Proliferation of Money Laundering: Law and Practice in Bangladesh

University of Rajshahi Rajshahi-6205 Bangladesh.
RUCL Institutional Repository http://rulrepository.ru.ac.bd

Department of Law PhD Thesis
2015
Proliferation of Money Laundering:

Law and Practice in Bangladesh
Islam, Md. Rafiqul

University of Rajshahi
http://rulrepository.ru.ac.bd/handle/123456789/315
Copyright to the University of Rajshahi. All rights reserved. Downloaded from RUCL Institutional Repository.
Proliferation of Money Laundering: Law and
Practice in Bangladesh
By
Md. Rafiqul Islam

Assistant Professor
Department of Law
Dissertation
submitted to the Department of Law, University of Rajshahi, Rajshahi,
Bangladesh in fulfillment of the requirements for the degree of
Doctor of Philosophy
Department of Law
University of Rajshahi, Rajshahi
Bangladesh
July 2015
Proliferation of Money Laundering: Law and
Practice in Bangladesh
Md. Rafiqul Islam

Ph.D. Researcher
Session: 2011-2012
Registration No.2881
Roll No.11202
Department of Law
Dr. Md. Hashibul Alam Prodhan Dr. Md. Anisur Rahman

Co-Supervisor Principal Supervisor
& &
Professor Professor
Department of Law Department of Law
University of Rajshahi University of Rajshahi
Department of Law
University of Rajshahi, Rajshahi
Bangladesh
July 2015
For
my parents
Declaration
I declare that this dissertation entitled Proliferation of Money Laundering:
Law and Practice in Bangladesh prepared for submission to the Department
of Law, University of Rajshahi, for the Degree of Doctor of Philosophy in Law,
is completely a personal work of mine. No part of this dissertation in any form
has been submitted to any other University or Institute for the award of any
degree or diploma.
Md. Rafiqul Islam

Assistant Professor
&
Ph.D. Fellow (2011-2012)
Department of Law
i
Certificate
This is to certify that the dissertation entitled Proliferation of Money
Laundering: Law and Practice in Bangladesh is an original work done by
Md. Rafiqul Islam in the Department of Law, University of Rajshahi, for the
degree of Doctor of Philosophy in Law under our supervision.
It is also certified that we have gone through the draft and final version of the
dissertation and approved it for submission.
Dr. Md. Hashibul Alam Prodhan Dr. Md. Anisur Rahman

Co-Supervisor Principal Supervisor
& &
Professor Professor
Department of Law Department of Law
University of Rajshahi University of Rajshahi
ii
Acknowledgements
It is a great opportunity for me to have undertaken the Ph.D. programme in the
Department of Law, University of Rajshahi, Rajshahi, Bangladesh. To begin
with, I am all thankful to the Almighty for gracing me with this opportunity.
I would like to express my sincere gratitude to my Principal Supervisor,
Dr. Md. Anisur Rahman, Professor, Department of Law, University of Rajshahi
and Co-Supervisor Dr. Md. Hashibul Alam Prodhan, Professor, Department of
Law, University of Rajshahi, for their supervision and proper guidance during
the whole period of the study. Without their cooperation, it would not have
been possible for me to carry out this research.
I am grateful to Professor Dr. Md. Ahsan Kabir, Chairman, Department
of Law, University of Rajshahi and Mr. Biswajit Chanda, Dean, Faculty of
Law, University of Rajshahi, for their cooperation in smoothing the process of
submission of the thesis. I acknowledge my gratitude to all my honourable
teachers, particularly to Professor Dr. M. Badar Uddin, Professor Dr. M.
Habibur Rahman, Professor Dr. Sarker Ali Akkas, and Associate Professor Md.
Waliul Hasanat, LLD as well as to other colleagues of the Department of Law,
University of Rajshahi, for their continuous encouragement towards my
research work.
Anti Corruption Commission (ACC) of Bangladesh, Central Library of
Rajshahi University, Central Library of Dhaka University, Central Library of
iii
Chittagong University, Central Public Library, Public Library of Rajshahi,
NGOs, Bangladesh Bank (BB) and other banks, both public and private,
deserve special thanks for helping me with information for this study. I also
offer my cordial thanks to my friends, relatives and well wishers, who
encouraged and supported me in various ways in the preparation of this
doctoral dissertation.
I would like to thank my family members, who have accompanied me
with their untiring patience, tremendous sacrifice during this study. I am
eternally grateful for the love and inspiration from my lovely children, Sadat
Bin Rafique and Jawad Bin Rafique, and my beloved wife, Shahinur Parvin;
without their sacrifice this dissertation would not come to light in time.
Md. Rafiqul Islam
iv
Table of Contents
Declaration................................................................................................................ i
Certificate ................................................................................................................ ii
Acknowledgements ................................................................................................. iii
Table of Contents..................................................................................................... v
List of Acronyms and Abbreviations ..................................................................... xi
Abstract................................................................................................................. xvi
Chapter One Introduction ....................................................................................... 1
1.1 Introduction ............................................................................................. 1
1.2 Statement of the Problem ......................................................................... 3
1.2.1 Money Laundering ...................................................................... 6
1.2.2 Proliferation of Money Laundering.............................................. 7
1.2.3 Proliferation of Money Laundering in Bangladesh....................... 8
1.2.4 Governmental Initiatives in Bangladesh to Limit Proliferation of
Money Laundering ...................................................................... 9
1.3 Review of Literature .............................................................................. 12
1.4 Methodology of the Study...................................................................... 23
1.5 Objectives of the Study .......................................................................... 24
1.6 Justification of the Study........................................................................ 25
1.7 Utility of the Study................................................................................. 25
1.8 Scope and Limitation of the Study ......................................................... 25
1.9 Structure of the Thesis ........................................................................... 27
Chapter Two Concept of Money Laundering........................................................ 29
2.1 Introduction ........................................................................................... 29
2.2 The Concept of Money Laundering........................................................ 30
2.3 Historical Background of Money Laundering......................................... 35
2.4 Classification of Money Laundering ...................................................... 43
2.4.1 Stages of Money Laundering ..................................................... 43
2.4.2 Modes of Money Laundering..................................................... 47
2.4.2.1 General Modes ............................................................. 47
2.4.2.2 Rare Modes .................................................................. 53
2.5 Case Studies in Foreign Perspective ....................................................... 58
2.6 Case Studies in Bangladesh Perspective ................................................. 62
2.7 Conclusion............................................................................................. 69
v
Chapter Three Proliferation of Money Laundering in Bangladesh ...................... 70
3.1 Introduction ........................................................................................... 70
3.2 Proliferation of Money Laundering ........................................................ 71
3.2.1 Nature of Proliferation of Money Laundering ............................ 72
3.2.1.1 Practical Perspective ..................................................... 72
3.2.1.2 Legal Perspective.......................................................... 74
3.2.2 Causes of Proliferation of Money Laundering............................ 80
3.2.2.1 Factors of Proliferation of Money Laundering ............... 80
3.2.2.2 Reasons of Criminal Engagement in Proliferation of
Money Laundering........................................................ 82
3.2.2.3 Causes of Increasing Money Laundering Activities and
Related Crimes ............................................................. 83
3.2.3 Consequences of Proliferation of Money Laundering................. 84
3.2.3.1 Financial Sectors........................................................... 86
3.2.3.2 Social and Cultural Sectors............................................ 93
3.2.3.3 Political Culture............................................................ 94
3.2.3.4 Growth of Predicate Offences ....................................... 95
3.2.3.5 Global Effects............................................................... 97
3.3 Proliferation of Money Laundering in Bangladesh ................................. 99
3.3.1 Proliferation of Money Laundering through Banks .................. 100
3.3.1.1 Lease and Term Loan Finance..................................... 101
3.3.1.2 National and International Factoring............................ 102
3.3.1.3 Private Placement of Equity/ Securitization of Assets... 103
3.3.1.4 Personal Loan/Car Loan/Home Loan........................... 104
3.3.1.5 Small and Medium Enterprise (SME)/ Women
Entrepreneur Loan ...................................................... 104
3.3.1.6 Deposit Scheme .......................................................... 105
3.3.1.7 Loan Backed Money Laundering................................. 106
3.3.1.8 Structural Vulnerabilities ............................................ 106
3.3.1.9 Property Dealing......................................................... 106
3.3.1.10 Front Companies and False Loans............................... 107
3.3.1.11 Foreign Bank Complicity ............................................ 108
3.3.1.12 Invoices (Import/Export/Local Trading) ...................... 108
3.3.1.13 Working Order Financing ........................................... 109
3.3.1.14 Automated Teller Machines (ATM) ............................ 110
3.3.2 Proliferation of Money Laundering through Capital Market..... 111
3.3.2.1 Broker-Dealers ........................................................... 112
3.3.2.2 Asset Managers, Custodian and Portfolio Managers..... 113
3.3.2.3 Trust, Nominee, and Omnibus Accounts...................... 114
3.3.2.4 Shell Companies ......................................................... 115
vi
3.3.2.5 Margin Trading........................................................... 116
3.3.2.6 Transfer Pricing .......................................................... 116
3.3.2.7 Cheques...................................................................... 117
3.3.2.8 Low Priced Securities and Private Placement............... 118
3.3.2.9 Short Selling............................................................... 119
3.3.2.10 Insider Trading ........................................................... 120
3.3.2.11 Market Manipulation .................................................. 121
3.3.2.12 Securities Fraud.......................................................... 121
3.4 Conclusion........................................................................................... 125
Chapter Four Laws Concerning Money Laundering in Bangladesh .................. 127
4.1 Introduction ......................................................................................... 127
4.2 Relevant Provisions of Domestic Anti-Money Laundering Laws.......... 128
4.2.1 The Money Laundering Prevention Act 2012........................... 128
4.2.1.1 Money Laundering as an Offence................................ 129
4.2.1.2 Establishment of Bangladesh Financial Intelligent Unit
(BFIU) ....................................................................... 131
4.2.1.3 Supervision................................................................. 131
4.2.1.4 Reporting and Compliance Organisations or Institutes . 132
4.2.1.5 Reporting or Compliance Requirements ...................... 133
4.2.1.6 Penalties ..................................................................... 134
4.2.1.7 Summons, Searches and Seizures................................ 137
4.2.1.8 Freezing or Attachment of Property............................. 137
4.2.2 The Anti Terrorism Act 2009 (amended in 2012 and 2013) ..... 138
4.2.2.1 Terrorist Financing is an Offence ................................ 138
4.2.2.2 Supervision................................................................. 139
4.2.2.3 Reporting Organisations or Institutes........................... 141
4.2.2.4 Reporting or Compliance Requirements ...................... 141
4.2.2.5 Penalties ..................................................................... 143
4.2.3 Penal Code 1860...................................................................... 143
4.2.4 The Arms Act 1878 ................................................................. 144
4.2.5 The Code of Criminal Procedure (CrPC) 1898......................... 145
4.2.6 Criminal Law (Amendment) Act 1958..................................... 146
4.2.7 The Customs Act 1969 ............................................................ 147
4.2.8 The Foreign Exchange Regulation Act 1947............................ 148
4.2.9 Mutual Legal Assistance on Criminal Matters Act 2012 .......... 149
4.2.10 The Mutual Legal Assistance Act 2012.................................... 150
4.3 Transnational Steps to Control Money Laundering............................... 151
4.3.1 The United Nations.................................................................. 153
vii
4.3.1.1 United Nations Convention Against Illicit Traffic in
Narcotic Drugs and Psychotropic Substances............... 153
4.3.1.2 United Nations Convention Against Transnational
Organized Crime (UNTOC)........................................ 154
4.3.1.3 International Convention for the Suppression of the
Financing of Terrorism ............................................... 155
4.3.1.4 The Global Programme against Money Laundering
(GPML)...................................................................... 156
4.3.2 Basel Committee on Banking Supervision (BCBS).................. 157
4.3.3 The Financial Action Task Force (FATF) ................................ 159
4.3.4 Council of Europe Convention on Laundering, Search, Seizure
and Confiscation of the Proceeds of Crime .............................. 161
4.3.5 Other Organizations................................................................. 162
4.3.5.1 Wolfsberg Anti Money Laundering Principles ............. 162
4.3.5.2 International Money Laundering Information Network
(IMoLIN) ................................................................... 163
4.3.5.3 Egmont Group of Financial Intelligence Units ............. 164
4.3.5.4 Asia-Pacific Group on Money Laundering (APG or
APGML) .................................................................... 166
4.3.5.5 International Organization of Securities Commissioners168
4.4 Drawbacks of the Existing Anti-Money Laundering Laws in Bangladesh
........................................................................................................... 169
4.4.1 Weaknesses of Enforcement Mechanism ................................. 170
4.4.2 Growth of Technology............................................................. 171
4.4.3 Lack of Proper Information...................................................... 172
4.4.4 Governmental Interference ...................................................... 172
4.4.5 Improper Endorsement ............................................................ 173
4.4.6 Tricky Policies......................................................................... 173
4.4.7 Inadequate Reporting............................................................... 174
4.4.8 Remittance Flow...................................................................... 174
4.4.9 Lack of Proof/Evidence ........................................................... 175
4.4.10 Alternative Dispute Resolution (ADR) .................................... 175
4.5 Conclusion........................................................................................... 176
Chapter Five Implementation of Anti Money Laundering Laws in Bangladesh 178
5.1 Introduction ......................................................................................... 178
5.2 Administrative Rules and Guidelines for Banks/FIs of Bangladesh ...... 179
5.2.1 Appointment of Compliance Officer........................................ 180
5.2.1.1 Central Compliance Unit (CCU) ................................. 180
5.2.1.2 Branch Compliance Unit (BCU).................................. 185
5.2.2 Customer Identification ........................................................... 185
viii
5.2.2.1 Know Your Customer (KYC)...................................... 186
5.2.2.2 Identifying Real Person............................................... 187
5.2.2.3 Customer Acceptance Policy....................................... 188
5.2.2.4 Appropriateness of Documents.................................... 190
5.2.2.5 Introducer................................................................... 192
5.2.3 Employee Identification........................................................... 192
5.2.3.1 Appointment of Employee .......................................... 192
5.2.3.2 Know Your Employee (KYE) ..................................... 193
5.2.3.3 Responsibilities of Employee ...................................... 194
5.2.4 Compliance Programme .......................................................... 195
5.2.5 Record Keeping....................................................................... 197
5.2.5.1 Retrieval of Records ................................................... 198
5.2.5.2 STR and Investigation................................................. 199
5.2.5.3 Training Records ........................................................ 199
5.2.5.4 Branch Level Record Keeping..................................... 200
5.2.5.5 Sharing of Records...................................................... 200
5.2.6 Control Mechanism ................................................................. 200
5.2.7 Training and Awareness Programme ....................................... 201
5.3 Anti Money Laundering Instruments.................................................... 203
5.3.1 Administrative Mechanisms .................................................... 203
5.3.1.1 Bangladesh Bank ........................................................ 204
5.3.1.2 Anti-Corruption Commission (ACC)........................... 206
5.3.1.3 Ministry of Finance (MoF).......................................... 207
5.3.1.4 Ministry of Home Affairs............................................ 207
5.3.1.5 Attorney General Office.............................................. 208
5.3.2 Judicial Mechanisms................................................................ 208
5.3.2.1 Judicial Procedure....................................................... 208
5.3.2.2 Law Enforcing Agency ............................................... 210
5.4 Challenges Faced by Governmental Institutions Engaged for Limitation of
Money Laundering Activities in Bangladesh ...................................... 215
5.4.1 Lack of Formal Banking System.............................................. 216
5.4.2 Lack of Proper Identification ................................................... 216
5.4.3 Lack of Fund ........................................................................... 217
5.4.4 Lack of Regulatory Mechanisms.............................................. 217
5.4.5 Improper Awareness................................................................ 218
5.4.6 Weak Institutional Framework................................................. 219
5.4.7 Lack of Effective Administration............................................. 219
5.4.8 Misuse of Charitable Funds ..................................................... 220
5.4.9 Gaming Activities.................................................................... 220
ix
5.4.10 Deployment of Experts ............................................................ 221
5.5 Conclusion........................................................................................... 221
Chapter Six General Conclusion.......................................................................... 223
6.1 Introduction ......................................................................................... 223
6.2 Findings of the Study ........................................................................... 224
6.2.1 Preventing Proliferation of Money Laundering in Bangladesh . 224
6.2.2 Effectiveness of Anti Money Laundering Laws in Bangladesh. 225
6.2.3 Governmental Interference ...................................................... 226
6.2.4 Insufficient Fund ..................................................................... 226
6.2.5 Political Influence.................................................................... 227
6.2.6 Lack of Awareness .................................................................. 227
6.2.7 Procedural Weakness............................................................... 228
6.2.8 Money Laundering as a Crime ................................................. 228
6.2.9 Weakness in Implementation ................................................... 228
6.2.10 Technological Development .................................................... 229
6.2.11 Money Laundering as a Dirty Game ........................................ 230
6.3 Suggestions for the Better Management to Prevent Money Laundering in
Bangladesh. ........................................................................................ 230
6.3.1 Policy Measures of Bangladesh Bank ...................................... 230
6.3.2 Policy Measures for Strengthening Financial Sector ................ 232
6.3.3 Policy Measures of Capital Flight ............................................ 234
6.3.4 Guidelines for Foreign Exchange Transactions ........................ 236
6.3.5 International and Regional Cooperation................................... 236
6.3.5.1 International Cooperation............................................ 237
6.3.5.2 Regional Cooperation ................................................. 237
6.3.6 Strengthening the Prevention and Detection Policy of Money
Laundering .............................................................................. 238
6.3.7 National Strategy and Corresponding Policies ......................... 238
6.3.7.1 Legislation.................................................................. 239
6.3.7.2 Comprehensive Reporting........................................... 239
6.3.7.3 Capacity Building ....................................................... 240
6.3.7.4 Cooperation and Coordination..................................... 240
6.3.7.5 Supervision of Regulatory Bodies ............................... 241
6.3.7.6 Negotiation................................................................. 241
6.4 Conclusion........................................................................................... 242
Bibliography ........................................................................................................ 244
Enactments .......................................................................................................... 250
Appendices........................................................................................................... 252
x
List of Acronyms and Abbreviations
ACC Anti-Corruption Commission

