The concept of money laundering

There is no denying the fact that money laundering means unlawful transfer of money indicating unauthorized transfer of money relating to illegal source like terrorism and malpractice of properties or assets. Besides, it may happen when money is sent abroad without legal permission of the Central Bank. On the other hand, transmission of foreign funds if occurs without any legal source then money laundering takes place. It is the course of action of transforming the proceeds of transgression and sleaze into allegedly lawful assets. Some countries define money laundering as obfuscating sources of money, either intentionally or by merely using financial systems or services that do not recognize or pathway sources or destinations. Other countries define money laundering to include money from bustle that would have been a misdemeanor in that country, even if it was legal where the actual ways occurred. Sometimes breech of law may be involved to transfer fund where cash delivery in the form of consignment is made without any legal source in the form of Hundi.

 Recently, a television discussion has been held in the BTV where the speakers have nicely represented the case of money laundering where many different sides of transfers have been highlighted.  According to them, in a number of authorized and dogmatic systems, however, the term money laundering has been interpreted  with other forms of financial and business felony, and is sometimes used more generally to include maltreatment of the financial system (involving things such as securities, digital currencies, credit cards, and customary currency), including terrorism financing and elision of international sanctions. Most anti-money laundering laws openly conflate money laundering (which is concerned with source of funds) with terrorism financing (which is concerned with destination of funds) when regulating the financial system.  The following are the key definitions of money laundering:

Money laundering is defined at section 2 (k) of the MLPO as follows:-

(i)         Transfer, conversion, remitting abroad or remit or bring from abroad to Bangladesh the proceeds or properties acquired through commission of a predicate offence for the purpose of  concealing or disguising the illicit origin of the property or illegal transfer of properties acquired or earned through legal or illegal means.

(ii)       To conduct, or attempt to conduct a financial transaction with an intent to avoid a reporting  requirement under this ordinances

(iii)       To do or attempt to do such activities so that the illegitimate source of the fund or property can be concealed or disguised or knowingly assist to perform conspire to perform such activities.

Suffice it to say that Money laundering is the process of transforming the proceeds of crime and corruption into ostensibly legitimate assets. In a number of legal and regulatory systems, however, the term money laundering has become conflated with other forms of financial and business crime, and is sometimes used more generally to include misuse of the financial system (involving things such as securities, digital currencies, credit cards, and traditional currency), including terrorism financing and evasion of international sanctions. Most anti-money laundering laws openly conflate money laundering (which is concerned with source of funds) with terrorism financing (which is concerned with destination of funds) when regulating the financial system. Some countries define money laundering as obfuscating sources of money, either intentionally or by merely using financial systems or services that do not identify or track sources or destinations other countries define money laundering to include money from activity that would have been a crime in that country, even if it was legal where the actual conduct occurred. Bangladesh is a developing country located in South Asia having boarders with India on the west, north and north east, Myanmar on the east and Bay of Bengal on the south. Estimated population is around 150 million living in an area of about 150,000 square kilometers.  Current GDP is over US$280 billion and GDP per capita is about US$ 885. The country has significant earnings from expatriate Bangladeshis and from export of garments products. It is a democratic, constitution based republic. The government is divided into executive, legislative and judicial branches. The executive branch is led by President, elected by the parliament members, an elected Prime Minister and the appointed cabinet chosen by the Prime Minister mostly from the parliament members. The legislative branch, known as Jatiya Sangsad (National Parliament) consists of 300 directly elected parliamentarians and an additional 45 women members selected by the parliamentarians from the reserved quota. Three tiers court system in Bangladesh is comprised of 64 District Courts, one High Court and the Supreme Court, which is the country’s highest court. The legal system combines  civil and common law principles. Both accused and the prosecution can go for appeal from the District Court to the High Court Division of the Supreme Court and from the High Court Division to the Supreme Court. Special Courts are often constituted under some Acts by the Government to serve essentially as fast-track courts. Money Laundering cases are mostly prosecuted in Special Courts established for the purpose. In Bangladesh illegal asset transfer is understood and mainly as Money Laundering. Meaning of Money Laundering as per Money Laundering Prevention Act MLPA 2012, whosoever commits following offenses;

1) Transfers money or property earned through legal or illegal means concealing or disguising the sources by way of sending abroad or bringing within the territory

2) Conduct or try to conduct any financial transaction in such a way so that it does not require any exposure under this Act.

