The international definition of money laundering
Money laundering is a generic term that is used to
explain the way through which criminals attempt to conceal the ownership and
sources of their criminal works. International Monetary Fund defines money
laundering as a process of wealth created through criminal works to dim the
link between their wealth and origins of fund.[1] According
to the World Bank, money laundering is the method of disguise emanates of crime
by attempting to hide their unlawful origins and legitimize their further use+.
To hide real origin and ownership of the proceeds, criminals maintain a change
and control of the proceeds. FATF defines money laundering as the process of
legitimisation of illicit funds by hiding the real source or nature.[2]
U.S. Customs service defines money laundering as the
method in which proceeds are derived from criminal works, are converted,
transformed, transferred, imported or intermingled with legal wealth for the
intention of disguise or hiding the real form, movement or ownership, source
disposition.[3]
EU states money laundering as the transfer or conversion
of assets, knowing that these assets are generated from crime, for the aim of
incognito or hiding the illegal origin of the assets or helping any individual
who is embroil in carrying such an offence to escape the legitimate outcome of
the activity, hiding real nature of property, rights, movement, disposition,
location, source or ownership of assets.[4]
Moreover, most often money laundering is described
turning black money into white money. It is to be noted that money has no
particular colour in real and there has not universal definition of black
money. The term black money is defined by the government of a country according
to the domestic law.[5]
Hence, there have differences among countries about the sources of black money.
One source may be illegal in one country which is legal to other countries by
law. National Board of Revenue of Bangladesh defines black money as non-taxed
money that is earned illegally or legally which is not proclaimed to the
relevant government agency.[6]
Corruption is the key source of black money and which is an important cause of
money laundering. Money laundering can be happened when international
transaction happens between two countries and create illicit capital flows.
Illicit flows of money to the outside can assist money launderers to incognito
money transactions from the predicate crimes or illegal origin. According to
the report of FATF, money launderers mainly use international trades to conceal
transaction of crime.[7]
This money laundering process can be done through misleading of the quality,
quantity and price of exported and imported items and also involves in
fraudulent transactions.
Money laundering
can happen from any transaction at any time in any form that involves monetary
benefits or property regardless of intangible or tangible assets obtained
through criminal activities.[8] It
is to be noted that in the starting point, money does not dirty or to be
criminal. Tax avoidance is good evidence. An individual can earn money legally
and deposit the amount in another bank of a foreign country.[9]
When the account holder does not declare the income on the tax return of the
parent country, the money considers as laundering and the bank authority may not
be aware of it.
Generally, illicit money is laundered by criminals and
they try to disguise the earned money through which it is generated or earned. Criminals
will try to isolate themselves from the crime by searching safe locations for
their benefits where they can escape seizing wealth and where the wealth can be
considered legal.[10] Money
laundering is performed by the financial system to hide illicit origins and
commit it seems to be legitimated funds.
Money laundering definition by Bangladesh’s law
Money Laundering Prevention Act 2009 of Bangladesh states
money laundering as remitting or bringing, conversion, transfer or remitting
abroad from overseas to Bangladesh property or proceeds obtained by beginning
of a specific offense for the intention of incognito the illegal origin of the
property or transferring or proceed obtained illegally.[11]
The Central Bank of Bangladesh defines money laundering as a financial
transaction which is happened to hide the destination, source, and identity of
illegally earned money or wealth.[12]
If any individual or person do such tasks, as a result, the legal source of
property or proceed can be concealed or endeavors to do similar tasks
purposefully help or plot to conduct such works
Stages of money laundering
Money laundering has no sole way. In every criminal
activity, the primary proceeds generally keep the form of cash. For example,
extortion, bribery, trade of drugs in the streets is made with cash. Criminals
are attempted to push this cash into the financial system in a different
process.[13] As a result, it can be
transformed and can be easily converted, transported, hidden or transformed.
Despite various processes engaged, the laundering is
accomplished in three basic stages such as placement, layering, and
integration.[14]
Figure: Stages of money laundering
Placement
It refers to the movement of cash from its source so that
the origins of cash can be misrepresented or disguise easily.[15] This
cash is placed through financial organisations, shops, casinos both abroad and
local. Placement process can be brought by different processes such as:
·
Bank complicity: It happens when any kind of financial institution e.g.
banks are controlled or owned immodest persons doubtful of ignoring with
different crime groups e.g. drug dealers. It creates the way easier and simple
for launderers. The full liberalisation of the financial system can be
sufficient without checks that give leeway for money laundering.[16]
·
Currency smuggling: It is the process of illegal physical movement of
monetary instrument abroad from the home country. The different ways of
transport do not quite apparent audit trail.
·
Securities brokers: Brokers are helping money launderers by structuring
large cash deposits in a specific process that hide the true source of
deposits.[17]
·
Currency exchanges: Different transactional economies liberalise exchange
markets gives scope movement of foreign currency and this kind of laundering
process can facilitate from different policies.
·
Asset purchase: A classic money laundering technique is buying assets
with cash. The main aim of this is to alternate the formation of the proceeds
from obvious cash to specific similar valuable in a less obvious form of
assets.[18]
·
Blending of funds: The better method to conceal cash is with bulk cash so
that financial organisations can use as vehicles for laundering. The change of
funds is to use the cash from illegal works to establish front firms. This
qualifies the money from illegal works to be dimmed in legal transactions.
Layering
It is the method of isolating illegal proceeds from its
origin by making critical layers of financial transactions which are modeled to
incognito the provide anonymity and audit trail.[19] The aim of this is to create it complex
finding out and discover a money laundering work. Layering can be done in two
methods such as:
·
Cash converted into
monetary instruments: When fund placement
successfully is done within the financial system through different financial
organisations after that criminals convert proceeds into monetary instruments. Money
orders, banker’s draft, etc. are involved in this process.
·
Material assets
purchase through cash and then sale: In
this method, material assets are purchased by persons by their illegal money
and after that resold those assets abroad or locally.[20]
As a result, it is hard to detect the true nature and source of assets.
Integration
It is the method of moving previously laundered funds
into the country’s economy via banking channel so that money considers as
regular business earnings.[21] It
is a different method from layering and integration process identification and
discovers of funds that are laundered is given by informants. The following
methods are generally used:
·
False loans and front
companies: Front companies that are
formed with a country’s secret laws where criminals take a loan from own
laundered proceed so that the lending process looks legitimate transaction.
·
Property dealing: A common practice is selling assets to integrate
laundered funds bring back into the country’s economy.[22]
For example, shell companies are used by criminals to purchase assets so that
proceeds can be regarded as legitimate.
·
Foreign bank
complicity: Money launderers use
familiar foreign banks that protect the interest of account holders and protect
the information as per bank policy that makes it difficult to know the true
source of funds by law enforcement agencies.[23] Foreign
banks do not do it in favour of criminals rather it is applied for all account
holders and money launderers take advantage of these policies.
·
Misleading
export/import invoices: It is a very common
and globally popular method of movement of laundered funds from home country to
abroad.[24] Criminals
generally use false invoices during export and import and effectively
integrating illegal proceeds bring into the economy.