ADB Asian Development Bank
AML Anti-Money Laundering
AMLD Anti-Money Laundering Department
AMLU Anti-Money Laundering Unit
APGML Asia Pacific Group on Money Laundering
APRRG Asia Pacific Regional Review Group
ATA Anti -Terrorism Act
ATO Anti-Terrorism Ordinance
BAMLCO Branch Anti-Money Laundering Compliance Officer
BB Bangladesh Bank
BCBS Basel Committee on Banking Supervision
BCS Bangladesh Civil Service
BDT Bangladesh Taka
BFIU Bangladesh Financial Intelligence Unit
BGB Border Guard of Bangladesh
BMPE Black Market Peso Exchange
BO Beneficial Owner
BP Bangladesh Police
BSA Bank Secrecy Act
CAG Comptroller and Auditor General
xi
CAMLCO Chief Anti-Money Laundering Compliance Officer
CCU Central Compliance Unit
CDD Customer Due Diligence
C&F Clearing and Forwarding Agents
CFATF Caribbean Financial Action Task Force
CFT Counter Financing and Terrorism
CID Criminal Investigation Department
CMI Capital Market Intermediaries
CPTU Central Procurement Technical Unit
CSE Chittagong Stock Exchange
CTC Counter Terrorism Committee
CTR Currency Transaction Report
CTRs Cash Transaction Reports
DoC Department of Cooperatives
DoS Department of State
DSE Dhaka Stock Exchange
EAG Eurasian Group
EBRD European Bank for Reconstruction and Development
EC Election Commission
ECB European Central Bank
EDD Enhanced Due Diligence
EG Egmont Group
EGFIU Egmont Group of Financial Intelligence Units
ESAAMLG Eastern and Southern Africa Anti-Money Laundering Group
xii
FATF Financial Action Task Force
FERA Foreign Exchange Regulation Act
FI Financial Institution
FinCEN Financial Crimes Enforcement Network
FI U Financial Intelligence Unit
GDP Gross Domestic Product
GIFCS Group of International Finance Centre Supervisors
GoB Government of Bangladesh
GPML Global Programme against Money Laundering
IAIS International Association of Insurance Supervisors
ICAB Institute of Chartered Accountant of Bangladesh
ICRG International Cooperation Review Group
IDB Inter-American Development Bank
IFIs International Financial Institutions
IMF International Monetary Fund
IOSCO International Organization of Securities Commissions
IPO Initial Public Offer
IRD Internal Resources Division
JMB Jamaat ul-Mujahideen Bangladesh
KYC Know Your Customer
KYE Know Your Employee
MCs Money Changers
MER Mutual Evaluation Report
MIS Management Information System
xiii
ML Money Laundering
MLCA Money Laundering Control Act
MLM Multi Level Marketing
MLPA Money Laundering Prevention Act
MLPO Money Laundering Prevention Ordinance
MoF Ministry of Finance
MoUs Memoranda of Understanding
NBR National Board of Revenue
NCC National Coordination Committee
NCCT Non-Cooperative Countries and Territories
NGOs Non Governmental Organizations
OECD Organisation for Economic Co-operation and Development
OOCL Orient Overseas Container Line
PEPs Politically Exposed Persons
POCA Proceeds of Crime Act
SAARC South Asian Association for Regional Cooperation
SAR Suspicious Activity Report
SEC Stock Exchange Commission
STRs Suspicious Transaction Reports
SOPs Standard Operating Procedures
SWIFT Society for Worldwide Interbank Financial
Telecommunication
TC Travelers’ Cheque
TF Terrorist Financing
xiv
TIB Transparency International Bangladesh
TP Transaction Profile
UK United Kingdom
UN United Nations
UNCAC United Nations Convention Against Corruption
UNODC United Nations Office on Drugs and Crime
UNSCR United Nations Security Council Resolution
USA United States of America
USD United States Dollar
WCO World Customs Organization
xv
Abstract
Money Laundering (ML) is an issue much-discussed all over the world
including Bangladesh. States and number of transnational organisations are
concerned about the issue and have taken various steps in preventing ML and
controlling activities associated with it at both national and international levels.
The government of Bangladesh has also acted on many forums to prevent ML.
However, no significant result is evident in this regard. The aim of the study is
to explore the concept of ML, determine the existing laws concerning Anti
Money Laundering (AML), and also examine the role of the government of
Bangladesh in preventing ML.
The study has been conducted on an elaborate pattern of 06 (six)
chapters with sections and sub-sections. The introductory chapter includes the
statement of the problem, literature review, methodological aspect and
objectives of the study, along with its necessity, scope and limitations. The
following chapter discusses the conceptual issues covering the definition,
historical background, and analyses the classification, stages, and different
modes including some relevant case studies on ML. Chapter Three explains the
term ‘proliferation of money laundering’ and also examines its nature, causes
and consequences. At the same time, the chapter also focuses on the sectors
through which ML occurs in Bangladesh. The next chapter briefly describes the
relevant provisions of domestic AML laws and transnational initiatives to
prevent ML and also examines the drawbacks of existing AML laws of
xvi
Bangladesh. The implementation of AML laws, administrative rules and
guidelines are discussed in the penultimate chapter which focuses on the role of
governmental institutions engaged in implementing the provisions of AML
laws with a view to preventing ML in Bangladesh. The chapter examines both
of their operational and functional frameworks at national and international
levels, and also analyses the obstacles and challenges faced by the concerned
authority or institutions engaged in preventing ML in Bangladesh.
The concluding chapter puts forward some suggestions on the basis of
the summaries of findings and identifies specific challenges addressed in the
thesis. In addition to these, the chapter summarises the main arguments used in
the thesis and suggests a few ways of preventing ML by amending existing
AML laws; cumulatively, critically synthesises all of the above mentioned
issues and constitutes the outcome of the study.
xvii
Chapter One
Introduction
1.1 Introduction
Money Laundering (ML) is a serious concern in every country whatsoever the
nature of the country is, large or small, rich or poor.1 It affects economic
situation, social culture, political integrity and the national stability of a
country. ML may provide advantages to drug dealers, smugglers, terrorists
along with corrupt public servants and other criminals.2 ML impacts on
established institutions in financial-sector and hinders economic growth.
Subsequently, it slows down the economic growth of a country by reducing
productivity in the industrial sectors through diverting resources. Activities
connected to ML also distort the external economic sector, international trade
and capital flows, in turn long-term economic development.3 These negative
consequences of ML have awakened the governments to be more concerned
and they have introduced Anti-Money Laundering (AML) laws and policies,
although those initiatives do not always seem sufficient in limiting ML
activities and related crimes at the optimum level.
The subversive nature of practices has made it difficult to define and
characterize the term ‘money laundering’ in absence of universal single
1
Bowden Stephen, Money Laundering: Key Issues and Possible Action (Commonwealth Secretariat,
UK, January 1997). p. 1.
2
Davi M. D'Agostino, Money Laundering: Extent of Money Laundering Through Credit Cards Is
Unknown (Diance Publishing Co. Alibris, UK, December 2002). p. 6.
3
Anti Money Laundering Section, Janata Bank Limited, “Anti Money Laundering Policy.” Dhaka,
Bangladesh (October 2011). pp. 9-10.
2
definition. However, the concept is generally understandable by explaining its
sources: dirty and clean. Dirty money refers to the money earned from illegal
sources and the launderers transform the earnings into funds with seemingly
legal sources. Clean money, for the purpose of the study, is money earned
through legal sources. This clean money becomes controversial when someone
launders or misappropriates it for the purpose of illegal activities.
Generally, ML means the movement of illicit funds for the purpose of
concealing the original sources of that fund. ML is, in fact, a multi-faceted
process of disguising, transferring, retaining, remitting or investing of
unlawfully derived money (from moveable or immovable property) in domestic
or international level by concealing the origin.4 It can be as simple as cash
deposit and withdrawal from a bank account. At the same time, it is also as
complex as international off-shore banking,5 using internet, wire transfers, shell
corporations,6 or bulk cash smuggling and monetary instruments, informal
personal networks, and so on.
ML has grown into an alarming stage in Bangladesh because of rising
crimes like smuggling, drug dealing and corruption. This alarming growth and
their links with other crimes, including illegal trade (in narcotics) have made it
a major global problem. It is practiced through engagement in financial
4
M.S. Siddiqui, “Need for Reviewing Anti-money Laundering Law to Serve Its Real Purpose.” The
Financial Express, Dhaka (27 July 2009).
5
An offshore bank is a bank located outside the country of residence of the depositor, provides
financial and legal advantages. These advantages typically include: greater privacy, low or no
taxation (i.e. tax havens) easy access to deposits (at least in terms of regulation), protection against
local, political, or financial instability.
6
Shell corporations are those corporations that primarily exist only as named legal entities, without
any trading and business activities.
3
transactions by concealing identity, source, purpose and final stage of
laundered money. 7 The condition purports the use of illegal money legally,
averting connecting with criminal activities and avoiding the eyes of law
enforcement authority. ML is virtually in existence with every country
especially in present situation when more flexible global financial market has
opened up. As such, a single scheme usually involves the transfer of money
through several countries so as to obscure its origins.
In detecting ML and limiting it, governments enact legislations as well
as execute those. Nonetheless, individual nation has no power to stop ML
despite having number of legislations, policies and regulations since many of
launderings happen by connecting more than one country. Thus, the issue gets
international character.
1.2 Statement of the Problem

