Bishnu Datta | BBA 7th semester | Department of Finance
You, as a liable and honest citizen of our country, honestly pay all kinds of taxes that the government of Bangladesh imposes on you. You pay your income tax if your income exceeds 350000 TK annually, and in the case of women and senior citizens (65+) , when it exceeds 4500000 taka annually and you get a TIN certificate recognized as a respected tax payer. Besides, you pay indirect taxes whenever you shop or buy your daily commodities for your daily life. Doing all these, you think you are contributing a lot in nation's GDP, and this money will be used for your betterment.
Having a sound sleep, thinking all about this, and you wake up hearing news like that-
“S. Alam, suspected of laundering an immense sum of money, with estimates reaching around Tk 1.13 lakh crore ($10 billion+)’’,
”Proshanta Kumar Halder, a former managing director of NRB Global Bank, is at the center of a major scandal for allegedly laundering Tk 80 crore to Canada and illegally amassing Tk 426 crore.’’
’’Tk19,680 crore in seized BO accounts of ex-land minister Saifuzzaman Chowdhury and nine industrial groups.’’
Some information, like a cherry on top we need to know which is-
‘’The country's ranking on a global anti-money laundering index fluctuated, from 82nd out of 152 countries in 2017, worsening before recovering to 46th place in 2023.’’
‘’Bangladesh's annual money laundering is estimated to be around 3.2 percent of the country's GDP, based on a $150 billion stock estimate.’’
‘’Transparency International Bangladesh (TIB) estimates that $3 billion is laundered annually, while the Global Financial Integrity Institute (GFI) puts this figure closer to $8.7 billion.’’
Now a days its very familiar to us having seen these kinds of news in tv channels and news papers.
MONEY LAUNDERING: Making a large amount of money that's generated by criminal activity, such as illegal business, drug trafficking or terrorist funding, appear to have come from a legitimate source. Nowadays, offshore banking and cryptocurrency have made this activity very easy for all the corrupt politicians and businessmen. And their main reason behind is simply evading the tax .
Basically illegal money go through 3 steps to make it appea from legal sources. These steps are-
1. Placement: This is the initial stage, where it injects the “dirty money” into the legitimate financial system by depositing money in the financial system using numerous bank accounts or investing in projects where source of money is not asked. The goal is to distance the money from its criminal source, so that nobody can trace the source of earnings.
Example: A drug trafficker deposits large sums of cash into a series of bank accounts using small, separate transactions to avoid detection (a technique known as "smurfing").
2. Layering: In this stage, the money is moved through a complex series of financial transactions to obscure its origin. complex series of transections indicates passing the money into so many accounts so that real location cannot be traced. This may include wiring funds between accounts in different countries or converting cash into assets.
Example: Funds are transferred through offshore accounts, invested in shell companies, or used to purchase high-value items like art or jewelry.
3. Integration: The final stage involves reintroducing the laundered money into the legitimate economy, making it appear legally earned.
Example: The laundered money is used to purchase real estate in other countries like “begam para in canada”, invest in businesses, or fund luxury lifestyles, all under the guise of legitimate income.
Key reasons identified for money laundering in Bangladesh include:
Transforming Illicit Funds: Converting "black money" into legal funds.
Bribe Payments: Facilitating bribes and "speed money," and concealing their sources.
Higher Remittances: Utilizing illegal channels to receive higher remittances.
Foreign Investment: Seeking higher returns from investments in foreign securities, stocks, and derivatives.
Safe Deposit Abroad: Depositing money safely overseas.
Import Duty Evasion: Evading import duties on high-rate items like gold.
Overseas Property Acquisition: Building second homes abroad.
A lack of strict law enforcement, ethical practices, an imbalance in income and expenditure, and a tendency to prioritize earning more also influence individuals to engage in money laundering.
So many Ways of Money Laundering are found which are very much shocking to know that under observation illegal money is smoothly laundered . These are :
Real Estate Investments: Money laundering through real estate can involve buying foreign properties to move illicit funds. which is the most favourite ways for the corrupt money launderers. The real estate sector in Bangladesh is highly questionable for money laundering due to regulatory loopholes and weak enforcement. Corrupt individuals from Bangladesh have reportedly gathered significant property portfolios in countries like the UK.
Trade Mis Invoicing: This method involves falsifying the value of imports and exports to illegally move money across borders.
Under-invoicing: Exporters declare a lower price for goods than their actual value.
Over-invoicing: A higher price is declared for goods than their actual value.
Misdeclaration and the use of fake documentation are also employed to manipulate trade values.
"Sample Shipment" Method: This is a newer money laundering tactic identified within the export sector.
Hundi System: This informal value transfer system operates outside traditional banking channels. This system is particularly popular among migrant workers from South Asia, including Bangladesh, who use it to bypass official channels for remittances. Money obtained through extortion, bribery, and corruption, is also sent abroad via hundi through mobile financial services and apps.
Offshore Accounts: These accounts are commonly used to conceal laundered money. The government alleges that billions of dollars have been transferred out of Bangladesh and held in offshore accounts.
These whole process is making our country economically fragile. First of all , our tax paid money are transferred which is meant to use for the betterment of citizens. Secondly, when money is transferred from one account to another to finally transfer it in outside. Meanwhile , this exchange of money boost our economy for a short time but it increases demand of money ,inflation and unemployment for a long time.
Even though the interim brings back some amount of money laundered but still its very short In against of total money transferred. We believe still interim government has time to strictly control the laundering and bring them under punishment unless this will be the final nail of the coffin of economic collapse of our Bangladesh.