How money is laundered
Criminals use different methods to launder illegal
proceeds so that detecting the true source or origin of funds become hiding or
disguise. The most common methods of money laundering are discussed here:
·
Structuring/smurfing: It is a method of reusing proceeds easily. It is a
technique in which money is divided into little deposits of cash to avoid doubt
of money laundering and maintain a strategic distance from reporting about
laundering.[25] A sub-segment is to
utilise the little amount of money to buy money orders or bearer instruments
and after that deposit the money again in small amounts.
·
Cash smuggling: It is a very old technique which is used for utilising
smuggling money or currency. It involves physically smuggling currency to other
locale and deposit money in monetary organisations like offshore banks that
maintain high-level confidentiality or less through illegal money laundering
agencies.[26] The mass shipments of
money covered up in freight are driven abroad despite it is illicit to export a
mass amount of money. Every country has own policy of carrying the maximum
amount of currencies e.g. the UK allows £7,500 without report
to international transportation of currency.[27]
It is to be noted that criminals know to buy of shipping business to move the
money conceal in the products.
·
Shell banks (offshore
accounts): Offshore accounts are
frequently utilised by culprits to hide the audit trail the same number of
various countries in the world. These banks offer strict law for secrecy to
allure cash in their country. In regard to the law, the related country can
deny helping international money laundering authorities in opening up the data
of the account holders.[28] A
large number of these countries additionally draw in customers by selling Shell
banks that indicates a bank that is incorporated under the jurisdiction that
has not presence physically and is not affiliated with controlled financial
organisations.[29] These types of banks are
established in financial haven nations for giving the opportunity of the legitimacy
of funds. A client just requires a bogus name to open an account so that it is
very difficult to detect the real identity of the account holders. Panama,
Belize, Dominican Republic, Cyprus, Bahamas, etc. are popular to the money
launderer for offshore banks.
·
Underground banking: In some Asian countries like Bangladesh, India. Pakistan
etc. have an entrenched and alternative system of the bank that supports
undocumented deposit, withdraw and transfer of funds.[30]
This system is developed on the basis of trust and does not need a legal paper
trail and is running outside the control of the government. The culprits are
using this system for safe money laundering and general process is used. Hundi
and Chop banking are two popular underground banking.[31]
People who are working abroad use this underground banking to hide their money
from tax.
·
Gambling: It is a very common method of money laundering which is
used globally by the criminals. The culprits white the cash by using casinos,
purchase chips in high amount to play gamble.[32] But
criminals use a small part of that purchased chips or not use them. The aim of
the activities is to transform the chips into cash and at a time be issued by
the gambling house. In addition, a progressively successful technique comprises
in catch by organised control of betting house. In this situation, criminals
just simply require to do is pronounce the black cash as earning from the gaming
action.
·
Shell companies and
trusts: A very common and popular
technique of money laundering to criminals all over the world is forming of
companies for the objective of trading antiques.[33] These
are basically phony trusts and companies that subsist for only to money
laundering. These trusts and companies receive dirty cash as payment for
services and goods but in reality, nothing can be given in terms of services or
goods. These companies and trusts simply make a legitimate ground of
transactions by bogus balance sheets and invoices. Shell companies and trusts
hide or conceal the real owner of cash and they do not require disclosing the owner’s
true identity.
·
Investing in a legitimate
business: Often launderers use dirty
cash in generally genuine businesses to convert dirty money to clean it. Generally,
launderers use big businesses like casinos or brokerage house that arrangement
in a lot of cash that is simple to clean dirty money. In addition, cash-intensive
businesses such as check-cashing stores, strip clubs, car washes or bars, etc.
are also used by launderers to invest their laundered money.[34] These
businesses are legitimate by the countries laws that provide good service but
is basically used to clean money of the launderers. This technique generally
works in two forms such as launderers mixed up dirty money with business’s
clean earnings and launderer’s can conceal the information of the dirty money
to the bank account of the business.
·
Round-tripping: In this technique, cash is deposited to the foreign
offshore companies where the corporate tax is very little or zero and little
financial data is recorded and then back into the country as FDI exempt from
taxation.[35]
The global economy and money laundering
Money laundering is a global issue right now because it
has a direct link to criminal funds that are generated from organised crime. Culprits
attempt to hide their proceeds of crime through money laundering in
international trade, financial systems, and other means. Activities to hide
these funds generated from criminal activities are aimed to hide the source of
assets and to make it legitimate.[36] The
undeniable direct impact of criminalisation of laundering money is that law
agencies utilise more influence and chances to get criminals because they have the
power to arrest criminals and send them to the court for trial. The traditional
prosecution presumes the innocence of the criminals unless law agencies submit
authorise and legal documents against the criminal activities of launders which
is in many cases complex and time-consuming and often it is impossible due to
various techniques of money laundering have been used by criminals. Every year
approximately £570 billion money laundered
worldwide.[37] The impact of this amount
on the global economy is tremendous in security, economy and society. In 2017,
in the world, the aggregate money laundering size was between 3% and 5% of the
world’s GDP.[38]
On the social end, effectively laundering cash implies
that crime really pays off. This achievement urges criminals to maintain their
illegal activities since they get the opportunity to go through the benefit
without any shadow.[39]
This implies more fraud, progressively corporate stealing, more drug-related
offense, and a major loss of moral values. A few issues on an increasingly
nearby scale linked with small business competition and taxation. Likewise,
legit ventures cannot do well in the competition with the money laundering
front companies that can able to sell goods for less expensive in light of the
fact their main role is to clean cash, not generating profit. As a result,
money launderers can sell goods at below cost so that legit small businesses
face loss in business.
Impact of money laundering on the global economy
The impact of money laundering in the global economy is
alarming and the intense of the money laundering is noticeable. Money
laundering is impacted by the external sector, real sector and financial sector
of the world’s economy.
Impacts on financial sectors
·
Increased crime and
corruption: When criminals
successfully laundered money, the ratio of financial crime increases. Thus, a
country is attracted to the criminals for being a safe place for laundering
money so that corruption is increased. Money laundering crime increases when a
country has a weak anti-money laundering act, financial organisations are not
controlled by AML framework, weak enforcement of AML, delay in the court judgment
of money laundering suit.[40]
·
Lack of financial
organisations integrity: The achievement of
money laundering has extensive effect in the overall financial system of a
country. In most of the cases, developing countries are suffering much because
laundered money are transferred abroad and very small amount back into the
economy. Countries that incorporate into the world financial systems are
presented to the wonder of money laundering. The laundered amount engaged with
different types of the financial transaction system and money related crimes
are often intense. As a result, it hampers the integrity of the national
economy and world financial frames. For instance, approximately £100 billion illegal assets were corruptly sent out from
Nigeria to the USA between 2000 and 2010 and these proceeds from drug
trafficking and other financial crimes.[41]
India, Bangladesh, Egypt, and other countries are accused of money laundering
in different domestic and international reports. As a result, the integrity of
financial institutions is questioned that encourages criminals for money
laundering.
·
Loss of control of
the national economic policy: When
money laundering activities spread out in a country, especially developing
countries lose the control over the national economic policies because illegal
cash is incurred from money laundering actions and different financial crimes
deeply rooted in the economy so that launderers can dominate to downsize the
domestic market through illegal activities.[42] Money
launderers in many developing countries manikin government budget, as a result,
government loss some control to impose economic policies. Moreover, the
endeavors of money launderers and cash moving can hurtfully undermine interest
and currency rates. This is unavoidable for a developing country. In this
situation, developing countries are depending on the acquisition of different
currencies to meet the international obligations of the country. Thus, the
practice of money laundering in the country unfavourably encroaches on the monetary
standard from doubt than where the rate of profits is high. So, it is always
benefitted launderers to shift the money elsewhere as the condition may demand.