ML is widely spread in different countries including Bangladesh. The cross-
border money flows, tax evasion, corruptions, terrorism, smuggling,8
trafficking (of men, women, child, and narcotics or drugs etc.), illegal trade and
so on are related with the proliferation of money laundering in Bangladesh. The
ML activities and related crimes are seen in national and international levels. It
is deemed as a finance-based crime that buckles down to conceal, misrepresent
7
Mahalingam Sudha, “Economic Offences: Dealing with Dirty Money.” Frontline (national
magazine of Indian), The Hindu, Vol. 15, No. 07 (4 – 17 April 1998).
8
Smuggling of money or property means-(i) transfer or holding money or property outside the country
in breach of the existing laws in the country; or (ii) refrain from repatriating money or property from
abroad in which Bangladesh has an interest and was due to be repatriated; or (iii) not bringing into the
country the actual dues from a foreign country, or paying to a foreign country in excess of the actual
dues. The Money Laundering Prevention Act, 2012 (Act No. 05 of 2012). Sec-2 (a).
4
and to disguise all the details with regard to illegal income. However, ML
activities are also extending beyond regulated market with increased money
flows outside conventional banking by transferring currency from outside state
territory. ML appears as a malpractice of money transaction which is regulated
outside a legal framework. 9
ML activities and related crimes are committed frequently and also
increasing day by day through the financial, non financial and other sectors in
Bangladesh. This raises a question about the awareness of concerned persons or
organs from the view point of their supervision, efficiency, reputation or
implementing mechanism in preventing ML activities. The efforts of banking
sector on the prevention of ML activities cannot be achieved to a satisfactory
level without introducing proper regulations; while, the government plays the
key role.
There are specific ways of ML of which the most common are black
market peso exchange, structuring deposits, offshore banking, underground or
alternative transactions, shell company etc.10 Overall context of counter
terrorism, ML activities and related crimes must be kept in purview with equal
importance. In this regard, enacting appropriate AML laws (side-by-side) and
its proper execution are important to build up capacity in order to identify ML
activities and related crimes. Money collected for charitable purposes and often
9
Bangladesh Financial Intelligence Unit (BFIU), Bangladesh Bank (BB), “Guidance Notes on
Prevention of Money Laundering and Terrorist Financing.”Dhaka, Bangladesh (16 September
2012). Available at <http://www.bangladesh-bank.org/aboutus/regulationguideline/aml/16sep2012
guideline pdf > Accessed on 20 January 2014. p. 1.
10
Sudha, op.cit.
5
distributed to terrorist groups, thereby both enhancing the capability of
disadvantaged people and boosting specific terrorist groups. Boosting up of
terrorist groups disrupts the general functions of government’s administration
in Bangladesh.11
The development of information technology has increased the
possibility of moving money fast along with maintaining confidentiality. The
government of Bangladesh has not prepared enough paperwork to protect ML
on the strain of Foreign Exchange (FX) reserve and understaffing of FX
although there are different agencies involved in this area. Joint oversight
activities may complicate things even further. Notwithstanding such
interpretation, based largely on perception, it was prudent to make this explicit
in 1988 under the United Nations Convention Against Illicit Traffic in
Narcotics, Drugs and Psychotropic Substances. Otherwise, Bangladeshi
legislation will turn out ineffective in dealing with ML activities connected
with offshore transactions. According to the United Nations Convention
Against Transnational Organized Crime (The Palermo Convention 2000), the
scope of ML activities and related crimes has been elaborated.12
Several countries follow strong bank-secrecy laws so that a bank cannot
provide with information about any details of its account holder to others. The
process facilitates the anonymous depositing of dirty money13 followed by
11
Hearns Michael, “Terror Financing Loopholes in Existing Laws Need to be Plugged.” The Daily
Star, Dhaka (25 September 2010).
12
The United Nations Convention Against Transnational Organized Crime (2000). Art 6.
13
Dirty money is money that is illegally earned, illegally transferred or illegally utilized. The money
qualifies as dirty money through breaking laws in its origin, movement or use.
6
transferring to another country. The government of Bangladesh fails to fully
control ML, despite it has introduced AML laws.14 According to the Bangladesh
Economic Association (BEA), roughly $6bn has been transferred outside proper
channels in the year 2002-2003, more than half of which was moved through
smuggling. More than 20% of the laundered money is transferred as
undocumented remittances from outside the country, while the bribery covers
about 7% of the total amount. The survey also revealed that informal money
transfer, or hundi,15 responsible for the bulk of the funds Bangladeshis transfer
every year to other countries for education, leisure trip, medical treatment etc.
involved $5.9 bn for the fiscal year 2002-2003.16
1.2.1 Money Laundering

In fact, there is no unique definition of ML. However, ML refers to handling
money via unlawful processes with a view to disguising or concealing their
sources of earning. The process of ML may appear in complex ways; it is also
difficult to clearly determine activities connecting to ML. It may be seen as self-
preserving and at the same time self-generating process having no exact time of
beginning and ending. The activities related to ML may be realized in many
ways. Many times, the persons involved use innovative techniques in committing
ML. However, there are some typical ways and techniques which they have been
using for a long period such as placement, layering and integration.17
14
Ahmed Ali, “Anti-money Laundering Measures Still Ineffective.” The Daily Star, Dhaka (29 May 2004).
15
Hundi is an alternative remittance system that is popular among not only immigrant workers, but
also all strata of Bangladesh society.
16
This figure was presented at a seminar by Professor Dr. Abul Barakat, Department of Economics,
Dhaka University and the general secretary of the Bangladesh Economic Association (BEA). Cited
in M S Siddiqui, “Need for Reviewing Anti-money Laundering Law to Serve Its Real Purpose.”
The Financial Express, Dhaka (27 July 2009).
17
Details in the following chapter 2.4.1.
7
ML activities became much complicated when the enterprises use non
existing products or services for tax evasion. It affects national economic
strength, open market economy, and the rule of law. Moreover, it threatens to
the efficiency and stability of overall financial system. Subsequently, AML
legislations have extended jurisdiction not only over banks and financial
intermediaries, but also to personal level i.e. professionals and agents,18 the
AML provisions of laws are diversified through a set of international and
domestic sources.
1.2.2 Proliferation of Money Laundering
Proliferation of money laundering is inflation of ML which cannot be
understandable without explaining in depth the concept of ‘money laundering.’
The researchers have been searching for a concrete meaning of proliferation of
money laundering. The proliferation is either expansion or effects or
consequences of its origin–money laundering. Money launderers try to create a
false impression that the funds in their possession are generated from legitimate
sources.19 Sometimes they mislead law enforcing authorities so that the
authorities fail to trace the actual sources of the money. Thus, they escape
punishment despite their misdeeds relating to financial transactions.
ML affects society where it flourishes since the relationships between
crimes connected to financial transactions and ML are quite close. There is likely
18
The professionals are the lawyer, notary, other legal professional and accountant, and the dealer in
precious metals or stones, real-estate developer or its officers or employees or agents and so on.
19
Peter J. Kacarba, “An In depth Analysis of the New Money Laundering Statute.” Akron Tax
Journal, Vol. 8, No. 2 (United States, 1991).
8
to be an increase of unlawful economic transaction parallel to spreading of ML.
Hence, the general view is that ML operates to boost up illegal activities in the
field of financial sectors along with other different criminal activities.
1.2.3 Proliferation of Money Laundering in Bangladesh

