central bank executive said, citing the boon of strict measures against hundi. He informed the function that foreign remittances grew by 40 per cent last year as a result of curbing such illegal money transactions to some extent.

Since the money laundering issues are relatively new here, he said, the central bank is ready to extend training services to the relevant officials of commercial banks.

BSB managing director Abdul Hamid Miah, however, recorded his reservations about calling remittance through hundi an offence as money laundering. He said money laundering stands for transmitting the incomes from hidden sources through a complex network. "I am still not clear whether or not the legally earned money remitted through illegal channels like hundi would at all come within the purview of money laundering," he said.

As a signatory to the 1988 Vienna Convention, Bangladesh shares the global concern on money laundering that steers drug trafficking, gambling, smuggling and other criminal activities through cross-country networks. The criminal gangsters cleverly put the illegal money in sponsoring global terrorism intensifying the usage of high-tech weaponry and threatening global peace.

International Monetary Fund (IMF) estimates suggest that money laundering deals constitute about 2-5 per cent of world's total GDP amounting to US$ 590 billion, the workshop was told.

Keynote speaker and senior country executive of American Express Bank Dr John A Smetanka said money laundering has linkages to drug smuggling, terrorism, tax evasion, political corruption and other criminal activities.

"The actual volume of money laundered each year is unknown -- for obvious reasons! However the figure worldwide has been estimated at between US$ 500 billion and US$ 1 trillion," he informed the meet that delved deep into the nexus between economic underworld and criminal gangland.

He suggested a combined effort of the government and financial institutions for controlling money laundering. "The point is that laws are not enough. Effective enforcement is required as well," said the American banker.

The collaborative efforts include transparency in identity and income sources of bank clients, enacting laws declaring money laundering a criminal offence, compliance of financial institutions with the laws and enforcing the laws together, he said.