Illicit financial flows from various countries to tax havens are now a reality. Over the decades, these flows have increased, and their diversification has troubled developing nations. Bangladesh is no exception. After the fall of Sheikh Hasina's authoritarian regime two years ago, the large-scale illegal transfer of assets by oligarchs also surfaced.
Illicit financial flows are illegal movements of money or capital from one country to another. Global Financial Integrity (GFI), a Washington-based think-tank, classifies the movement as 'an illicit flow when funds are illegally earned, transferred, and/or utilised across an international border.' Over the decades, several international organisations have estimated illicit financial flows, or capital flight, from Bangladesh, as well as from other countries around the world. Tax Justice Network (TJN), a Bristol-based global network that works on tax abuse and capital flight, and GFI are leading the exercise.
Though it is difficult to identify and quantify the illegal transfer of financial assets, several tools have been developed to trace them. A White Paper on the State of the Bangladesh Economy, prepared by the Yunus-led interim government in 2024, estimated illicit financial outflows from Bangladesh between 2009 and 2023 at around US$ 234.0 billion. The average annual outflow was US$ 16.0 billion, or Tk 18000 billion, equivalent to 3.40 per cent of Bangladesh's gross domestic product (GDP). This amount was about one-fifth of foreign exchange earnings from exports and remittance inflows in FY24, and about 11.20 per cent of national savings, according to the white paper. It also outlined the channels and processes of these outflows.
Despite some limitations, the estimate is generally accepted. The government has made progress in tracing illicit assets transferred abroad. Joint Investigation Teams (JITs), guided by the Stolen Asset Recovery Task Force, are investigating to repatriate stolen assets and prevent future cases. Though recovery is tough and complex, continuing the effort is necessary. The latest annual report of the Bangladesh Financial Intelligence Unit (BFIU), unveiled last month, presented the status of collaboration with domestic and international agencies to strengthen asset recovery mechanisms.
BFIU is the national agency responsible for leading Bangladesh's efforts to combat money laundering, terrorist financing and other illicit financial activities. A unique feature of the latest annual report is the incorporation of several case studies on major financial irregularities and illicit financial flows from Bangladesh. Without naming the offenders, due to legal complications, the case studies illustrate how a significant amount of financial assets has been plundered and illegally transferred.
A case study titled 'Takeover of Banks and Embezzlement' showed how the "S" Group strategically took control of multiple banks and financial institutions during the ousted autocratic regime. It also revealed that shell companies were formed to illegally transfer assets abroad, mainly to Singapore, Malaysia, Cyprus, and the United Arab Emirates (UAE). The "S" Group refers to a large conglomerate known for its close ties with former prime minister Hasina.
Another case study titled 'Embezzlement of Funds through Bond Issuance' presented the story of an influential businessman, Member of Parliament (MP), and cabinet advisor to the fallen government. Named as "Mr R", founder of the "B" business group, he was the mastermind behind two major bond initiatives supposedly launched to finance development projects in renewable energy and real estate. BFIU report showed that the funds raised through these bonds were diverted 'through complex layering techniques to Mr R's affiliated entities.' A portion of the money was used to pay off his loan instalments, and some was withdrawn in cash. Again, another portion was invested in the capital market. So, only a token amount of interest was returned to bondholders. "Ultimately, the proceeds were never used for the intended development purposes," said the report. Though the actual name of Mr R is not disclosed, people familiar with the event understand that the man was arrested immediately after the fall of the Hasina regime.
Again, the BFIU report illustrated case studies of at least three former ministers of the fallen regime. One is Mr B, who had substantial foreign assets in Malaysia and Singapore, and residential and commercial properties in the United States of America (USA) and the UAE. As he had no legal overseas income sources, these 'assets are presumed to have been acquired through laundered funds.' As he fled the country, INTERPOL issued a Red Notice for his arrest. Another is Mr C, who, along with his close associates, established multiple offshore entities, such as Z Trading and R Raptor, in UAE free zones, according to the BFIU investigation.
The BFIU report observed that over the past decades, and particularly in the last 15 years, 'corruption-induced money laundering in Bangladesh has flourished, driven by weak institutional oversight, entrenched political patronage and systemic exploitation of the financial system.' It also added that high-level involvement by politicians, public servants, and business elites has enabled the siphoning of billions of dollars to foreign jurisdictions, depriving the country of vital development resources.
During one and a half decades of the tyrannical regime, excessive public investment in major infrastructure projects provided ample opportunities for rent seekers. Though many projects were necessary to improve the country's infrastructure, overspending became a long-term financial burden on the nation's exchequer. Cronyism in trade and finance severely undermined the competitive business climate and weakened the financial sector. Banks were seized by cronies to extract financial assets, putting millions of depositors at risk. Moving large amounts of these assets into safe havens abroad by cronies and rent seekers was also backed by the corrupt regime. As the nation observes the second anniversary of 'July 36', the day of emancipation from the tyrant's rule, on Wednesday (August 5), it reminds all that the country will not allow such corruption and illicit financial flows of resources again. At least 1,400 people were killed, and 20,000 were injured by the fallen tyrant's orders during the mass uprising. These sacrifices must not be undermined, and any attempt to revive plundering of the country's assets will likely face stiff resistance from the people.