Geographical location is an important factor to determine the social culture,
political integrity, scope of ML and the preventing measures of ML of a country.
ML activities depend upon relation and communication between the launderers
and a country. It is necessary to know the strategic geographical location of a
country in order to achieve real knowledge about ML. Bangladesh is a
developing country, located in South Asia, having borders with India on the
west, north and north east, Myanmar on the east and Bay of Bengal on the south.
The economy of Bangladesh has developed in many fronts; among them
cash-based is important one. Most trade in Bangladesh is operated through
physical transactions of money other than online or card purchase.20 Generally,
in the age of globalisation, people transfer money abroad using the banking
channel and by bulk cash smuggling.21 However, a large portion is often
transferred through hundi networks or other informal money transferring
systems. Hundi transaction costs lesser than a formal process and the system is
based on trust. An effective policy with strong foreign exchange laws may
20
21
Bulk cash smuggling is the smuggling of cash physically from one place to another jurisdiction,
which deposited in a financial institution, such as an offshore bank, with greater bank secrecy or
less rigorous money laundering enforcement. Available at <http://www.justice.gov/dea/pubs/pressrel
/011106.pdf.> Accessed on 15 March 2014.
9
prevent criminals from committing ML activities. The government of Bangladesh
has been trying to limit ML activities and related crimes. The lack of awareness
of mass people and shortcomings of the law enforcing agencies are observed as
the main obstacles to prevent proliferation of money laundering in Bangladesh.
1.2.4 Governmental Initiatives in Bangladesh to Limit Proliferation

of Money Laundering
A controlling body is required to govern the financial sector of a country. The
government of Bangladesh established Bangladesh Bank (BB)22 in 1971as the
Central Bank of Bangladesh for controlling and supervising financial
institutions. The BB has been issuing number of guidelines23 in favour of banks
(both government and private), financial institutions, insurance companies etc.
since the beginning. These guidelines include direction to deal with transferring
money, prevent ML and TF activities. However, it took long time for
Bangladesh government to enact AML laws. At first, the government of
Bangladesh enacted the Anti Money Laundering Act 2002 to prevent ML
activities. It was amended in 2005 to include predicate offences as ML. The
Act was again amended in 2008 to include a provision of stock market
22
Bangladesh Bank is responsible for the banking supervision in Bangladesh. The Bank’s affairs and
business is controlled by a Board of Directors, made up of nine members, including the Governor,
Deputy Governor, three government officials and four persons with advanced banking, commerce and
finance experience. The core legal framework for banking supervision in Bangladesh is laid down in
article 7A (f), the Bangladesh Bank Order, 1972 (President Order No.20, 1972) and in section 44 of
the Bank Company Act (BCA), 1991 (Act No. XIV of 1991).The Bank and Financial Institutions
Division of Ministry of Finance exercises control over the State Controlled Banks through
appointment/ nomination of the Board of Directors, although they are under the supervisory purview
of Bangladesh Bank. Bangladesh Bank supervises all the commercial banks as per instructions given
in the Bank Company Act 1991 in conjunction with the Bangladesh Bank Order 1972.
23
For instance, “Guidance Notes on Prevention of Money Laundering and Terrorist Financing”,
Bangladesh Financial Intelligence Unit (BFIU), Bangladesh Bank (BB), Dhaka (16 September
2012) “Guidelines on Prevention of Money Laundering & Combating Financing of Terrorism for
Capital Market Intermediaries”, BFIU, BB, Dhaka (2013) and “Guidelines on Prevention of Money
Laundering and Combating Financing of Terrorism for Designated Non Financial Business and
Profession”, BFIU, BB, Dhaka (2013).
10
manipulation, which was passed by the parliament in February 2009. At the
same time, the Anti Terrorism Act 2009 was also enacted. Further repealing the
Money Laundering Prevention Act 2009, the Money Laundering Prevention
Act 2012 was enacted to introduce a provision to make admissible foreign
documents in court and to back siphon off money from abroad. Similarly, the
Anti Terrorism Act 2009 was also amended in 2012 and 2013 to meet
international standards and to establish an effective regime in Bangladesh to
deal with Terrorist Financing (TF).
In 2007, BB formed its Financial Intelligent Unit (FIU) for receiving,
analyzing and disseminating Suspicious Transaction Reports (STRs) and Cash
Transaction Reports (CTRs) related to ML and TF. The FIU was tasked to take
care of Anti Money Laundering Division (AMLD) of the BB. At the present,
the FIU works as a separate unit of the BB renamed in 2012 as Bangladesh
Financial Intelligence Unit (BFIU).24
The government of Bangladesh established Anti Corruption Commission
(ACC) under the Anti Corruption Commission Act 2004. Initially the ACC
could not function well due to its limited power; however, it got more power
after the government had amended the Anti Corruption Commission Act in
2007 in the light of United Nations Convention against Corruption, which was
adopted by General Assembly on 31 October 2003. The ACC is entitled to
freeze the property acquired by ML activities.
24
Details in chapter 4.2.1.2. The Financial Intelligence Unit (FIU) was established in Bangladesh
Bank (BB) for receiving, analyzing and disseminating Suspicious Transaction Reports (STRs) and
Cash Transaction Reports (CTRs) related to Money Laundering (ML) and Terrorist Financing (TF)
on 16 May 2007. The Anti Money Laundering Division (AMLD) is now working as a separate unit
in Bangladesh Bank (BB) as Bangladesh Financial Intelligence Unit (BFIU). The Money
Laundering Prevention Act, 2012 (Act No. 05 of 2012). Sec- 24.
11
The government has also ratified a number of international treaties such
as the United Nations Convention Against Illicit Traffic in Narcotic Drugs and
Psychotropic Substances (the Vienna Convention 1988)25 and the United Nations
Convention Against Transnational Organized Crime (the Palermo Convention
2000) for preventing and controlling ML activities. Bangladesh is a member of
Asia Pacific Group on Money Laundering (APG or APGML) from its inception
which was formed to ensure the adoption, implementation and enforcement of
the recommendations of the Financial Action Task Force (FATF).26 This aims to
achieve international AML standards. In addition, the government of Bangladesh
has reframed its existing Voluntary Tax Compliance (VTC) Programme by
issuing a new Statutory Regulation Order (SRO) by National Board of Revenue
(NBR), which rescinded the previous VTC Programme to address the FATF
concerns expressed in the public statement in the NBR Chairman’s summary
following the October 2011 plenary meeting.27
25
The Convention was adopted by the United Nations Conference for the Adoption of a Convention
against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, held at Vienna from 25 November
to 20 December, 1988. The Conference was convened pursuant to resolution 1988/8 of 25 May, 1988 of
the Economic and Social Council acting on the basis of the General Assembly resolutions 39/141 of 14
December, 1984 and 42/111 of 7 December, 1987. The Convention was open for signature at the United
Nations Office at Vienna, from 20 December, 1988 to 28 February, 1989, and thereafter at the
Headquarters of the United Nations at New York, until 20 December, 1989. The Convention entered into
force on 11 November, 1990, in accordance with Article 29(1) of the Convention. In addition to the
Convention, the Conference adopted the Final Act and certain resolutions which are annexed to the Final
Act. The text of the Final Act was published in document E/CONF.82/14. Available at <http://treaties.
un.org/pages/ViewDetails.aspx? src=TREATY & mtdsg no=V.> Accessed on 12 October 2013.
26
Details in the following chapters 4.3. The FATF is an inter-governmental body founded by G7
countries (Canada, France, Germany, Italy, Japan and United Kingdom) created in 1989, whose
purposes is the development and promotion of national and international policies to combat money
laundering and terrorist financing. These are currently 34 members of the FATF; 32 jurisdictions
and two regional organizations (the Gulf cooperation’s Council and European Commission). These
34 Members are at the core of global efforts to combat money laundering and terrorist financing.
These are also 27 international and regional organizations which are Associate Members or observers of the
FATF are participate in its work. Available at <http://www.fatf-gafi.org/document/5/0,3343, en_32236869
34310917_ 1_1_1_1, 00. html.> Accessed on 27January 2014.
27
12
1.3 Review of Literature

