Bangladeshi expatriates held a protest rally in Canada's Toronto city recently for building social awareness and demanding punishment of those involved in laundering money from Bangladesh to the North American country.
Over 200 Bangladeshi expatriates present there pledged that money launders would not be allowed in Canada. Such messages are being given by many circles around the world to stop such activities.
There is no denying that money laundering results in flight of funds from the country which could have otherwise become part of the much-needed capital driving the economy. It's very much rampant here as revealed by leaked financial documents like the Panama Papers.
Being a progressive economy, it's really hard to believe how a huge amount of money is being driven out of Bangladesh in the process of laundering. It is true many people seek to keep the money they earn in a secure environment. Since stability persists here now, why should they send money abroad?
A report prepared by the Global Financial Integrity (GFI) ranked Bangladesh second in South Asia in terms of illicit outflows of money. It said a staggering amount of $5.9 billion was siphoned out of Bangladesh in a just a single year through trade mis-invoicing.
The new GFT study estimated that Bangladesh is losing between $6.0 billion and $9.0 billion to illicit money outflow on an average every year. The country lost, according to the latest report, the second highest amount of illicit fund flows (IFFs) after India among the South Asian nations.
High level of mis-invoicing, as a percentage of total trade, indicates that most governments in the developing countries do not benefit from a significant portion of their international trade transactions with advanced economies. Bangladesh tops the list of lesser developed countries for illicit financial outflow and ranks at 40 among the top 100 countries in this regard. This is enough to understand the gravity of capital flight from the country.
The amount of finance transferred unlawfully from the country over the past 10 years, exceeds the current fiscal year's budget by over a trillion taka. Capital flight is a global problem but the situation in Bangladesh is something alarming. It has been observed that lack of an investment environment promotes the illegal outflow of finance.
The deposits of Bangladeshis in various Swiss banks dropped recently as the central bank is reportedly keeping a close watch on money laundering. The central bank has taken cautious measures in the new monetary policy, keeping in mind the issue of money laundering.
Bangladesh's per capita debt is $378 and the debt burden would have been less if it could curb illegal capital flight. Many Bangladeshis have accounts in Swiss banks; names of some of some of them were mentioned in the leaked Panama papers. It is unacceptable that the country is unable to prevent illicit capital outflow.
Cooperation with the relevant countries should be stepped up to prevent such transfer of money. According to GFI, 85 of 90 per cent of this illegal wealth transfer is done in the guise of international trade. This sector needs to be closely monitored. However, political will appears to be the most important tool to prevent such illegal capital flight.
A healthy business environment can attract more foreign direct investment (FDI), encourage more entrepreneurs to invest in the country, decrease flight of capital by local and multinational enterprises and help sustain a sound economic environment.
It is shocking that such a huge illegal outflow of capital is happening at a time when the country is suffering from a lack of adequate investment. It also shows the businesses' lack of confidence in investing in the country. This has to be reversed at any cost.