Therefore, it is difficult for the government of developing countries to
develop and implement effective economic policy.
·
Investment
instability and economic distortion: Money
launderers transfer the proceeds from one economy to another without valid
reasons. In addition, there is no particular intention to make profits and in
most of the cases, they invest illegal cash in the businesses to clean the
dirty money rather than generating profits or serving the economy. In case of
investment decision, launderers generally give high premium so that they can
hide their illegal money from any doubt.[43] Thus,
the circumstances rise in which capital is moved from one country to other
countries that increase high returns to nations with lower financial policies
and poor rates of return. At the national phase, huge capital outflows and
inflows misleadingly completed the laundering process and negatively influence
interest and exchange rates.[44]
Hence, rudimentarily affecting the procedure of specific assets to which the
money is invested. The counterfeit outflows and inflows of funds from one
nation to other nations might have incapable effects on the international
monetary markets in its integrated form. As a result, many financial
organisations in the developing countries undergo eventually heartbreak and in
many cases, complete destruction as deposits of the illegal proceeds of
laundering works in these financial organisations dissolved within a short
time.
·
Weaken the legal
private sector: Money laundering
impact badly in the private sector businesses of a country particularly
developing countries. Money launderers generally utilise front companies to use
their illegal proceeds with legal cash to conceal their illegal money. With the
entrance to generous illegal cash, these front companies can sponsor their
services and goods at a lower level than the market rates.[45]
In some cases, front companies offer below the production cost of legit
manufacturing companies so that the private sector businesses are significantly
faced slowdown of the transaction and incur a huge loss. In consequence, many
small businesses are closed. Apparently, the principles of these criminal firms
are not relevant to the principles of conventional free-market legal businesses
that bring adverse macroeconomic effects.
·
Vulnerable
privatisation efforts of government: To
promote economic growth, many developing countries encourage privatisation that
attracts money launderers. Money launderers take this privatisation opportunity
to clean their dirty money through buying Government Corporation that incurs a loss.[46] As a result, money launderers use government
corporations as an ideal mechanism for their illegal money. Since money
launderers possess huge dirty money so that they can bid a higher rate for these
government corporations that decline the positions of legit competitors. Legitimate
bidders who think that the bidding system has been accommodated are unlikely to
compete in the future. In consequence, money laundering tasks intimidated the
attempts in many developing nations to restructure their economies by privatisations.[47] When
illegal proceeds are put resources into this was, criminals enhance their
talents for conducting more criminal works and corruption to deprive the
country’s legitimate taxpaying businesses. In this manner, many countries
possessed endeavors have been purchased up by the private business undertakings
and people. However, the endeavors of money launderers alongside degenerate
authorities have undermined the viable usage of the policy.[48]
More clearly, privatisation practice of government deposed by corrupt
government officials and criminals with the monetary ability to outbid the authentic
and planned buyer of earlier state-owned corporations. These declines
privatisation efforts of government and real investors are affected negatively.
·
Reputation risk: When the money laundering incidents are increases in an
economy, lack of transparency exists of a country, the corruption activities
continuously grown in a country; it is very hard to attract foreign investors
to develop the economic activities. The adverse image of developing countries
attributed to these actions diminishes real global chances and manageable
financial development and then again, declining organised global criminal group
with unwanted notorieties and transitory objectives. In this way, almost every
developing country are characterised with a large extent of insecurity,
corruption, financial and economy unrest, social inequalit, and threat, etc.
has been failed to attract foreign real investors to contribute economic
development of a developing country. The dominance of the money launderers on
the financial system of a country has been responsible for such inadequate
froing inflows of investment. For instance, due to corruption and weak
financial regulation, foreign investment inflows in Bangladesh has been
declined by 17% in 2016 compared to the period of 2013-2015.[49] Money
launderers damage the capital market and banking system of Bangladesh so that
globally the country has gained a poor reputation for investment. The aggregate
impact of the weak reputation of a developing country to the real foreign
investors significantly decline and eventually, real businesses become weak and
money launderers gain more dominance in the businesses.
·
Loss of revenue: Like other financial crime, money laundering
significantly declines the revenue of the government. To avoid tax trail, money
launderers transfer cash abroad illegally so that government loss a large
amount of revenue. Generally, corporate tax and income tax are two important
sources of government revenue.[50] Criminals
generate money illegally and offshore companies are giving the opportunity to
attract investors. It enables money launderers to move their dirty money and
hide the origins of proceeds and then back the money into the country through
small investment. In consequence, governments of developing countries loss a
huge amount of revenue for these financial criminal activities are conducted by
money launderers.
Impacts on Real Sector
The impacts of money laundering on the real sector of the
global economy are also noticeable. Money laundering declines real productivity
and spoils real investment. Due to money laundering activities, financial crime
and corruption are increased in the developing country as well as developed
countries.[51] The risk of macroeconomic
instability can be seen by money laundering that declines the GDP growth of a
country. The criminal groups can convert productive businesses into a barren
investment because funds proceed from crime which is less valuable to the money
launderers. Money laundering and crime have a positive relationship. For
instance, when the cost declines, the amount of crime enhances and equilibrium
creates, at that point the cost of crimes and crime opportunities create
balance.[52] That’s how money
laundering impact on the real sector.
Impacts on External Sector
Money laundering is a global issue right now because it
has a direct link to criminal funds that are generated from organised crime. Effectively
laundering cash implies that crime really pays off. This achievement urges
criminals to maintain their illegal activities since they get the opportunity
to go through the benefit without any shadow. Money launderers generally
utilise front companies to use their illegal proceeds with legal cash to
conceal their illegal money.[53]
Often launderers use dirty cash in generally genuine businesses to convert
dirty money to clean it. Criminals try to isolate themselves from the crime by
searching safe locations for their benefits where they can escape seizing
wealth and where the wealth can be considered legal. As a result, money
laundering shrinks clean capital flows in economic development so that
countries are failed to attract foreign investment. Money laundering creates a shortage
of money in the financial system e.g. banks so that banks lose their ability to
give loans to the real investors. In consequence, investment in the productive
sector seriously affects that enhances the price of products and services.
The impact of money laundering on Bangladesh
Money laundering is common in every country but the
intensity of money laundering is high in developing countries like Bangladesh. Money
laundering creates a barrier in GDP growth as expected due to extreme money
laundering.[54] Additionally, it impacts
negatively on the political, social, financial, moral and economic system of
Bangladesh. From 2005 to 2014, around £71bn money was
laundered from Bangladesh to abroad and the country faces nearly £6.1bn money laundering every year which is 7% of the
country’s GDP.[55] Money laundering
increases corruption in the country and financial crime that declines security
of Bangladesh. The impact of money laundering on Bangladesh is explained below:
·
Lack of trust in
banks: Last couple of years, the
banking system of Bangladesh seriously questioned the people of the country. Criminals
take fake loans from banks and become a defaulter. For example, Farmers’ Bank
Ltd, ICB Bank, and Basic Bank scam seriously has reduced the trust of people on
the banking system. Additionally, state-owned banks such as Sonali Bank Ltd and
Janata Bank Ltd. have around £2bn default loans.[56]
Lenders take a loan from the banks with fake information and then transfer the
money abroad. As a result, general people lost trust in the banks of the
country and reluctant to deposit in the domestic bank. Hence, billions of
pounds are shifted to the foreign banks that create liquidity crisis in the
domestic financial market of Bangladesh.