There are a good number of books, reports and articles published in the field of
money laundering. Except for one book and one article on money laundering
and terrorist financing in Bangladesh, none of the books or articles covers and
relate to money laundering and existing anti money laundering laws in
Bangladesh. A brief description of some related works on money laundering of
different countries are given below:
Paolo Bernasconi has stated in his book entitled Money Laundering and
Banking Secrecy28 that ML and banking secrecy had become a threat to entire
integrity of financial system. The book evaluates International trend of ML as a
serious threat to the stability of democracy and the rule of law. In order to
combat ML efficiently, it is clear that criminal law was not sufficient and that it
was necessary for banks and other financial institutions to co-operate with law
enforcement agencies of a country. The banking community is now obliged to
report suspicious transactions, which they often regard as going beyond their
role as bankers. The issue of bank secrecy has played an important role in the
discussion between law enforcement agencies and banking community. The
Council of Europe Convention on Laundering Search, Seizure and Confiscation
of the Proceeds from Crime and the UN Drugs Convention require that bank
secrecy cannot be an obstacle to international co-operation. At the national
level the seizure of bank records should not be hindered by bank secrecy.
28
Paolo Bernasconi, Money Laundering and Banking Secrecy (Kluwer Law International,
Netherlands, 1995).
13
Danny R. Burton in his book entitled Money Laundering: A Framework
for Understanding U. S. Efforts Overseas29 has explained the United States and
selected European countries’ approaches to combating money laundering
through regulation of financial institutions as well as United States participation
in international agreements to combat ML.
Stephen Bowden in his book entitled Money Laundering: Key Issues
and Possible Action30 has discussed the serious threat posed by ML to all
countries, large and small, rich and poor, and demonstrates the effect of ML not
only on economic development but also on political integrity and stability of
nations. The paper recommends measures to strengthen the financial sector,
considers practical issues involved in combating money laundering in offshore
financial centers in the parallel economy.
Temple has given a quick guide which looks at the scale of problems
and efforts taken to overcome from the effect of money laundering in his book
entitled Essential Elements of the Prevention of Money Laundering: A study.31
This study is an important reference for all who are concerned to identify ML
within their organization. It is a quick guide on how to prevent an organization
being used by money launderers.
In the book entitled The Art and Science of Money Laundering32 by
Brett F. Woods shows and finds out how the world’s best money launderers
29
Danny R. Burton, Money Laundering: A Framework for Understanding U. S. Efforts Overseas
(Diance Publishing Co. Alibris, UK, 1996).
30
Bowden Stephen, Money Laundering: Key Issues and Possible Action (Commonwealth Secretariat,
Marlborough House in London, UK, 1997).
31
Temple, P. Essential Elements of the Prevention of Money Laundering: A Study (Securities
Institute Ltd., UK, 1998).
32
Brett F. Woods, The Art and Science of Money Laundering (Paladin Press, USA, May 1998).
14
evade sophisticated high-tech detection measures and move money freely in the
electronic age. The book also provides the latest international law enforcement
countermeasures for stopping illegal flow of money.
Danny R. Burton has discussed in his book entitled Money Laundering:
FinCEN Needs to Better Communicate Regulatory Priorities and Time Lines33
about the regulatory role of the Financial Crimes Enforcement Network
(FinCEN), which is a bureau of the United States Department of the Treasury that
collects and analyzes information about financial transactions to combat domestic
and international money laundering, terrorist financing, and other financial crimes.
In 1994, FinCEN’s anti-money laundering role was expanded to include
responsibility for promulgating regulations under the Bank Secrecy Act (BSA). In
1994 Treasury was directed to take certain actions regarding the use of money
transmitting businesses by criminals involved in money laundering. The report
assesses FinCEN’s efforts to issue regulations pursuant to the BSA.
Another study in this area, Dirty Money: The Evolution of Money
Laundering Counter-measures34 by Gilmore, William C describes the
laundering of criminal proceeds through abuse of internet banking and
gambling; also potential for abuse presented by the development of smart cards
and cyber wallets. To adapt to these advances in criminal activity, existing
AML measures have been revised in different countries of the world. This
33
Danny R. Burton, Money Laundering: Fincen Needs to Better Communicate Regulatory Priorities
and Time Lines (Diance Publishing Co. Alibris UK, June 1998).
34
Gilmore, William C. Dirty Money: The Evolution of Money Laundering Counter-measures (2nd ed.;
Council of Europe Press, Strasbourg, France, 1999).
15
work describes various international measures, such as Project Octopus and
work of individual countries, with specific updating of the situation in
Caribbea, Latin America and Asia.
Guy Stessens provides a deep analysis of the legal issues raised by
international fight against money laundering in his book entitled Money
Laundering: A New International Law Enforcement Model.35 It offers an
extensive comparative research of criminal law and preventive law aspects
from international perspective. Stessens shows ML as a new criminal trend
threatening both national and international societies which must be addressed
multilaterally through banking practice, international conventions and human
rights. Most of this is devoted to specific legal problems that spring from
international nature of ML phenomenon. It contains a detailed overview on
rules and practices of international co-operation in preventing measures against
ML. The publication gives a thorough examination of the exchange of
information, lifting banking secrecy, and seizing and confiscating assets as well
as the jurisdictional questions that inevitably arise in this context.
Peter Alldridge discusses in his book entitled Money Laundering Law:
Forfeiture, Confiscation, Civil Recovery, Criminal Laundering and Taxation of
the Proceeds of Crime36 of the past twenty years action in respect of the profits
of crime that has moved rapidly up the criminal justice agenda. This book
35
Guy Stessens, Money Laundering: A New International Law Enforcement Model (Cambridge
University Press: London, August 2000).
36
Peter Alldridge, Money Laundering Law: Forfeiture, Confiscation, Civil Recovery, Criminal
Laundering and Taxation of the Proceeds of Crime (Hart Publishing, Oxford, UK, January 2003).
16
examines critically the history, theory and practice of all developments,
culminating in the Proceeds of Crime Act 2002 in the UK; it marks another
step in the move towards greater concentration on both the financial aspects of
crime and internationalization of criminal law.
Davi M. D’Agostino has defined money laundering and discussed about
the vulnerabilities of money laundering that may exist in credit card industry in
his book entitled Money Laundering: Extent of Money Laundering Through
Credit Cards Is Unknown.37 The book explains the efforts by the industry to
address potential vulnerabilities of money laundering using credit cards; and
existing regulatory mechanisms to oversee the credit card industry and help to
ensure the adequacy of required anti-money laundering programs.
The book Money Laundering: Business Compliance38 by Stuart Bazley
and Caroline Foster have explored the practical approach and hands on
guidance to understand the Regulations and the Proceeds of Crime Act 2002
and the guidance notes in United Kingdom (UK) for Money Laundering
Reporting Officers (MLROs), directors, compliance officers, risk officers,
finance directors and accountants, company secretaries and all those within the
regulated sector. Bazley and Foster bring experience and inside knowledge of
the regulations and potential pitfalls in practice, and provide tips to help
companies avoid liability for ML.
37
Davi M. D’Agostino, Money Laundering: Extent of Money Laundering Through Credit Cards Is
Unknown (Diance Publishing Co. Alibris, UK, 2003).
38
Stuart Bazley, Caroline Foster, Money Laundering: Business Compliance (Elsevier, Amsterdam,
Netherlands, July 2004).
17
Peter Reuter and Edwin M. Truman have carried out an important study
on Chasing Dirty Money: The Fight Against Money Laundering 39 which deals
with the scale and characteristics of ML. The book describes the current anti-
money laundering regime, develop a framework for assessing the effectiveness
of the regime, and use that framework to assess how well the current system
works and make proposals for its improvement.
Paul Allan Schott has pointed out in his book entitled Reference Guide
to Anti-money Laundering and Combating the Financing of Terrorism40 a
comprehensive source of practical information on how countries can fight
against ML and TF activities. The book discusses the problem caused by ML.
At the same time, the book explains the concept of new international initiative
to prevent ML activities. The book also addresses the specific actions and the
role of international organizations plays in preventing ML.
In the book entitled Money Laundering: Experiences,41 Charles
Goredema explains the main reasons of ML—disclosure in relation to foreign
tax evasion—definition of predicate offence and criminal conduct. This book
also points out the reason for deeming conduct abroad to take place in UK and
looks at well established principle that no country takes any notice of the
revenue laws of another.
39
Peter Reuter and Edwin M. Truman, Chasing Dirty Money: The Fight Against Money Laundering
(Peterson Institute Press, NW Washington DC, USA, November 2004).
40
Paul Allan Schott, Reference Guide to Anti-money Laundering and Combating the Financing of
Terrorism (World Bank Publications, United States, February 2006).
41
Goredema Charles, Money Laundering: Experiences (Institute for Security Studies, Pretoria, South
Africa, 2006).
18
Wouter Muller, Christian Kalin and John Goldsworth have discussed in
their book entitled Anti-Money Laundering: International Law and Practice42
about AML with definitive reference on ML and practice. There is also an
overview to make a comparison between the most important topics of money
laundering legislation and rules in different countries of Europe.
Mahfuzur Rahman focuses, in his book entitled Money Laundering
Protirodh43, the impact of ML on the economic development, and also describes the
international initiatives in preventing ML activities and terrorist financing (TF). He
also included the existing anti money laundering (AML) laws of Bangladesh and
circulars issued by Bangladesh Bank in preventing ML activities in Bangladesh.
Another book entitled Money Laundering: Effects and Measures44 by
Susanne Rösner deals with the subject of money laundering, its effects and
measures. The first section of the book contains a short summary of the effects
of ML. The second section shows combating methods of ML in Germany. In
third section, legal measures against ML are presented.
John Madinger in his book entitled Money Laundering: A Guide for
Criminal Investigators,45 has discussed the basics of illegal proceeds, tracing it,
linking it to the criminal, and then seizing the laundered assets. He also updated
it in third edition to reflect recent important court decisions of USA, changes in
federal laws relating to ML, and trends in crime and TF.
42
Wouter Muller, Christian Kalin, John Goldsworth, Anti-Money Laundering: International Law
and Practice (John Wiley and Sons Ltd, England, 2007).
43
Mahfuzur Rahman, Money Laundering Protirodh (3rd ed.; Borna Binnash, Dhaka, 2010).
44
Susanne Rösner, Money Laundering: Effects and Measures (Grin Verlag, Munich, Germany, 2010).
45
Madinger John, Money Laundering: A Guide for Criminal Investigators (CRC Press, Florida, USA, 2011).
19
The book Money Laundering Law and Regulation: A Practical Guide46
by Robin Booth, Simon Farrell, Guy Bastable and Nicholas Yeo, provides a
practical and comprehensive guide to UK domestic anti-money laundering laws
and regulations, which could be seen as key weapons in the fight against serious
and organized crime. The book also provides a specific guidance to practitioners
through a detailed scenario involving parallel civil and criminal proceedings and
commentary on how the relevant laws are put into practice.
Peter J. Quirk carries out an analytical study on ‘Money Laundering:
Muddying the Macro Economy.’47 He analyses the ways of ML that affect
macro economy. He implies that ML in which money is moving often from one
country to another and causing misled data which has an adverse impact on
interest rate, exchange rate volatile and tracking becomes more uncertain. He
further supported in his view that ML has an impact on the economy by
highlighting his empirical study that shows that ML has a negative impact on
economic growth.
A study by De Boyre et al. ‘The Impact of Switzerland’s Money
Laundering Law on Capital Flows Through Abnormal Pricing in International
Trade’48 indicates that there were significant changes in the abnormal
international trade pricing subsequent to the enactment of Switzerland’s AML
46
Robin Booth, Simon Farrell, Guy Bastable, Nicholas Yeo, Money Laundering Law and Regulation:
A Practical Guide (Oxford University Press, UK, June 2011).
47
Quirk, Peter J. “Money Laundering: Muddying the Macro Economy.” Finance and Development,
International Monetary Fund, Vol.34, No.1 (United States, March 1997).
48
De Boyre, Maria E., Simon J. Pak, & John S. Zdanowicz, “The Impact of Switzerland’s Money
Laundering Law on Capital Flows Through Abnormal Pricing in International Trade.” Financial
Economics, Vol.15 Issue: 4 (North-Holland, February 2005).
20
laws. The study supports the view that individuals and companies will find
substitute techniques and channels to launder money when central banking
authorities enact legislation that only focuses on financial institutions. The study
evaluates every reported import and export transaction between the United States
and Switzerland during 1995 to 2000.
Satish M. Kini in his work titled ‘Recent Anti-money Laundering
Enforcement Actions: Lessons to be Learned at Others’ Expense’49 has
reviewed the recent high-profile enforcement actions and the article attempts to
identify those measures that firms can take now to avoid headline-grabbing
enforcement actions in the future. In the findings of the study the author
expresses that an AML programme can only function well if it is calibrated
properly to the risks that the institution’s businesses face; business growth needs
to be accompanied by AML compliance growth; as institutions expand globally,
they need to consider how to apply their AML programmes across geographies
and to ensure that common best practices are followed by all employees.
Wouter Muller has presented money laundering as a serious crime that
destabilizes society in his article on ‘The Role of Foundations in International
Anti-Money Laundering.’50 The author also focuses on the measures undertaken
by the international community to combat ML in different countries of the world
and analyses a possible abuse of foundations in such illegal schemes.
49
Satish M. Kini, “Recent Anti-money Laundering Enforcement Actions: Lessons to be Learned at
Others’ Expense.” Journal of Investment Compliance, Vol. 7, No. 3 (England, 2006).
50
Wouter H. Muller, “The Role of Foundations in International Anti-Money Laundering.” Trusts &
Trustees, Vol. 13, No. 5 (UK, 2007).
21
Shawgat S. Kutubi has explained in his article on ‘Combating Money-
Laundering by the Financial Institutions: An Analysis of Challenges and
Efforts in Bangladesh’51 the moves with elaborating international
developments and control mechanisms to deal with the problem of money
laundering in financial sector. In light of the above discussion the paper then
proceeds to analyze the position of Bangladesh in terms of financial
institutions in controlling money laundering keeping up with the mandate of
international forum.
Elod Takáts shows in his article entitled “A Theory of ‘Crying Wolf’:
The Economics of Money Laundering Enforcement”52 how excessive
reporting, also called as ‘crying wolf’, can dilute the information value of
reports and how more reports can mean less information. Excessive reporting is
investigated by undertaking the first formal analysis of ML enforcement. Banks
monitor their transactions and report suspicious activities to government’s
agencies of all countries, which use these reports to identify investigation
targets. Banks are charged with fine, if they fail to report of ML. However,
excessive fines force banks to report transactions which are less suspicious.
The empirical evidence is shown to be consistent with the model's predictions.
The model is used to suggest implement able corrective policy measures, such
as decreasing fines and introducing reporting fees.
51
Shawgat S. Kutubi. “Combating Money-Laundering by the Financial Institutions: An Analysis of
Challenges and Efforts in Bangladesh.” World Journal of Social Science, Vol. 1, No. 2 (Australia,
May 2011).
52
El & odblac; d Takáts, “A Theory of ‘Crying Wolf’: The Economics of Money Laundering
Enforcement.” Journal of Law, Economics and Organization, Vol. 27, No. 1 (UK, 2011).
22
The article on ‘An Economic Investigation of Confiscation as a Tool
Against Money Laundering’53 written by Ricard Azevedo Araujo and Tito
Belchior Silva Moreira, shows how money laundering is converting criminally-
obtained cash into another asset form to conceal its origin. Examples of ML
used in the area include drug trafficking, robbery, terrorism, tax-related
offences, corruption, child pornography and people trafficking.
Armando Fernandez Steinko in his research on ‘Financial Channels of
Money Laundering in Spain’54 analyses of court documents referring to 367
cases settled down between 1995 and 2011.The numerous data obtained are
contrasted to the quantitative and qualitative hypotheses published in the official
papers of different international institutions to prevent ML. These hypotheses
have the basis for the development of the legal principles for the implementation
of AML laws worldwide. The main conclusions of the research shed some light
on the economic, financial and business-related movements of illegal money. At
the same time, these conclusions should invite international community to reflect
on the position presently held by the empirical knowledge about criminal
realities in the process of working out legal initiatives to fight against them.
World Bank, ‘Combating Money Laundering and the Financing of
Terrorism: a Comprehensive Training Guide’55 shows ML and financing of
53
Ricard Azevedo Araujo and Tito Belchior Silva Moreira, “An Economic Investigation of Confiscation
as a Tool against Money Laundering.”Social Science Electronic Publishing, inc, European Corporate
Governance Institute (ECGI) (31 May 2012). Available at <SSRN: http://ssrn.com/abstract=2071331
or http://dx.doi.org/10.2139/ssrn.2071331.> Accessed on 15 December 2013.
54
Armando Fernandez Steinko, “Financial Channels of Money Laundering in Spain.” The British
Journal of Criminology (BJC), Vol. 52, No. 5 (UK, September 2012).
55
World Bank, “Combating Money Laundering and the Financing of Terrorism: a Comprehensive
Training Guide.” World Bank Publications, Vol. 3, Part. 1 (United States, 2009).
23
terrorism as global problems that not only threaten a country’s security, but
also compromise the stability, transparency, and efficiency of its financial
system consequently undermining its economic prosperity. The annual global
estimate for ML is more than $1 trillion, valued in US dollars. The training
guide contains numerous case studies, discussions and analyses of hypothetical
and actual examples of ML schemes, and best practices in investigation and
enforcement, which may help readers fully understand the implementation of
successful AML/Counter Financing and Terrorism (CFT) programmes.
The above mentioned literature review concerns with ML and criminal
activities and the causes behind ML, and the different measures to control ML
activities around the world. From the aforesaid discussion it is found that there
is no comprehensive study on proliferation of money laundering, and the role
of concerned authority as well as national government in preventing ML
activities in Bangladesh. Some of them are devoted to the organisational and
functional aspects of ML on global perspective. Thus it can be said that these
books and writings are of much worth although none of them provides with a
full understanding of proliferation of money laundering. This study will try to
fill in the gaps.
1.4 Methodology of the Study
The study mainly follows documentary analysis method, examines legal
instruments, relevant decisions of courts of Bangladesh and abroad, along with
other documents, e.g., selected international agreements where Bangladesh is a