The issue of money laundering and recovery of assets, although a late initiative in Bangladesh is gaining increasing importance and attention. The socio- eco political situation in Bangladesh and existence of large scale corruption at all level gave sufficient signals to the relevant authorities regarding the high susceptibility of illegal money transfer to unknown destinations abroad. During a special kind of two year long Care Taker Government (2007-2008) in Bangladesh the issue of corruption and money laundering was a very high agenda. Almost all the top leaders of the main political parties and the leading business personalities were arrested and cases were initiated against them for corruption and transfer of money abroad. People also generally supported the actions since they had been victims of corruption for quite a long period. Even if the allegations raised against political leadership, government functionaries (bureaucrats) and business community are partially true that is sufficient to conclude that huge amount of national assets have been laundered abroad. Revealing and tracing of some money laundering offenses committed by high profile persons created matter of high concern to all of us. Therefore, the necessity for recovery of the illegitimately transferred assets of a low income country like us is a high national agenda.

 The sociology-eco-political context of Bangladesh is such that it makes the country vulnerable to illegal transfer of assets outside the country as a result of which Bangladesh faces a range of money laundering threats. Following are the most common offences generating substantial criminal proceeds which are the main sources of money laundering:

-          inducement

-          mistreatment of public office

-          securities fraud

-          misappropriation

-          human trafficking

-          extortion, and

-          drug trafficking, etc

It is obvious that Bangladesh authorities highlights corruption, drug trafficking and human trafficking as the most serious sources of illegal transfer of money. According to the estimate of World Bank, national proceeds of corruption are worth more than 3% of GDP. Moreover, the location of Bangladesh in between the golden triangle and golden crescent makes it further vulnerable to illegal inflow and out flow of assets. The prevalent insurgencies and activist and terrorist activities in countries around Bangladesh also cause trafficking of arms through Bangladesh, which in turn increases the chance of money laundering from Bangladesh.

 Bangladesh has a cash based economy rather than accrual basis. The common methods of laundering proceeds are structuring transactions through the banking sector and bulk cash smuggling. Alternative remittance system (HUNDI) is a common phenomenon in Bangladesh for sending illegal money abroad. Hundi transition does not leave any record and therefore is no chance of auditing. Therefore, the enforcing agencies can’t detect any information for taking actions against these illegal transactions.

Hundi system out of many transfers is preferred for a number of reasons i.e.

1.       Money can be transited easily and quickly

2.       Transaction can cover remote areas  and it  can be transferred hand to hand where less transaction cost involved exchange rate is attractive where no down payment  is required and where no evidence is left and anybody for any can be involved

 Bangladesh has been actively pursuing anti money laundering steps since 2000. Bangladesh joined Asia Pacific Group (APG) since its inception in the year 1997 and commenced to prepare and pass an AML statute. It was the first jurisdiction in the SAARC region to pass stand-alone AML legislation with passage of the Money Laundering prevention Act (MLPA) in 2002. Focusing on implementing effective AML measures is a priority of the Government of Bangladesh, particularly in the banking, non-bank financial institutions, money exchange house and insurance sectors. Recently the securities market has also been included under the umbrella.

 The finance Division coordinates with the ministry of Law, Justice and Parliamentary Affairs concerning AML/CFT laws including drafting regulations to the MLPO and Money Laundering Prevention Act (MLPA). Bangladesh Bank is the government entity that is responsible for administering the MLPA 2012 and is responsible for implementing a number of TF provisions contained in the ATO 2008. FIU undertakes the role in supervising AML/CFT preventative measures.

It is administrated by Home Ministry. Major units within the police include the Criminal Investigation Department (CID) consisting of approximately over 1500 staff, Special Branch (Intelligence), training institutes and a number of metropolitan and regional police forces. The Bangladesh Police does not have role to investigate ML offences.

The NBR is the taxation and customs authority of Bangladesh formed under The National Board of Revenue Order, 1972-President’s Order No.76 of 1972, NBR is under the Internal Resources Division (IRD) of the Ministry of Finance (MoF) who also try to track black money and illegal transaction through taxation and custom intelligence unit.