·
Damage reputation
internationally: A reputation as a
money-laundering haven must cause serious negative outcome for the development
of a country. The international financial organisation takes the decision to
restrict their financial transaction with organisations money laundering
havens. Even legal enterprises and businesses from money laundering havens face
difficulties to access in the global markets or they require a high cost to control
and ownership systems.[57] A
country that is weak in anti-money laundering enforcement is less likely
attracts foreign investment. A list of countries with good enforcement in AML
is maintained by FATF where Bangladesh scores poor due to weak AML requirements
and application of laws. It damages the reputation of Bangladesh
internationally so that the domestic economic development suffers.
·
Weakens financial
organisations: The financial organisations
of Bangladesh are not strong enough. Money launderers’ cheated central bank
database system and hack £79 million which was created
a big issue globally.[58]
It indicates a weak financial system of the country that encourages money
launderers to do the financial crime. Additionally, most of the financial
institutions of Bangladesh are permitted due to political consideration. As a
result, criminals get the opportunity to do corruption and crime for laundering
money. Criminals involve with different domestic political parties and receive a
large amount of loans with false information from these banks and then
defaulter.[59] This money then transfers
to abroad, offshore companies and shell banks. As a result, the capability
financial organisations of Bangladesh are weakening day by day.
·
Damaged privatisation efforts: There
are many adverse effects of money laundering on an economy. The government
efforts of privatisation seriously affected by money launderers. Money
launderers bid below than the real investors. Since money launderers possess
huge dirty money so that they can bid a higher rate for these government
corporations that decline the positions of legit competitors. Legitimate
bidders who think that the bidding system has been accommodated are unlikely to
compete in the future. As a result, privatisation effort of Bangladesh
government affects negatively.
·
Increase of crimes: Money laundering haven like Bangladesh face high-security
risks that endanger the country’s interest. In a report of the Central Bank of
Bangladesh states that illegal flow of cash has often founded with the criminal
networks embroiled in total crimes that linked with extremist funding,
arms-dealing, drug, and human trafficking.[60] U.S.
Human Trafficking Report 2017 shows that in the South Asian region, Bangladesh
is the center of human trafficking and thousands of people are trafficking to
the Middle East and Europe which is a profitable business to the criminals.[61]
In addition, drug smuggling is another serious crime that is increasing in the
country. All these crimes are happened by criminals which are a major source of
money laundering in Bangladesh. These crimes are also increasing bribery and
corruption among the public officials that make the country laundering haven.
·
Damage policy of
central bank: Central bank of a country
creates a different policy to strengthen the national economy and discipline in
the financial system. Money launderers create threat in the effort of the
central bank. Many banks of Bangladesh
are now in liquidity crisis due to high stake money laundering crime.
Additionally, a large number of politicians of the country are accused of money
laundering crime some of them are very powerful. Moreover, these politicians
force government to give the opportunity to clean dirty money and every year the
Bangladesh government provides this opportunity in the fiscal budget for the
aim to reduce money laundering.[62]
But, unfortunately, this action of government encourages money launderers to do
such activities further. As a result, central bank policy to limit money
laundering crime from the country is hampered.
Anti-Money Laundering
Undoubtedly, money laundering has an adverse effect on
the developing countries financial and real sector. In the developing
countries, financial organisations have a lack of technologies and laws to
detect money laundering crimes so that countries fail to take immediate action
against launderers to safeguard the real and financial sector. In the
developing economies, five directions have been identified of money laundering
movement such as domestic flow, returned flow, inbound funds, outbound funds,
and flow-through.[63] International
initiative to prevent money laundering is mainly focused on the strength the
corporate governance, accountability of the top management; improve technologies
to combat money laundering.
Reasons for Anti-Money Laundering
All most every developed and developing countries are
agreed to prevent money laundering national and international context. There
are some reasons for fighting again money laundering:
·
Money laundering has
strong adverse social, security and economic outcome. It gives energy for
corruption, bribery, illegal arms business, terrorist, smuggling, human and
drug trafficking and other crimes to increase criminal networks domestically
and internationally.[64]
·
The trust of domestic
and foreign investors on the money laundering haven countries is declined so
that the economic development is disturbed.
·
The financial and
real sector is seriously damaged by money laundering activities. Thus, the cost
of living, employment opportunity, production, and real businesses are affected
badly.
·
Government loses a high
amount of revenue due to money laundering because launderers hide the origin of
proceeds and evade from tax trail that eventually affects the GDP of the
respective countries.
·
Money laundering activities decline the
efficiency of the financial sectors, government policies and enforcement of
laws.
·
The private sector
real businesses are seriously damaged by money laundering tasks. Launderers use
front companies to legitimate their illegal money. As a result, these front
companies can decline the service and product price lower than the
manufacturing cost of real businesses. So, the genuine businesses incur a loss
and ruled out from the competition.
·
Money laundering
damages the reputation of a country internationally so that domestic financial
organisations face difficulty to do collaborate with international financial
organisations.
For these above reasons, the government of developing and
developed countries has developed AML policies.
Global Anti-Money Laundering (AML) policies
The United States of America first adopts anti-money
laundering policy in 1986.[65]
The country has developed the Money Laundering Control Act to prevent money
laundering activities and save the financial and real sector of the country. After
that most of the developing and developed nations have been developed various
AML principles by the prescription of various international organisations.
UN Vienna Convention 1988
UN Vienna Convention 1988 was the first initiative
against money laundering. This act adopted against illegal traffic in narcotic
drugs which is one of the main sources in money laundering. The aim of the
combat against money laundering is fighting international criminal groups at
the vital point.[66] It is difficult to
conceal criminal works through which money is generated and often it forms
preliminary evidence of a crime. It can be detected the movement of dirty money
in the financial system if countries become alert. Political declaration
against money laundering adopted in 1998 at UN general meeting, ten years after
the first convention held in Vienna.[67]
In 2000, the UN opened signed for the UN member states against transnational
organised crime. The convention includes every possible scope of money
laundering incurred any serious crime. The convention enables members states to
co-operate each other to detect, investigate and prosecute of money laundering.
Under the agreement of the convention, member states are bounded to reinforce
necessary things for identifying customers, record-keeping and filing
transaction which is suspicious. Additionally, agreement signing member states
are also recommended to establish monetary intelligence units to gather process
and disseminate information.
The signing members of the Vienna Convention 1988 are
agreed to:
·
Concern deeply about the
rising trend in the illegal psychotropic substance, traffic drugs and other
crimes that threat to human welfare and health and negative affect the
political, cultural and economic foundations.
·
Recognise the
relations between illegal traffic and other organised crimes which bypass the
legitimate economies of the member countries and creates a threat to the
sovereignty, security, and stability of states.
·
Determine to despoil individuals
involved in illegal traffic of proceeding of their offensive works and after
that terminate their key incentive for so doing.
·
Recognise the illegal traffic is treated as a global
crime and determines the demands of the highest priority and urgent attention
towards criminal activities.