24
party, and legal provisions frequently used by different AML institutes relevant
to AML laws in Bangladesh. Rules, policies, data, expert opinions, government
reports and other forms of written materials have been used for content
analysis. The descriptive method has been used in the study to narrate the
concept of ‘money laundering’ and ‘proliferation of money laundering.’ In
view of strengthening the research in qualitative aspects, observations, informal
discussions, and different internet sources, various reports of regional and
global organizations regarding ML have also been logically considered and
included in this study. The researcher would consider his practical knowledge
gained during his eight years banking career (2001-2009) to some extent.56
1.5 Objectives of the Study

The overall objective of the study is to examine the role of government in
preventing proliferation of money laundering in Bangladesh. The specific
objectives of the study are:
i) To explore the concept of money laundering from both global and

Bangladesh perspective.
ii) To examine the situation of proliferation of money laundering in Bangladesh.
iii) To examine or determine the existing anti-money laundering laws, rules or

self-regulations made by different financial bodies in Bangladesh.
iv) To find out the drawbacks of the existing anti-money laundering laws in
Bangladesh.
56
The researcher joined at Uttara Bank Limited as a Probationary Officer on 15 November 2001 and
served as Principal Officer and Manager in different branches of the bank till October 2009.
25
v) To identify or determine the challenges in implementing the provisions of

anti-money laundering laws in Bangladesh and
vi) To suggest proper measures or guidelines so that the government may

improve its mechanism in preventing the proliferation of money
laundering in Bangladesh.
1.6 Justification of the Study

A number of research works have been conducted in the field of ML abroad
and a few in Bangladesh. None of them covers the implementation of existing
AML laws in Bangladesh. ML is growing much rapidly in Bangladesh that
warrants original research in this field. The findings of the study will contribute
to the arrangement of structural and procedural safeguards in preventing ML
activities and related crimes.
1.7 Utility of the Study

The present study will be helpful for AML institutions in Bangladesh. The
government may be benefited from this study. This will be supportive for the
government in policy making. The parliamentarians can be guided in making
and improving legislation to prevent ML. Intellectuals will get their elements of
thinking. Besides these, the students of law, researchers, lawyers, judges,
judicial officers, teaching professionals of law in different universities will be
benefited from this research work.
1.8 Scope and Limitation of the Study

The study focuses on the collaboration between laws and financial institutes.
The study primarily aims to look at AML laws in Bangladesh from the
26
viewpoint of internationally recognized principles. The issue of ML would be
scrutinized under the existing laws and rules set by established institutions
partaking in preventing ML activities in Bangladesh. The economic and policy
implication of the laws regarding ML is a worthy point due to the significant
advancement of technologies and their misuses for the purpose of expanding
ML activities and related crimes.
There are a number of new laws and initiatives of the government of
Bangladesh to limit ML activities. However, most of them are yet to start their
functions. This is an important cause that the study fails to cover those laws
and initiatives. The limitation of the study is that the researcher has to review a
number of books and articles related to money laundering issue, published on
the context of different countries in the world due to a few publications on
Bangladesh perspective. Another difficulty is that many authorities, including
financial institutes, hesitate to provide detailed information, which could be
used for the purpose of the study mainly related to Politically Exposed Persons
(PEPs),57 transparency and corruption. One more limitation of this study is that,
in order to keep the thesis in a manageable size only two sectors i.e. Banks and
Capital Markets are selected for the research work.
57
PEPs refer to the following individuals: “Individuals who are or have been entrusted with
prominent public functions in a foreign country, for example Head of State or of government,
senior politicians, senior government judicial or military officials, senior executive of state owned
corporations, important political party officials. Business relationships with family members or
close associates of PEPs involve reputational risks similar to those with PEPs themselves.”
Bangladesh Financial Intelligent Unit (BFIU), Bangladesh Bank (BB), Dhaka circular No.06 (I) (g)
dated 30 December 2012.
27
1.9 Structure of the Thesis
The study has been divided into SIX chapters and each of the chapters has
further been divided into sections and sub-sections.
Following the introductory Chapter (Chapter One), Chapter Two discusses
the conceptual issues of ML which deals with the meaning and causes of
money laundering. This chapter also focuses on the historical background and
analyses the classification including the stages and various modes of ML. This
chapter includes some relevant case studies on ML concerning national and
global issues.
Chapter Three focuses on the sectors of the proliferation of money
laundering in Bangladesh and the causes behind those. This chapter explains
the term ‘proliferation of money laundering’ and examines the causes of
proliferation of money laundering. It also examines the nature and
consequences of the proliferation of money laundering in Bangladesh. This
chapter also analyses the achievements and main shortcomings in preventing
proliferation of money laundering in Bangladesh.
Chapter Four briefly describes the existing provisions of the rules,
regulations, laws, customs, and conventions at national and international level
concerning ML. It also provides the background and examines the strengths,
weaknesses and complexities of the relevant provisions of domestic AML laws
as well as the relevant provisions of international AML norms. It analyses
whether there is a need for reform of the AML laws and examines a few
28
existing proposals on how to improve the capability of the authority, prepares a
set of suggestions to achieve the effectiveness of those laws.
Chapter Five discuses the role of the AML instruments and analyses the
administrative and judicial mechanisms in implementing the provisions of
AML with a view to prevent ML activities in Bangladesh. It also provides a
synopsis of background including the obstacles and challenges faced by the
concerned administrative and judicial authority of national and global
perspective in controlling ML and implementing the existing provisions of
AML laws. This chapter also includes observations on how the FATF and other
related regional and global organizations are a unique cooperation forum to
prevent the proliferation of money laundering. This chapter also analyses the
character of the national and international laws, customs, conventions and so
on, and whether this has any influence in creating new norms in national and
international administrative authority and AML. It also examines both of their
operational and functional frameworks, including the different entities within
the national, regional and global perspectives.
The concluding Chapter (Chapter Six) prepares some suggestions on the
summaries of findings and problems in each Chapter. It provides a synopsis
including the strengths and weaknesses of AML laws, administrative and
judicial mechanisms in Bangladesh, and identifies specific problems addressed
in the thesis. It also summarizes the main arguments of the thesis and suggests
the ways to prevent ML.