 BGB is a paramilitary force whose principle role is boarder security, and includes investigating smuggling across Bangladesh’s borders.

 ■ Bangladesh largely comply with the terms of Articles 6 of the Palermo Convention,

    although there are gaps in its coverage of predicate offences and property.

■ The MLPA and ATO 2008 contains forfeiture and freezing provisions which specified

    as money laundering and terrorist financing. Analysis of provisional measures and

    confiscation for TF. In relation to money laundering, the ACC Act is also important to

    an assessment of Bangladesh’s forfeiture and freezing regime.

■ The ACC is now the investigating organization for ML offences. In cases where the

    ACC obtains money laundering conviction, it is possible that the ACC will use the

    Forfeiture powers available under the MLPO. However this is one of many areas about

    which there is uncertainty? It may be mentioned that the ACC instead seeks to use its

    Forfeiture Powers under ACC Act, particularly where the predicate offences is

    Corruption-related and the ACC Act provides for forfeiture and freezing of proceeds

    of corruption offenses

 

The MLPO confers the following investigative powers: Bangladesh Bank is able to order banks and financial institutions to freeze accounts to allow a period for investigation where it is suspected that a transaction involves proceeds of crime. The FIU is able to seek information regarding suspected money laundering from another country on the basis of ‘any contract signed or arrangements ‘section 24(2); on demand from Bangladesh Bank, reporting institutions must provide (in the case of open accounts) identification information and (in the case of closed accounts) previous transaction records.  The ACC Act confers strong powers upon the ACC for the identification and tracking of property in corruption investigations. These include powers under  a compel a suspect or any other person who may be holding property in his or her behalf to submit a statement of assets and liabilities and to furnish any other information: summon witnesses, interrogate them under oath and take evidence under oath: request discovery of any document: call for public records: issue warrants for examination of documents; require any person to furnish information in matters relating to any inquiry or investigation; call for any information from the government or any other authority or organization under the government in the manner determined by the ACC. In Article 51: General provision states that: The return of assets pursuant to this chapter is a fundamental principle of this Convention, and States Parties shall afford one another the widest measure of cooperation and assistance in this regard. It is obvious that Bangladesh is considerably newly active nation in the National and International arena in this aspect of combating illegal transfer of assets abroad and recovery of the same. The asset recovery provision of UNCAC action such as prevention and detection of transfer of proceeds of crime, measures for direct recovery of property, mechanisms for recovery of property through international cooperation in confiscation, return and disposal of asset etc. are very helpful for perusing the recovery of asset for less advanced countries like Bangladesh. However in order to reap benefit out of these provisions  respective  parties must have enabling infrastructure, minimum expertise and institutional strengths. Bangladesh lacks ability to derive full support from the international bodies at the present state of preparation.. The proceedings of money laundering related cases inside Bangladesh takes much longer time in obtaining court verdict required for recovery of assets from outside the country. The influence of political and business forces are so strong in the country  that if they can manage to delay  the matter and get a bit longer time, in most cases they can manage the events to their favour with the change of government in power. It is learnt from the Bangladesh Bank that so far it was possible to conclude agreements for mutual legal assistance with nine countries only. We have to go a long way ahead in this regard. Bangladesh also has to finds its way for tapping benefit from all international agencies which are helpful for recovery of assets. It requires competent expertise and resources. International cooperation in line with the spirit of UNCAC is very much required for the purpose. 

 In view of the above, it is evident that the people of Bangladesh must take permission from the Central Bank at the time of sending money abroad and without obtaining permission,  no money can be transferred. The law is a binding phenomena, no one should ignore it. The foreign exchange department examines the causes of transfer in due course and takes action accordingly. Besides, many children of Bangladesh remain busy with studies abroad and as such their parents send money by any means ignoring the rules existing in the country. In that particulars case, the people face difficulties and despite time constraint they do this frequently. These unusual practice ignoring the law of the country as promulgated by the Central Bank needs to be stopped immediately so that the actual foreign exchange is computed correctly for the sake of economic as well as financial adequacy systematically as a tentative flow.