·
Aware states that
illegal traffic makes huge monetary profits and wealth that encourage global
crime organisations to the implant pollute and corrupt the government
structure, legit businesses and financial system and society at large.
Financial Action Task Force 1989
FATF is an inter-governmental body which was
formed in 1989 by the member jurisdictions of its ministers. FATF aim is to
establish standards and promote appropriate application of operational,
regulatory and legal measure for fighting against money laundering financial
proliferation, terrorist financing and other linked threats of the global
financial mechanism.[68] FATF
also works to determine vulnerabilities in the financial system at
national-level by collaborating with another global stakeholder for the purpose
of preventing misuse of the global financial system. FATF recommendations
provide a coherent and complete framework to measure which states should apply
the recommendations to fight against money laundering. Nations have various
operational, administrative and legal frameworks and various financial
mechanisms so that all states cannot take unified measurements to defend money laundering
threat. Considering this limitation, FATF establishes a set of global standard
and recommendations which countries require to apply by considering their
particular situations.[69] In
the FATF recommendations, all necessary measures are taken to the countries can
understand the areas they need to concern such as:
·
Find out the threats
and form policies and coordination domestically.
·
Implement protective
measures for the monetary system and other involved sectors.
·
Set up
responsibilities and power for the relevant authorities’ e.g. supervisory
authorities, law enforcement, investigative and other institutional measures.
·
Increase the
transparency and beneficial legal ownership and arrangement and assists
transnational cooperation.
In 1990, FATF proposed forty recommendations to fight
against abuse monetary systems by individuals through laundering money incurred
from drug trafficking. FATF revised the recommendations in 1996 to reflect
money laundering techniques and trends and lengthen the scope of money
laundering. In 2003 FATF revised the recommendations and endorsed by more than
180 counties and after it has considered universal standard for AML policy.[70]
The FATF Standards have likewise been amended to fortify the prerequisites for
higher risky circumstances, and to enable nations to adopt an increasingly
engaged strategy in the necessary areas where high dangers remain or usage
could be improved. Nations should first identify survey and comprehend the
dangers of laundering money that they face, and after that receive proper
measures to alleviate the risk. The hazard based methodology permits nations,
inside the structure of the FATF necessities, to receive an increasingly
adaptable arrangement of measures, so as to focus on their assets all the more
adequately and apply preventive estimates that are equivalent to the idea of
dangers, so as to center their endeavors in the best way. Moreover, FATF makes
guidance, effective practice suggestions and another necessary consultancy
supports to help different countries to practice FATF recommendations
effectively to combat money laundering.
EU legal framework for AML
EU first adopted AML policies in 1990 for the purpose of
preventing misuse of the financial system by different criminal organisations
or persons for the intention of laundering money. It is necessary that banks
and other financial institution execute proper measure to repel money
laundering from the EU member states.[71] AML
policy of EU provides that obliged parties shall implement client requirements
e.g. verify customer identity and report doubtful transactions when performing
business relationships. EU constantly revised the legislation to alleviate risk
due to laundering money.[72] The
amendments of EU AML policies have been taken to prevent money laundering crime
in the financial system. The major amendments of EU AML legislation include:
·
Increase transparency
by establishing generally sufficient registers for legal arrangements, trusts,
and companies.
·
Increase the strength
of European Union financial intelligence units and give them entrance to
details information to carry their activities.
·
Restrict the hidden
transaction of virtual currencies and virtual wallet providers.
·
Widen the
requirements for the measurements of large-risk third states and enhance the
protection for financial transactions to and from those nations.
·
Enhance cooperation
and collaboration of information between AML supervisors and the European
central bank.
EU AML directive is list on high-risk countries for money
laundering. The commission is worked for determining the third countries that
are highly vulnerable to money laundering activities. The purpose of this list
is to safeguard the financial system of the EU from money laundering crimes. As
per the EU directive, banks and other financial institution are required to
apply upgraded watchfulness in business connections and exchanges including
high-chance third nations. The kinds of improved watchfulness necessities are
essentially additional checks and control estimates. The commission has
proposed to expand the use of information related to the financial transaction
by providing law-enforcement agencies direct entrance to information about bank
account holders’ identity. This will monitor by the financial intelligence
units to prevent money laundering of the financial system of the EU.
Basel AML policy
Basel Institute of Governance is working to ensure
transparency in the banking system. The Basel committee has developed AML index
that measures the risk of money laundering of different countries. Based on the
particular standards, Basel rates high risk to low-risk countries for AML. Basel
has endorsed some key elements of the AML practices as clearly supported by
sound financial practices that decline financial risk international and
national financial system.[73] Basel
committee has stepped very rapidly to promote global supervisory standards
guidelines regarding AML in close supervision with non G-10 and G-10
authorities. Among the various rules figured by the Basel Committee, good KYC
(Know Your Customer) approaches and methodology are basic in securing the
wellbeing and soundness of banks and the trustworthiness of banking frameworks.
KYC strategies advance sound financial practices, which can be found in the Prudential.
As reasonable financial arrangement requests that no single client turns into a
predominant customer, so it lessens the likelihood of contribution of financial
institutes with the offenders or criminals attempt the exercises of financial
institutes.
Anti-money laundering policy in Bangladesh
Despite taking different AML policies and efforts to
remove money laundering, still, Bangladesh is facing serious money laundering
activities. Money laundering creates a barrier in the GDP growth as expected
due to extreme money laundering. Additionally, it impacts negatively on the
political, social, financial, moral and economic system of Bangladesh. From
2005 to 2014, around £71bn money was laundered
from Bangladesh to abroad and the country faces nearly £6.1bn money laundering every year which is 7% of the
country’s GDP.[74] The main threat for money
laundering in Bangladesh still exists from the underground banking hundi or
hawala. Additionally, corrupt politicians and businessmen are also involved in
money laundering in the country.
To combat money laundering problems, Bangladesh enacted the
Money Laundering Prevention Act 2002. Bangladesh also signed in UNCAC in 2007
and approved the financial intelligence unit under the authority of the
country’s central bank.[75] In
2008, the government enacted ML Prevention Ordinance to combat against money laundering.
Money laundering prevention act 2002 requirements
MLP act 2002 is the first legislative framework for AML
of Bangladesh that contains specific guidelines to prevent money laundering.
This act includes the following core issues:
·
Defines the situation
in which an offense can be considered as money laundering and gives penalties
for the crime.
·
Requires financial
institutes and banks to engage in financial tasks to set up the identity of
their clients.
·
Requires financial
institutes and banks that involve in financial tasks to keep accurate and
detail information of the customers and up to date records of their financial
transactions for a minimum five year periods.
·
Imposes an obligation
to the financial institutions and banks make a report to the central bank of
the country about suspicious financial transactions.
Responsibilities of Bangladesh Bank (BB)
MLP Act of Bangladesh gives some specific
responsibilities to the Bangladesh Bank (country’s central bank) for
eliminating money laundering crimes and to take sufficient actions to retrain
crimes in the domestic financial system. Under the AML policies of Bangladesh,
the powers and responsibilities BB are given below:
·
Investigate money
laundering related crimes.
·
Monitor and supervise
the operations of financial organisations, banks organisation involved in
financial tasks.
·
Call for reports
identifying with illegal transactions from financial organisations, banks and
others occupied with money-related exercises, examine reports and take proper
actions.
