Banks, NBFIs asked to provide data of entities over financial frauds

Banks and non-bank financial institutions (NBFIs) have received letters from the revenue authority asking them to provide information about fixed assets of and transactions conducted by business groups infamous for financial scams committed during the ousted regime.

As many as 90 financial institutions received the letter for the second time on March 23. A majority of them are listed on the stock exchanges.

The directive has been issued again as, according to the letter, many banks and financial institutions were yet to comply with it upon receiving the first letter in January this year. The FE reporter has seen a copy of the letter.

The National Board of Revenue (NBR) sought details of term deposits, savings instruments, current and debt accounts, foreign currency accounts, credit cards, locker or volt, or any other savings instruments tied to the business entities being investigated.

The Department of National Savings and the Bangladesh Postal Department also received the order.

One of the organisations under the scrutiny of the NBR over suspected tax evasion is S. Alam Group.

The conglomerate itself has ownership in eight banks and one NBFI.

"So, it's difficult to get information from those financial institutions," said an official of the Central Intelligence Cell of the NBR, wishing not to be named.

"Many of those organisations delayed giving information or gave misleading information," he added.

"In some cases, they [financial institutions] are not providing information. As a result, the investigations related to tax [evasion] are being hampered and delayed," reads the letter.

The letter recipients were given 15 working days to provide the NBR with the data in the first letter. The second letter was issued since the order was disobeyed.

The revenue board warned the banks and other financial institutions that there will be regulatory actions for failure to do as required by the letter.

As per the income tax act 2023, the revenue board can impose a one-time fine of Tk 50,000 for non-compliance. Then a daily fine of Tk 500 will be slammed on them. The act also provides for filing of criminal cases against organisations that will not follow the order.

An official of Prime Bank confirmed that the lender received the letter.

A senior official of Social Islami Bank said there had been an increasing pressure on the bank to provide client information after the change of the political landscape on August 5 last year.

Several agencies sought information from banks as part of their probes into scam-hit business entities and corrupt individuals, he said, requesting anonymity. "So, the banks are struggling to provide information alongside daily operations."

Social Islami Bank is one of the banks in which S. Alam Group has ownership stakes.

According to an audit conducted last year by the field office of Customs, Excise & VAT Commissionerate, Chattogram, two firms of S. Alam Group had evaded a substantial amount of VAT (value added tax).

For not paying tax worth Tk 35.38 billion, the firms were fined Tk 35.31 billion.

NBR officials in February said the revenue board had uncovered financial transactions worth Tk 2.42 trillion in the accounts of businessman Md Saiful Alam, alias S Alam, and his family.

About Tk 360 billion remained in bank accounts as balances over the five years through Jun 30, generating Tk 67.81 billion in interest, but most of the money was not declared in tax documents.

Bank officials had manipulated records; they backdated transactions, according to the NBR.

mufazzal.fe@gmail.com