Chapter Two
Concept of Money Laundering
2.1 Introduction
Money is necessary both for livelihood and luxury. In the language of economics
money is a matter of four functions; a medium, a measure, a standard and a
store.58 Money is also needed to maintain social well being and happiness. Often
money is treated as the bone of contention between friends and relatives.59 Some
time money-wealth, property or estates have caused conflict in a family, feuds
and even murders for it. It also influenced mischief and evil activities.60 Money
is also essential for investment as well as industrial development of a country. In
economics, the land, labour, capital and organisation are four indicators of
production. Among them the most important is capital. Capital in some form or
other will always be needed.61 Sometimes the entrepreneurs are interested to
make capital by ML activities and related crimes.
ML happens in almost every country in the world including Bangladesh,
and a single scheme typically involves transferring money through several
58
Alfred Milnes, The economic foundations of reconstruction (Macdonald and Evans, UK, 1919). p. 55.
59
Vijay Kumar Singh, “Controlling Money Laundering in India-Problems and Perspectives.” This
paper was presented in a seminar held at the Indira Gandhi Institute of Development Research
(IGIDR), India, on 23-24 January 2009. Available at <vrsingh.hpage.com/about-me_77099810.html>
Accessed on 10 May 2014.
60
Frank Desantis, “Love of Money is Root Cause Evils,” (27 February 2006). Available at
<https://ezinearticles.com./?love of Money-is- Root-cause-of- Evils & id-664612> Accessed on 10
November 2013.
61
Mohandas K. Gandhi (1869–1948), Indian political and spiritual leader. Harijan, Indian news paper
(28 July 1940). Available at <https://www.learnthat.org/dictionary/67035_Harijan.html.> Accessed
on 20 March 2014.
30
countries in order to obscure its origins. 62 ML, at its simplest, is the act of
making money that comes from one source, looks like it comes from another
source. Popularly this is known as black money to transform into white money.
In practice, criminals are trying to disguise or conceal the origins of money
obtained through illegal activities. Otherwise, they cannot use the money
because it would connect them to criminal activities, as well as the law-
enforcement authority would seize it. Moreover, it is being employed by
launderers worldwide to conceal criminal activities associated with drugs or
arms trafficking, terrorism, extortion and so on.
This chapter discusses the conceptual issues of ML which are very
significant for the subsequent chapters. This chapter deals with the concept,
historical background, classification including the stages and various modes of
ML. It also discusses case studies both of foreign countries and Bangladesh.
2.2 The Concept of Money Laundering

The primary function of money is to serve as a medium of exchange. Money is
also accepted without question in final discharge of debts or payment of either
goods or services. The term ‘money’ generally includes banknotes as well as
coins. Sometimes it also includes a right to deposit in a bank account or to invest
in securities, and in some cases all real and personal property. The precise
62
Prevention of Money Laundering and Terrorist Financing.” Dhaka, Bangladesh (16 September
guideline. pdf> Accessed on 20 January 2014. p. 1.
31
meaning of the term depends upon the content in which it is used. It usually
gives an effect to the intention of the launderers. The intermediate meaning of
money laundering is connected with claims for money paid or received.
People are devoted to earn money and their major goal of education is to
earn money. Although, money is the cause of many evils like corruption, black
marketing, smuggling, human and drug trafficking, tax evasion etc.63 Money is
essential to become rich, develop the nation, and the living standard of the people.
Most of them want more money to cater to their needs, and at a point of time they
do not resist to have money from any sources i.e. legal or illegal. This is the
available soft corner where the concept of money laundering enters and prospers.
The origin of the term ‘money laundering’ is controversial. The literal
meaning of money laundering is laundering or washing illegal money which is
earned from illegal sources or activities. All though, ML activities are prohibited
all over the world including Bangladesh, the launderers are trying to integrate
64
their proceeds of crime into the legitimate economy. Whereas, in 1920’s the
term ‘money laundering’ was practically used as an untraceable proceeds of
illicit operations and thereby making the funds appear to be derived from
legitimate activities.65 Despite, the term ‘money laundering’ may have been
originated in the twentieth century, the practice of disguising ill-gotten gains pre-
63
guideline. pdf> Accessed on 20 January 2014. pp. 3-4.
64
Bourne Jane, “Money laundering: What is being done to combat it? A Comparative Analysis of the
laws in the United States of America, the United Kingdom and South Africa.” South African
Mercantile Law Journal, Vol. 14, No. 3 (South Africa, 2002). p. 475.
65
Doyle Todd, Cleaning, “Anti-Money Laundering Strategies: Current FATF Tactics Needlessly
Violates Int’l Law.” Houston Journal of International Law, Vol. 24, No. 2 (USA, 2002).
32
dates in history and indeed traces its roots back to the banking itself. There are
various definitions of ML available nowadays. European Commission defines
the term ‘money laundering’ as:
“the conversion of property, knowing that such property is derived

from serious crime, for the purpose of concealing or disguising the
illicit origin of the property or of assisting any person who is
involved in the committing such an offence or offences to evade the
legal consequences of his action, and the concealment or to disguise
of the true nature source, location, disposition, movement, rights with
respect to, or ownership of property, knowing that such property is
66
derived from serious crime.”
The fundamental concept of ‘money laundering’ is a criminal activity
by which a criminal may be capable to conceal the sources of their illicit
money.67 Most of the states subscribe to the following definition which was
adopted by the United Nations Convention against Illicit Traffic in Narcotic
Drugs and Psychotropic Substances (the Vienna Convention 1988) and the
United Nations Convention against Transnational Organized Crime (the
Palermo Convention 2000).
“The conversion or transfer of property, knowing that such property

is derived from any offence, e.g. drug trafficking, or offenses or from
an act of participation in such offense or offenses for the purpose of
concealing or disguising the illicit origin of the property or of
assisting any person who is involved in commission of such an
offense or offenses to evade the legal consequences of his actions;
the concealing or disguising the true nature, source, location,
disposition, movement, rights with respect to, or ownership of
property, knowing that such property is derived from an offense or
offenses or from an act of participation in such an offenses; and the
acquisition, possession, or use of property, knowing at the time of
receipt that such property was derived from an offense or offenses or
68
from an act of participation in such offense or offenses.”
66
EC Directive on prevention of the use of the Financial System for the purpose of Money
Laundering 1991. Art 1.
67
Levi Michael, “Money Laundering and its Regulations.” American Academy of Political Science,
Vol. 582 (USA, 2002). pp. 181-194.
68
Rudich V. Denisse, Performing the Twelve Labours: The G 8’s Role in the fight Against Money
Laundering (London Metropolitan University, UK, 2005). p. 5.
33
ML is defined in Bangladesh under section 2 (V) of the Money Laundering
Prevention Act 2012 as follows:-
‘Money laundering’ means-(i) Knowingly moving, converting, or

transferring proceeds of crime or property involved in an offence for
the following purposes:-1.concealing or disguising the illicit nature,
source, location, ownership or control of the proceeds of crime; or 2.
assisting any person involved in the commission of the predicate
offence to evade the legal consequences of such offence; (ii)
smuggling money or property earned through legal or illegal means
to foreign country; (iii) knowingly transferring or remitting the
proceeds of crime to a foreign country or remitting or bringing them
into Bangladesh from a foreign country with the intention of hiding
or disguising its illegal source; or (iv) concluding or attempting to
conclude financial transactions in such a manner so as to reporting
requirement under this Act may be avoided;(v) converting or moving
or transferring property, with the intention to instigate or assist for
committing a predicate offence;(vi) acquiring, possessing or using
any property, knowing that such property is the proceeds of a
predicate offence;(vii) performing such activities so as to the illegal
source of the proceeds of crime may be concealed or disguised;(viii)
participating in, associating with, conspiring, attempting, abetting,
69
instigate or counsel to commit any offences mentioned above.
In addition to the above definitions INTERPOL has come with a new
definition: “any act or attempted act to conceal or disguise the identity of
illegally obtained proceeds so that they appear to have originated from
legitimate sources.”70
The Financial Action Task Force (FATF),71 which is recognized as the
international standard setter for AML efforts, defines the term ‘money
laundering’ as the processing of criminal proceeds to disguise their illegal
69
The Money Laundering Prevention Act, 2012 (Act No. 05 of 2012). Sec- 2(v).
70
INTERPOL, Website: <www.interpol.int/Crime-areas/Financial-crime/Money-laundering> Accessed
on 15 January 2013.
71
The Financial Action Task Force on Money Laundering (FATF), formed by G-7 countries in 1989,
is an intergovernmental body whose purpose is to develop and promote an international response to
combat money laundering. In October, 2001, FATF expanded its mission to include combating the
financing of terrorism. FATF is a policymaking body, which brings together legal, financial and
law enforcement experts to achieve national legislation and regulatory AML and CFT reforms.
Currently, its membership consists of 34 countries and territories and two regional organizations.
34
origin in order to legitimize the ill-gotten gains of crime. 72 The real meaning of
this term ‘money laundering’ is known to a few. In fact, it is a process by
which criminals create illusion that the money they are spending is actually
theirs to spend. Nowadays America is the most worried nation on earth about
increasing trend of global ML activities and related crimes. However, the term
‘money laundering’ originated in America at the time of famous gangsterism,73
particularly from the period of 1930-1960.74
ML is a crime which is depended upon another crime. It is not also an
isolated crime. ML is a process where the sources of illegal earnings are
necessary to hide or disguise. The proceeds of which is the subject matter of
the crime in ML. Therefore, what exactly amounts to ML, which actions and
who can be prosecuted are dependent on what constitutes a predicate crime for
the purpose of ML.75The term ‘money laundering’ is also related with the
proceeds of predicate offences76–which make laundering necessary.
72
73
A gangster is a criminal who is a member of a gang. Some gangs are considered to be a part of
organized crime. Gangsters are also called mobsters. Al Capone, have become infamous as a gangster.
74
Ahmed Ali, “Anti-money laundering measures still ineffective.” The Daily Star, Dhaka (29 May 2004).
75
Brigittee Unger, The Scale and Impacts of Money Laundering UK (Edward Elgar Publishing, UK,
2007). p. 16.
76
Predicate Offence means: The offences from which the proceeds derived from committing or
attempt to commit the following offences: corruption and bribery; counterfeiting currency;
counterfeiting documents; extortion; fraud; forgery; illicit arms trafficking; illicit dealing in
narcotic drugs and psychotropic substances; illicit dealing in stolen and other goods; kidnapping,
illegal restraint, hostage-taking; murder, grievous bodily injury; woman and child trafficking;
smuggling and unauthorized cross-border transfer of domestic and foreign currency; theft or
robbery or dacoity; trafficking in human beings and illegal immigration; dowry; Terrorism and
Terrorist Financing; Counterfeiting and Piracy of Products; Environmental Crime; Sexual
Exploitation; Taking market advantage through transactions by using price sensitive information of
the capital market before it becomes public and trying to control or manipulate the market to gain
personal advantage (Insider trading and market manipulation) ; Organized Crime and any other
offence which Bangladesh Bank with the approval of the Government and by notification in the
Official gazette declares as predicate offence for the purpose of this Act. The Prevention of Money
Laundering Act, 2012 (Act No. 5 of 2012). Sec-2(cc).
35
ML became an issue both at national and international level in 1980
with the rise of world-wide drug trafficking. At the same time, AML
movements or operations are also associated to stop criminals benefit from
their crimes and to back them from those criminal activities or proceeds.77
2.3 Historical Background of Money Laundering