·
Provide preparing to
workers of banks, monetary foundations and different establishments locked in
in monetary exercises on restraining of money laundering.
·
To approve any
individual to go into any premises for leading examinations concerning money
laundering.
·
Persons approved by
Bangladesh Bank to explore crimes can practice the equivalent controls as the
Officer of Police Station can practice under the criminal code.
·
The Courts won't acknowledge any offense under
the Act for preliminary except if a grumbling is stopped by Bangladesh Bank or
any individual approved by Bangladesh Bank for this benefit.
Compliance of Bangladesh with AML
policies
One of the vital issues of successful AML
policies is the commitment of public officials of law enforcement agencies,
Bangladesh Bank’s FIU officials, top management of different banks and other
financial organisations those can prevent the tendency of using financial
system for laundering money by complying with the obligations as per the law
and legislation.[76] The statement of
compliance policy of AML in Bangladesh is as follows:
·
All works with
respected financial organisations, banks, and other stakeholder are needed to
comply with the implemented regulations and laws and corporate ethical
principles.
·
Every activity
performed by the financial organisation must comply with the implementation of
governing AML regulations and laws.
·
Comply with AML
regulations and laws are the obligation of all persons involved with financial
organisations in the normal course of their tasks. It is the legitimate
obligations of the person to know about AML regulations and laws and ignorance
of the regulations and laws are not considered as noncompliance.
·
All workers related
to financial organisations and banks should be accountable for conducting their
compliance obligations.
Money laundering situation in Bangladesh
The foreign of Bangladesh is rapidly expanding. From 2005
to 2016, foreign trade increased by 35% of the country.[77]
This is good news for Bangladesh but at the same time, it makes money
laundering crime in which trade-based ML has gained a key concern for the
country’s banking system. The survey of BIBM shows that under-invoicing and
over-invoicing of services and products trend in foreign trade have been
increased. The survey founded that bank officials, exporters, and importers have
collusion that facilitates money laundering and illegal transactions. In case
of export and import, Bangladesh trade laws allow the minimum price of goods
but there is no highest limit and criminals take this opportunity for over and
under-invoicing. Global Financial Integrity report shows that between 2005 and
2014, illicit monetary inflows were 4-12% and outflow was 12-17% of
Bangladesh’s total foreign trade and aggregate unrecorded money flows estimated
£56.83bn during the period.[78]
There is no doubt that ML causes serious problems for the
economic development, increase investment and generate sufficient tax revenue
of Bangladesh. ML leads an ample amount of money untaxed and unaccounted that
increases living costs and creates a gap between rich and poor people. Thus,
honest taxpayers are discouraged to give tax, distorts product prices, risk of
financial organisations is increased and misallocation of resources happens.[79] Apart
from these problems, ML creates critical security risks for the country and
peril national interests. For instance, often illegal cash flow has founded in
criminal networks the related to the total crime networks including extremist
funding, human trafficking, drug trafficking, illegal arms-dealing, etc.
In recent years, one of the main sources of money
laundering crime in Bangladesh is human trafficking. The last couple of years
hundreds of people were died during human trafficking in different European
countries and seas. Human trafficking Report 2017 shoes that Bangladesh failed
to fulfill the minimum requirements of human trafficking and the number of
victims increased than the last five years.[80] Also,
the increase of drug trafficking such as Yaba, heroin and other drugs is
touched red alert. Department of Narcotics Control of Bangladesh shows that law
enforcement agencies and other agencies seized 29.5 million pills Yaba, 1.3
tones Gaja and other drugs in 2016.[81]
This is the only small part of the total drug trafficking lots. Criminals
generate a huge amount of illicit money from the drug and human trafficking and
a significant amount is moved abroad from Bangladesh.
Although Bangladesh has signed UN Vienna convention 1988,
accepted FATF recommendations and developed own AML legal frameworks, the
intensity of money laundering does not reduce. The main reasons of this high
intensity of money laundering are many such corrupt government officials,
corrupt bank officials, illegal power of the practice of corrupt political
persons, weak law practice, delay in judgment and powerful businessmen involved
in money laundering. In most cases, it has found that most of the leading and
known money launderers are anyhow involved with the ruling party of the country
so that law agencies cannot get success to arrest them and the tendency of
money laundering and criminal activities are not declined.
Money laundering cases: Bangladesh perspective
·
Tarique Rahman Case
Tarique Rahman’s money laundering case for money
laundering is much known in Bangladesh. He was accused of 10-year prison in the
trail for different cases filed under AML laws. During the ruling of Prime
Minister Khaleda Zia (2001-2006), Tarique Rahman, the son of Khaleda Zia, took
different financial advantage by using the power of his mother’s position.
Tarique was the second most powerful person during the period of Khaleda Zia and
involved several corruptions. That time Bangladesh ranked for the most
corrupted country consecutive five years and Tarique Rahman was behind most of
the top-level corruption. He earned illegal money from every sector such as
foreign investment, petroleum, government tenders, capital market, etc. This
dirty was transferred in Swiss Bank and invested in different offshore
companies. In 2009, Anti-Corruption Commission (ACC) filed a case against
Tarique Rahman under AML law of Bangladesh.[82] He
was sentenced 10 years jail in one case and life sentence in another case under
AML laws by the supreme court of Bangladesh.
·
Lutfazzaman Babar
case
In January 2008, ACC filed a money laundering case
against Lutfazzaman Babar, was the home minister during 2001-2006, for earning £10 million illegally and moved the funds abroad. ACC also
founded £1 million deposited in
Singapore bank which was illegally transferred from a Bangladeshi bank named
Prime Bank.[83] He used state power to
earn illicit proceeds during the ruling period of Khaleda Zia. During the
interim government in 2007-2008, he arrested by the police for money laundering
and sentenced for 14 years by the supreme court of Bangladesh.
·
Arafat Rahman Koko
case
In March 2009, ACC sued against Arafat Rahman Koko for
taking money illicitly from different foreign companies for assisting them to
get government contracts by using his power as the son of prime minister. ACC
founded that Koko took £2 million money illegally
from a Chinese company to help for getting the construction contract of a
container terminal in the port city of the country.[84] AC
founded money deposited in three foreign bank accounts of Koko located in
Singapore and Malaysia that worth £18 million. This
money was sent illegally from Bangladesh and ACC founded evidence of this
illicit source. In 2012, Koko was sentenced for 10-year jail under money
laundering act by the supreme court of Bangladesh.
A remarkable case of money laundering and embezzlement
investigated by ACC
·
Embezzlement of £4 billion by Hallmark Group and other five companies,
clients of Sonali Bank Ltd
Hallmark group money scam is a remarkable incident that
created nationwide discussion among the general people of Bangladesh. ACC inquiry
founded that Hallmark Group embezzled of £4 billion by opening
fake LC, fake money transaction and took a loan with fake companies and moved
the money abroad.[85] ACC
lodged several cases against this against scam under different articles of
money laundering act of Bangladesh. The culprits are now in jail and the cases
are running on the court.
