15 days ago

Plugging conduits of money laundering

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Finally, the customs intelligence has cracked the nut. Reports have it that the intelligence unit of the National Board of Revenue (NBR) has detected siphoning of Tk 3.82 billion by four export-oriented companies through trade-based money laundering. There were few reported moves taken earlier by the central bank including detection of trade-based money flight, details of which were, however, not released. This time the important thing that the customs intelligence has done is naming the companies involved in the misdeed, the amount of money transferred through fake and manipulated documents, and the modus operandi applied.

While vigilance of the Customs intelligence is appreciable, it is sad to see that despite repeated alarm bells sounded from various quarters, it is only lately that these cases of trade-based money laundering got caught under the scanner. The plummeting foreign currency reserve 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 action -- though belatedly. The country's forex reserve dipped 23 per cent in the past one year and the central bank is learnt to monitor every letter of credit (LC) beyond $3 million. Conscious citizens, including economists, would agree that the work should have started long back. A report quoting the Washington-based Global Financial Integrity (GFI) said in 2021 that Bangladesh lost $8.27 billion every year on an average between 2009 and 2018 from mis-invoicing of imported and exported goods by traders to evade taxes and illegally moved 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 huge quantity of money 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 efforts to set out deterrent measures in this regard. The issue, because of its magnitude and scale, has been receiving media focus for quite a while--- set off by rough estimates made by international bodies about the money flown off 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 law enforcement agencies, but unfortunately nothing noticeable has been done as of now. The latest incident is, no doubt, a well targeted and commendable move.

Observers are of the opinion that there has to be a customised mechanism -- automation to be precise -- that can ensure the fraudulent practice will not happen anymore. Automation has been on the NBR's agenda for long, believed to be potentially capable of addressing a host of malpractices including, among others, misuse of bonded warehousing and mis-invoicing. It is high time work for NBR automation got completed as a priority job to discipline the trading regime once and for all.

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