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The Financial Express

Clipping trade-based money laundering

| Updated: November 19, 2022 22:07:34


- Representational image - Representational image

Finally, the central bank has reportedly detected some cases of trade-based money laundering. For a long time the media and a section of economists have been pointing accusing fingers at this crooked practice as a key mechanism of transferring money to overseas destinations and insisting on taking measures to detect and punish the criminals. Unfortunately, to no avail. Reports have it that a special audit of the Bangladesh Bank has unearthed cases of glaring under- and- over-invoicing in trade transactions. Some operators, as reports say, have overstated their export prices as high as 200 per cent by way of over-invoicing. On the other hand, under-invoicing while importing has also been spotted, to avoid higher duties and taxes.

While the BB's detection and mechanism employed are appreciable, it is sad to see that despite repeated alarm bells rung from various quarters, it is only lately that some cases of trade-based money laundering got caught under the BB scanner. The plummeting foreign currency reserves due mainly to the escalated import payments causing instability in the foreign exchange regime as well as shooting up of inflation is believed to have prompted the BB's late action. The country's forex reserve dipped 23 per cent in the past one year, and the central bank is learnt to be monitoring every letter of credit (LC) beyond $3.0 million. Conscious citizens, including economists, would agree that the work should have started long ago. A report quoting the Washington-based Global Financial Integrity (GFI) said Bangladesh lost $8.27 billion every year on an average between 2009 and 2018 resulting from mis-invoicing of imported and exported goods by traders to evade taxes and illegally move money out of the country. How much money got laundered in the process is not known to the central bank. All that has been gathered are from published reports of several international agencies, but the fact that money in huge quantity is laundered from the country is well established.

For sometime now, there were reports that the government was going for a mechanism to bring back huge amount of money siphoned off the country through various conduits. An inter-agency taskforce was formed for gearing up effort to chalk out effective deterrent measures in this regard. The issue, because of its enormity and scale, has been receiving media focus for quite a while-- set off by rough estimates made by international bodies about the money flown out of the country to so called tax heavens and overseas financial institutions.

There were moves, reportedly within the country, to combat the situation through collaboration of key state agencies such as the central bank, national board of revenue (NBR) and the law enforcement agencies, but unfortunately nothing in terms of hitting the target has so far been noticed. In fact, there were no targeted shots at all. Now that the central bank has sat up, apparently in a determined way to clip money flight, one can only hope that the work continues and efforts are also taken to get back the siphoned off money.

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