Trade-based money laundering

It is hardly surprising that the issue of money laundering continues to resurface, as it remains a stark and persistent reality the country is forced to confront without any foreseeable remedy. For long, there have been concerns raised from various quarters, and over time it seems as though this 'concern' is a cyclic expression of frustration and anger. The issue, because of its enormity and scale, has been receiving media focus for quite a while -- set off by rough estimates about the money flown off the country to so called tax heavens and overseas financial institutions. Lately, a government estimate has revealed that the country loses US$16 billion annually through trade-based money laundering alone primarily due to lax oversight of trading operations. The scale of this outflow is staggering. It accounts for around 3.4 per cent of the country's GDP, surpassing even the national budget for public health. The Bangladesh Institute of Bank Management (BIBM), in a study based on surveys across 37 commercial banks, reports that about 75 per cent of all domestic money laundering cases are linked to trade channels. The sectors most affected include textiles, consumer goods, and petroleum imports. 

Despite policy alignment with global anti-money laundering (AML) standards --such as risk-based customer due diligence, price verification protocols, and real-time monitoring -- the actual implementation remains inconsistent. Although the banks surveyed claim to have sanctions-screening and trade-monitoring systems, only 50 per cent use global price verification tools like Bloomberg or Global Trade Tracker, often citing cost as a barrier. Similarly, 90 per cent of banks have vessel-tracking systems, but few rely on established platforms such as Lloyd's or the International Maritime Bureau. While most institutions apply customer risk scoring, only 45 per cent have enhanced due diligence frameworks tailored to trade-specific risks. Moreover, many public banks lack dedicated price verification units, leaving trade officers to rely on subjective judgment -- an approach that severely undermines oversight. The legal framework also poses challenges. Notably, the Money Laundering Prevention Act 2012 does not explicitly list TBML as a predicate offence, although it provides for prosecution and asset seizure linked to illicit trade-related flows. A critical gap lies in the lack of coordination between key regulatory bodies such as the Bangladesh Financial Intelligence Unit (BFIU), National Board of Revenue (NBR), customs authorities, and commercial banks. The absence of real-time data sharing on trade, shipments, and payments creates loopholes that are exploited through phantom shipments, circular trading, and invoice manipulation.

Global best practices provide a way forward. Countries like Singapore, Finland, and Sri Lanka have successfully implemented integrated trade and payment data systems, strengthened beneficial ownership transparency, and structured public-private collaboration. These measures, coupled with proportionate penalties and incentives for clean trade, have significantly improved compliance.

Addressing TBML is not merely a regulatory obligation but a development imperative. Without urgent action, Bangladesh risks continued revenue losses, distorted trade statistics, and damaging consequences such as Financial Action Task Force (FATF) grey-listing, higher correspondent banking costs, and reputational harm in global markets.