·
Destiny 2000 Ltd
money laundering through MLM system
Destiny 2000 was a Multi-Level Marketing company in
Bangladesh which was involved in generating money in a fraudulent way. The
company was violated Company law of Bangladesh and illegally sells trees to the
clients of the company. The company showed trees to the clients and sold the same
plot to different clients and generated £76 million from the
investors. After leaked the scam, ACC conducted an inquiry where the agency
founded true evidence. Additionally, Destiny 2000 Ltd also operated different
sister MLM concerns violating the company laws of Bangladesh and generated £26 million illegally.[86] Thus,
ACC sued against the directors of Destiny 2000 under money laundering act and the
court sent them to the jail. And government closed Destiny 2000 Ltd in 2011.
The case is now running at the court.
Challenges applying AML universal framework domestically
Money laundering is a universal issue. Every country
especially developing countries are fighting to prevent this crime. Since,
there are many universal frameworks for AML, which is developed by different
organisations and international agencies. But the key challenge is applying the
universal AML framework domestically because different countries have their own
AML policies.[87] The key challenges of the
application of universal AML framework domestically are described below:
·
The difference in crime
consideration: Different country has different
domestic laws that determine the nature of the crime. Thus one incident is
considered as a crime in one country while it is considered legal in another
country. For instance, in Bangladesh, selling of alcohol is limited and only
registered enterprises can do this alcohol sale for a limited range. But in
other countries, there has no limitation of selling alcohol or similar hard
drinks. So, Bangladesh considers money generated from selling alcohol more than
limit is a crime. In another case, the sex industry and gambling are legal many
countries and money generated from these is not considered illicit if tax is
given by the owners. But, in Bangladesh, these types of income source are
considered illicit.
·
The difference in-laws: Different country has different laws and regulations. The
laws and regulations are developed by a country considering their social,
political and economic situations. As a result, often some articles and
recommendations of universal AML framework cannot properly adopt and
implemented domestically. For instance, the AML prevention act of Bangladesh
clearly states to disclose any person’s account information to the financial
intelligence unit of Bangladesh Bank if it is asked to a respective bank in
Bangladesh.[88] On the other hand, some
countries strictly protect the information of account holder under their data
protection act. As a result, when a Bangladeshi resident opens an account in
any foreign bank e.g. Swiss Bank they cannot share account holders information
to Bangladesh government.[89]
Thus universal AML framework cannot be effectively applied domestically.
·
Lack of collaboration: Collaboration between countries is the key to get
efficiency from universal AML framework domestically. Criminals generally move
illicit money to another country where they can secure their illicit money. Although
many countries signed in UN Vienna convention to prevent money laundering, due
to bad bilateral relationship countries can be successful to apply universal
AML framework.[90] For example, FATF recommended
that law agencies should work to collaborate with other countries to prevent
money laundering. Bangladeshi money launderers transfer dirty money to
Switzerland and it has seen lack of willingness of the law agencies of
Switzerland to cooperate with Bangladeshi AML agency because Switzerland is
benefitted from the laundered money and the inflows of money increase their
banks’ deposits. So, Switzerland is reluctant to transfer the laundered money
to Bangladesh. Generally benefitted country due to money laundering is not
collaborating properly with the affected country. As a result, universal AML
framework cannot be effectively applied domestically.
Conclusion
Money laundering is a global issue and the reality of
this cannot be ignored by a country. Criminals use different techniques and
method for money laundering which cannot be eliminated completely but the
intensity of money laundering crime can be minimised by the effective application
of domestic and universal AML frameworks. In the globalised financial system,
prevention of money laundering completely is impossible. Additionally, flexible
financial policies of different countries encourage criminals to misuse the
financial system. Often financial systems are utilised to move dirty money in
different locations, therefore, find out the origin of funds is quite
difficult.
There was no doubt that money laundering has a direct
adverse impact on the real and financial sector and especially developing
countries are the real sufferer of this crime. The intensity of crimes,
corruption, and illegal activities are boosted due to money laundering. Terrorists
and criminals bypass domestic and international laws to misuse financial
systems. The roles of financial organisations and banks to accelerate money
laundering crimes cannot be ignored. There are many banks in different
countries that strictly protect the information of launderers by their own
policies that protect the interest of money launderers. That harms the domestic
and international financial system and real businesses.
In this paper, the concept of money laundering has been
discussed elaborately where mentioned different international organisations
definition along with the ML definition by Bangladesh law. In addition, the
stages of money laundering such as placement, layering, and integration have
been discussed in details. Criminals use a different process of money
laundering such as smurfing, gambling, offshore bank, cash intensive business,
shell companies, etc. these have been discussed in details. Money laundering
has much adverse impact not only the domestic financial system but also the global
financial system. Additionally, economic development, reputation, crimes, etc.
are significantly affected by money laundering. The impact of money laundering
in global and Bangladesh context has been explained in this paper.
Money laundering has an adverse effect on the developing
countries financial and real sector. In the developing countries, financial
organisations have a lack of technologies and laws to detect money laundering
crimes so that countries fail to take immediate action against launderers to
safeguard the real and financial sector. Different global organisations such as
UN, FATF, EU, Basel Institute have developed some universal framework for AML
to support countries taking preventive measures against money laundering. Bangladesh
has also developed AML legal framework to prevent money laundering and the core
issues of the legislation have been mentioned. And finally, some
recommendations have been proposed to improve AML efforts of Bangladesh to
prevent the intensity of money laundering from the country.
Recommendations
Based on the above discussion, some recommendations have
been given to improve AML practices of Bangladesh:
·
Bangladesh should
conduct a detail assessment of the risks in the financial system in aspects of
money laundering threats and outcomes. At previous, Bangladesh has identified
some risk assessments of money laundering that includes an examination of the real
estate sector, securities, insurance, banking and NBFI sectors which require to
be revised. The country first performed gap analysis based on the UNCAC
guidelines in 2008 and peer review in 2011. The previous assessment was very
old and requires a new assessment for identifying money laundering threats
because criminals are using new methods to avoid law agencies and hide their
illegal proceeds. This revised ML risk assessment will help to determine the
geographical risk and the vulnerable areas for illegal human and drug
trafficking, smuggling, illegal trade and corruption in financial
organisations. So, the country can take action plan to minimise the risks of
money laundering.
·
Bangladesh Bank (BB)
should develop clear and cohesive guidelines for suspicious transaction report
and force financial institutions to follow this strictly. Suspicious financial
transactions are used to money laundering in most of the cases. In most of the
cases, it has seen that banks officials are not checked properly financial
transaction of clients when they gain the trust of the banks or transact money
at large amount regularly. Criminals take this opportunity to launder money. At
first, they gain the trust of Bank officials and then launder money. Financial
intelligence unit must alert the bank's officials about such situations and
strictly maintain suspicious transaction report for every client and report to
BB immediately if any transaction gets doubtful.
·
Bangladesh should
increase bilateral relations with the countries that are the favourite
destination to Bangladeshi money launderers for transferring their illicit
funds or property. In this globalised world, the issue of money laundering
cannot be ignored. And a country cannot prevent money laundering crime solely. Countries
do not want to show them for a safe place for dirty money because it hampers
their reputation globally. If the bilateral relationship with those countries is
not good enough, it is very difficult to collect information on suspicious
transaction holders and stop money laundering. Additionally, good bilateral
relations also help Bangladesh seized and back the laundered money into the
country.
