Bangladesh finalises roadmap to stop money laundering

Rejaul Karim Byron The Daily Star June 26, 2012

The government has prepared a roadmap to prevent money laundering and terrorism financing for a period up to 2013 with a provision of imposing restriction on cash transactions for some selected sectors.

The finance ministry has already prepared a strategy paper — National Strategy for Preventing Money Laundering and Combating Financing of Terrorism 2011-2013.

Finance ministry officials said the paper was supposed to be placed in parliament during the budget session but finally it did not happen.

Finance Minister AMA Muhith in the strategy paper said the strategic planning initiative has used APG (Asia Pacific Group on Money Laundering) Mutual Evaluation Report and Bangladesh’s self-assessment exercises in identifying the threats to anti-money laundering and combating financing terrorism efforts.

The strategy paper also incorporated stakeholders’ recommendations.

Muhith said, after setting the medium term vision for fighting money laundering and terrorism financing, the document identifies 12 strategic objectives to be attained.

The strategy paper said Bangladesh is mainly a cash-based economy and most of the banks are concentrated in large towns, leaving the majority of population in remote areas deprived of banking services.

The paper also said there are limited banking facilities, a small banking network and less trustworthiness upon the formal financial system among the low-income people in Bangladesh.

As a result, most of the business transactions are made in cash instead of paper or electronic media such as cheque or e-money, it said.

The roadmap includes a provision of imposing restriction on cash transactions for selected sectors/ types/purposes/thresholds by December this year.

The finance and home ministries, Bangladesh Bank, Securities and Exchange Commission, Insurance Development & Regulatory Authority Bangladesh, and NGO Affairs Bureau will impose the restrictions.

The strategy paper said if these are done, combating money laundering and terrorism financing activities will be easier.

The government has also set a target to develop an electronic database by December next year for sharing information among law enforcing and regulatory agencies such as Anti-Corruption Commission, Bangladesh Bank, customs authority and police.

Connectivity among the regulatory agencies for sharing the database would be established by June next year.

The strategy paper said strong coordinated efforts are required to analyse and unearth the money laundering cases as criminals use sophisticated methods.

For ensuring transparency in the ownership of legal entities, personal information of the owners or controllers of licensed entities will be reviewed and collected by December next year.

The strategy paper said, in Bangladesh, generally the organisations or registered entities such as corporations, limited companies, partnership firms and trusts are licensed or registered under different authorities under different laws.

These entities often do not have minimum public disclosure of personal information on controlling interest and ownership.

Due to a lack of capacity of the government, the Registrar of Joint Stock Companies and Firms (RJSC&F) is the main authority to register these entities.

Financial institutions cannot properly identify suspicious transactions due to a dearth of transparency and thus hinders law enforcing agencies from investigating and prosecuting money laundering and terror financing cases.

By using these entities, money launderers and terrorism financiers may get access to financial systems.

The government has set a target to make the RJSC&F fully automated by December this year to block this access. At the same time, the government will use national identification number as a unified identity number.

In order to improve transparency in financial reporting on money laundering and terrorism financing issues, the government will issue directives to incorporate a separate chapter dedicated to compliance issues on financial statements of reporting agencies by December this year.

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