Bangladesh still potential to money laundering

Jasim Khan/ Financial Express

Bangladesh has remained on the same grey list of international money laundering and financing of terrorism (ML/FT) risks in 2012, though the government undertook many initiatives suggested by the international agency.

The Financial Action Task Force (FATF) prepares the list annually. It publishes the latest list in February this year. The previous list was published in February 2011 when the country was in the same risk category.

Bangladesh formulated a national anti-money laundering strategy, prepared a vulnerability assessment report and amended the money laundering prevention and anti-terrorism laws by upgrading those to international standards.

The FATF is the global standard setting body for anti-money laundering and combating the financing of terrorism (AML/CFT) which places countries in three categories.

The FATF categorises the countries in three lists namely the ‘grey list’ for those with a high-level political commitment to address the AML/CFT deficiencies, the ‘dark grey list’ for those with high risk and non-cooperative to which counter-measures apply and the ‘black list’ for those which are non-cooperative and have not committed to an action plan.

Indonesia, Myanmar, Pakistan, Sri Lanka and Thailand were positioned in the black list although these countries were in the grey list in 2011.

The position was unveiled by Md Shafiqur Rahman Patwari, Secretary, Bank and Financial Institutions Division at the second working committee meeting on anti-money laundering and terror financing task force.

The meeting was held on April 19 last at the Finance Ministry conference room where Bangladesh set eight new targets to enter into ‘safe’ list.

Shafiqur Rahman Patwari said although the country remained in the grey list, it made significant progress in taking action on anti-money laundering and terror finance activities.

The meeting decided to make a proposal for amending the laws concerned so that no criminal can be a regulator of a bank or a financial institution.

A decision has been taken to prepare regulations by October 2012 on Anti-money Laundering Act 2012, Anti-terrorism (amendment) Act 2012 and Mutual Cooperation Act on Criminal Activities 2012.

It also decided to immediately strengthen capacity of the Registrar of Joint Stock Companies and Firms.

In order to protect the international financial system from ML/FT risks and to encourage greater compliance with the AML/CFT standards, the FATF has identified jurisdictions that have strategic deficiencies and wants to work with them to address those deficiencies that pose a risk to the system.

Earlier, Bangladesh prepared a 20-point action plan to curb money laundering and terror financing. It has set a specific timeline to upgrade some measures, including amendments to laws in line with international standards.

The amendments to the money laundering act include extending the scope of offences, criminalising the acquisition, possession or use of property, and the concealment or disguise with respect to ownership of property.

The government also prepared a vulnerability assessment on the non-profit organisations (NPOs) and identified six sectors, including the stock market and non-government organisations (NGOs), which were asked to inform the Bangladesh Bank about their respective suspicious transactions.

Earlier, the FATF in a draft report to the government, observed that Bangladesh was at a transshipment point for illegal drugs bound for markets in Europe, the USA and Canada.

The report lauded the government’s recent steps against money laundering and terrorism but observed 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 to the country.

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.

Bangladesh’s 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 NPOs is inadequate and compliance with registration and the obligation to financial reporting is very low, it observes.