·
AML agency of
Bangladesh should increase consultancy, training and other support to the
officials of banks and other financial organisation who are dealing with trade
affairs. Criminals are using different methods to launder money so that regular
training is necessary for the bank officials who are dealing with foreign trade-related
transactions. Generally, opening fake LC, over and under-invoicing of services
and goods are favourite methods of money laundering to the criminals. Good
training, assistance, and collaboration of bank officials can make it harder to
launder money by criminals. Additionally, improve morale to bank officials is
important because if bank officials perform their duty with proper integrity,
it is very hard for criminals to launder money.
·
Bangladesh should
faster the trial process and judgment of cases to prevent money laundering. The
judicial system of Bangladesh is very weak and lengthy that works a key point
to get low success of combating against money laundering by Anti-Corruption
Commission and other law enforcement agencies. It has founded that ACC and law
agencies caught many criminals who involved laundering money but they get bails
immediately because of delay to submit proper evidence. In addition, the
government attorneys often take bribe from the criminals and do favour to them
in the trial process. Late and lengthy trial process of Bangladesh judicial
system destroys the criminal evidence of money laundering and witnesses. As a
result, often criminal gets free in judgment. So, it is necessary to trail
money laundering cases in the special tribunal to prevent laundering activities.
·
Bangladesh government
should be fair and honest in investigating money laundering activities. In
Bangladesh, most of the cases it has seen that money launderers are involved
with the ruling political parties. Powerful businessmen are nominated and
elected in the national election and they are often involved in money
laundering. As a result, ACC and law agencies cannot perform fair investigation
against their money laundering activities because they face high pressure from
the high officials and often the honest investigator transfers to other from
the AML investigation. So, it is necessary to ensure honesty, fairness and
cordial wishes of the government in money laundering investigation to prevent
ML related crimes from the country.
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[36] International
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[38] Ansia
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[39] Syed
Alamin Ahmed, 'Practical Application Of Anti-Money Laundering Requirements In
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[41] Selina
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[42]
Michael
Salter and Julie Mason, Writing Law
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[43]
T Hutchinson, N Duncan,
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[46] Jeffrey Simser, 'Money
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[47]
Rowan
Bosworth‐Davies, 'Money Laundering –
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[49] Mohammad Saiful Islam,
Sharmin Akter Eva and Mohammad Zahed Hossain, 'Predicate Offences Of Money
Laundering And Anti Money Laundering Practices In Bangladesh Among South Asian
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[50] María Soledad Castaño, María
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[52] Friedrich
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[53] Ricardo
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Syed Alamin Ahmed, 'Practical Application Of
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[55] Jonathan
Rose, 'The Meaning Of Corruption: Testing The Coherence And Adequacy Of
Corruption Definitions' (2017) 20 Public Integrity.
[56]Jamal,
'The Hidden Dangers Of Money Laundering' (The Daily Star, 2019)
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Lameece Gasser and Khaled AbdelHalim, Corruption
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Rashid, 'The Bangladesh Bank Heist And Beyond' (Dhaka Tribune, 2019)
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[59] Emmanuel
Ioannides, Fundamental Principles Of EU Law Against Money Laundering (Taylor
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[60] Jamal,
'The Hidden Dangers Of Money Laundering' (The Daily Star, 2019)
<https://www.thedailystar.net/opinion/the-overton-window/the-hidden-dangers-money-laundering-1569517>
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[61]
Laurence Webb, 'A Survey Of Money Laundering
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(2018) 7 Journal of Money Laundering Control.
[62] 'Bangladesh
Bank: Reserve Heist Case To Be Settled In Three Years' (Dhaka Tribune,
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[63]
Umut Türkşen, İsmail Ufuk Mısırlıoğlu and Osman
Yükseltürk, 'Anti‐Money Laundering Law Of
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[64] Friedrich
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[65]
Lameece Gasser and Khaled AbdelHalim, Corruption
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(Pearson 2016).
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[67]
Ibid 12
[68] Hung Ba
and Tran Huynh, 'Money Laundering Risk From Emerging Markets: The Case Of Vietnam'
(2018) 21 Journal of Money Laundering Control.
[69]
Financial Action Task Force (FATF)' (Gov.ie,
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[70] P.
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[71] Alfred
Jones, 'The Importance Of Parallel Proceedings To Money Laundering' (2013) 3
Journal of Money Laundering Control.
[72] Friedrich
Schneider, 'Turnover Of Organized Crime And Money Laundering: Some Preliminary
Empirical Findings' (2010) 144 Public Choice.
[73] Zaiton
Hamin and others, 'Conceptualizing Terrorist Financing In The Age Of
Uncertainty' (2016) 19 Journal of Money Laundering Control.
[74] Mamun
Rashid, 'The Bangladesh Bank Heist And Beyond' (Dhaka Tribune, 2019)
<https://www.dhakatribune.com/opinion/op-ed/2019/02/03/the-bangladesh-bank-heist-and-beyond>
accessed 10 July 2019.
[75] Bangladesh
Bank (Bb.org.bd, 2015)
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accessed 10 July 2019.
[76] Bangladesh
Bank (Bb.org.bd, 2015)
<https://www.bb.org.bd/aboutus/regulationguideline/aml/aml-cft-guidelines.pdf>
accessed 10 July 2019.
[77] Syed
Alamin Ahmed, 'Practical Application Of Anti-Money Laundering Requirements In
Bangladesh' (2017) 20 Journal of Money Laundering Control.
[78] Jamal,
'The Hidden Dangers Of Money Laundering' (The Daily Star, 2019)
<https://www.thedailystar.net/opinion/the-overton-window/the-hidden-dangers-money-laundering-1569517>
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[79] Doulot
Akhter, 'Money Laundering, NPL Interlinked' (The Financial Express,
2019)
<https://thefinancialexpress.com.bd/economy/bangladesh/money-laundering-npl-interlinked-1553139964>
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[80]
Ibid
[81]
Jamshed Ahmed, 'Money Laundering Act: New Rules
Define Working Areas Of Investigators' (The Financial Express, 2019)
<https://thefinancialexpress.com.bd/economy/bangladesh/money-laundering-act-new-rules-define-working-areas-of-investigators-1550474029>
accessed 10 July 2019.
[82]
Syed Alamin Ahmed, 'Practical Application Of
Anti-Money Laundering Requirements In Bangladesh' (2017) 20 Journal of Money
Laundering Control.
[83]
Ibid 12
[84] Jamshed
Ahmed, 'Money Laundering Act: New Rules Define Working Areas Of Investigators'
(The Financial Express, 2019) <https://thefinancialexpress.com.bd/economy/bangladesh/money-laundering-act-new-rules-define-working-areas-of-investigators-1550474029>
accessed 10 July 2019.
[85]
Ibid 2
[86]
Mohammad Saiful Islam, Sharmin Akter Eva and
Mohammad Zahed Hossain, 'Predicate Offences Of Money Laundering And Anti Money
Laundering Practices In Bangladesh Among South Asian Countries' (2017) 12
Studies in Business and Economics.
[87]
Ibid 05
[88]
Bangladesh Bank (Bb.org.bd, 2015)
<https://www.bb.org.bd/aboutus/regulationguideline/aml/aml-cft-guidelines.pdf>
accessed 10 July 2019.
[89]
Ibid 15
[90]
International Monetary Fund, Detailed Assessment
Report—Anti-Money Laundering And Combating The Financing Of Terrorism' (2015)
15 IMF Staff Country Reports.