The practice of ML has a long history. The launderers are using different
techniques and modes over the years to launder money, though the aim has been
the same. It is very difficult to find out the clear proof that suggests when the term
‘money laundering’ was used foremost. However, it may be explained in several
ways referring to the historical sense of the term ‘money laundering’. Sterling
Seagraves, the American historian explores the phenomenon of merchant conducts
in operating businesses in China since 3000BC.78 At that time, funds were
concealed by hiding, moving, and investing in remote provinces or even outside of
China. Arguably, their reason for hiding their wealth was legitimate in the sense
that they had worked for their money and ought to have a right to keep and enjoy
the fruit of their hard labour. However, by not disclosing their total worth, they
engaged in tax evasion which is a criminal act and the practice of hiding proceeds
of income is ML. Even though the term ‘money laundering’ was not invented, yet
the principles of ML were founded to some extent. These included the conversion
of illicit funds into movable assets and then moving them outside its jurisdiction to
invest in other legal economies.
77
Ellinger E.P and et al., Ellinger’s Modern Banking Law (4th ed.; Oxford University Press, UK,
2006). p. 94.
78
Sterling Seagrave, Lords of the Rim: The Invisible Empire of the Overseas Chinese (New York:
Putnam’s Sons, 1995). p. 12.
36
The term ‘money laundering’ originated in 1920 from the United States
of America when organized crime used Laundromat businesses to shape the
unlawful sources of its currency.79 The mafia (with the likes of Al Capone)
generated vast amounts of cash from criminal activities such as trading illicit
drugs, murders, prostitutions, and gambling. To avoid the confiscation of their
proceeds, they operated retail service businesses such as bars, vending
machines, hotels, and restaurants. Through these legal businesses, the illegal
money was mixed with the legal proceeds and the total amount was reported as
the total earnings of the legitimate business. The illegal earnings turned
legitimate by using this technique and then the money took on the appearance
of a legitimate business. The money could then be used freely without
attracting the attention of law enforcement authorities.
The term ‘money laundering’ came into use after the case of Mayer Lansky
in the United States (1932).80 Mayer Lansky was one of the prominent leaders of
these groups, and he is regarded as the originator of modern ML.81 He engaged in
elaborate laundering of dirty money made though gambling in 1920-1930. In
1932, Lansky carried out an offshore account in a Swiss Bank that was used to
hide criminal proceeds of Huey Long, the Governor of Louisiana.82 The Swiss has
created the principle of Bank Secrecy under the Swiss Bank Act, 1934. Lansky
79
Wouter Muller, Christian Kalin, John Goldsworth, Anti-Money Laundering: International Law and
Practice (John Wiley and Sons Ltd, England, July 2007). p. 45.
80
Wilmer Parker, ‘Black/Parallel Markets: When is A Money Exchange A Money Laundering?’
Dickinson Journal of International law, Vol.13 (USA, 1995). p. 423.
81
Abdullahi Y. Shehu, Economic and Financial Crimes in Nigeria: Policy Issues and Options,
(National Open University of Nigeria, Victoria Island, Lagos, 2006). p. 219. Available at
<http://en.wikipedia.org/wiki/money-_laundering> Accessed on 21 November 2013.
82
Abdullahi Shehu, “Money-Laundering: The Challenge of Global Enforcement.” Dickinson Journal
of International law, Vol.13 (USA, 2000). p. 2.
37
bought a Swiss bank and steadily transferred illicit funds into it through his
several shell and holding companies as well as offshore bank accounts.83
Having smuggled the proceeds from various businesses into Swiss bank,
Lansky later established a slot machine house in New Orleans and the Swiss
Bank provided funds in the form of loans to Lansky & Co.84 This way, the bank
allowed illegal money to return to the United States of America. Since then,
ML activities have evolved into using technological advancements.85
According to Jeffrey Robins, the first reference to the term ‘money laundering’
was made by the British Guardian newspaper during the Watergate Scandal to
describe the practice of moving dirty money from the US into Mexico and
returning them to the US through a company in Miami before donating it to the
Committee that was set up to facilitate the re-election of President Nixon.86
In the early 1970, the concept of ‘money laundering’ came into
existence when the United States Bank Secrecy Act (BSA), 1970 was enacted.
This Act requires financial institutions to file record keeping and reporting
requirements for currency transactions if the transaction is $10,000 or more.87
The aim of this Act was to provide law enforcement authorities with the tools
83
Abdullahi Y. Shehu, Economic and Financial Crimes in Nigeria: Policy Issues and Options,
(National Open University of Nigeria, Victoria Island, Lagos, 2006). p. 219. Available at
<http://en.wikipedia.org/wiki/money-_laundering> Accessed on 21 November 2013.
84
Abdullahi Shehu, op.cit., p. 2.
85
Ibid.
86
Jeffrey Robins, “Money Laundering: The Laundrymen, The Merger and The Sink.”
Website: <http://en.wikipedia.org/wiki/money_laundering.> Accessed on 15 April 2013.
87
The Currency and Foreign Transactions Reporting Act of 1970 requires U.S. financial institutions to
assist U.S. government agencies to detect and prevent money laundering. Specifically, the act
requires financial institutions to keep records of cash purchases of negotiable instruments, file
reports of cash transactions exceeding $10,000 (daily aggregate amount), and to report suspicious
activity that might signify money laundering, tax evasion, or other criminal activities.
Available at <www.webcrawler.com/Banking> Accessed on 2 December 2013.
38
necessary to prevent or control ML activities and related offences. The BSA
includes few provisions to keep record of the Suspicious Activity Report
(SAR); a Currency Transaction Report (CTR); a report on foreign bank
accounts; and reports on cross-border movement of currency and monitoring
instruments. The rationale for these reporting-based systems is to create a
‘paper trail’ that aids law enforcement agencies in prosecuting ML cases. The
federal government indicted the first National Bank of Boston for its failure to
report a series of cash transactions in February 1985, involving more than $1.2
billion under the Bank Secrecy Act of 1970.88 The Bank of Boston pleaded
guilty and was fined $500,000 based on this indictment.
The term ‘money laundering’ was first used in the primary legal
document in 1982 through the case of civil forfeiture between United States v
$4,255,625.39.89 This case concerned the efforts to conceal or disguise ill-
gotten gain and civil forfeiture of large sums of money from Molins in
Columbia to Sonal in Miami, Florida. In its decision, the court concluded that
the transfer of sums from Molins to the bank in Sonal was more likely a ML
process. Although the court did not define the term, scholars concluded that
this phenomenon referred to ML. The effective implementation and
enforcement of the BSA of 1970 (USA), despite the detection, investigation,
and prosecutorial successes in these cases, also reveal the some of the problems
88
Frederick J. Knecht, “Extraterritorial Jurisdiction and the Federal Money Laundering Offence.”
Stanford Journal of International Law, Vol. 22 (United States, 1986). p. 391.
89
Heba Shams, Legal Globalization: Money Laundering Law and Other Cases (London: British
Institute of International and Comparative Law, 2004). p. 26.
39
investigators encountered with the BSA. Compliance was lax, and courts were
inconsistent in their judgment of an individual’s requirement to report.90
Congress enacted the Money Laundering Control Act (MLCA) of 1986. Two
sections of this Act are noteworthy. Section 1956 addresses certain financial
transactions involving the proceeds of ‘specified unlawful activity’, and 1957
addresses any monetary transaction in property known to derive from a
specified unlawful activity. Section 1956 has three subsections: 1956(a) (1)
addresses domestic money laundering, 1956(a)(2) addresses international
money laundering; and 1956(a)(3) involves sting operations.91 This Act was
intended to create a liability for individuals who conduct financial transactions
with the knowledge that the funds’ origins were either illegal or illicit. The
intention to make ML a crime according to the Senate Judiciary Committee
was to create a Federal offense against ML, to authorize forfeiture of the profits
earned by launderers, to encourage financial institutions to come forward with
information about money launderers without fear of civil liability, to provide
Federal law enforcement agencies with additional tools to investigate ML, and
to enhance the penalties under existing law in order to further deter the growth
of ML. This Act prohibits both conducting a monetary transaction knowing, or
with reason to know, that the funds were derived from unlawful activity, and
the transportation, transmitting, or transferring of funds with the knowledge
that those funds were derived from unlawful activity. The Act has categorized
90
Jeanne Bickford, “Filthy Lucre: A Socio-Legal Study of the Criminalization of Money Laundering.”
(Dissertation, University of California, Irvine, 1996). p. 43.
91
Andres Rueda, International Money Laundering Law Enforcement & the USA PATRIOT Act 2001
(10 Mich. St. U. Det. C. L.J. Int’l, 2001). p. 147.
40
three ML practices as criminal offences, namely: active engagement in the
laundering of money, willingness to accept monies that originate from criminal
activities and structure transactions in a way to evade reporting requirements.
The Act also provides both civil and criminal sanctions; civil sanctions include
fines of up to $10,000 and forfeiture; while, criminal sanctions include
imprisonment for up to 20 years and fines of up to $500,000 or twice the
amount laundered. 92
The basic characteristics of ML are the proceeds of crime, which to a
large extent also mark the operations of organised and transnational crime are
its global nature, the flexibility and adaptability of its operations, the use of the
latest technological means and professional assistance, the ingenuity of its
operators and vast resources at their disposal, according to UN Report (1993).
The characteristics of ML also include the constant pursuit of profits and the
expansion into new areas of criminal activity. Money represents the lifeblood
of the organization/person that engages in criminal conduct for financial gain
because it covers operating expenses and pays for an extravagant lifestyle. To
spend money in these ways, criminals must make the money they derived
illegally appear legitimate. 93 A trail of money from an offense to criminals can
become incriminating evidence. The launderers must obscure or hide the source
92
Senate Report 433, Senate Committee on the Judiciary 1986 on the Money Laundering Crime Act
1986, Cited in Jeanne Bickford, “Filthy Lucre: A Socio-Legal Study of the Criminalization of
Money Laundering.” (Dissertation, University of California, Irvine, 1996). p. 31.
93
41
of their wealth or alternatively disguise ownership or control to ensure that
illicit proceeds are not used to prosecute them. 94 The proceeds from crime often
become the target of investigation and seizure. To shield ill-gotten gains from
suspicion and protect them from seizure, launderers must conceal their
existence or, alternatively, make them look legitimate. 95
The process of ML usually involves several steps that make it difficult
to trace the original source of money. Some of these steps include transferring
the money between bank accounts, breaking up large amounts of money into
small deposits, or buying acceptable forms of money such as Fixed Deposit
Receipt (FDR), Demand Draft (DD), Payment Order (PO), Security Deposit
Receipt (SDR), and Travelers’ Cheque. The process is usually planned and
organized to avoid being caught and put to face punishment.
The character o ML as international dimension of ML shows in a study
of Canadian ML police files which revealed that over 80% of all laundering
schemes had an international dimension. The nature of modern ML shows as a
transnational character in the Operation Green Ice-1992 in Colombia. ML was
put on to the world stage through the adoption of the United Nations
Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic
Substances 1988.96 A provision includes in the convention for its parties to
94
guideline. pdf> Accessed on 20 January 2014., p. 3.
95
Ibid.
96
United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances
(hereinafter: the 1988 UN Vienna Convention), open for signature in Vienna, Austria in December
1988 and enter into force in November 1990.
42
criminalize ML and drug trafficking. 97 The convention also includes a
provision to acknowledge controlling or preventing internationalization and
criminalization of ML activities.98 The significant role of the convention is to
introduce the concept of ML. Many countries have developed the concept of
ML in their national legislations by following the convention.
Corruption is widely spread in different countries including Bangladesh.
Among its many form, ML has been a very major one which is hindering the
economic growth of a country like Bangladesh. According to Wikipedia, ML is
a process whereby illegal sources of money are tried to be cloaked with a look
of the fair sources so that nobody can doubt the sources at first instance.
Transfer, transformation, sending or bringing of money, to or from any foreign
country respectively, which is earned through a related offence and smuggling
property acquired through a legal or illegal means is ML. To conduct criminal
activities, huge amount of money is needed and sometimes it needs to be spent
in open daylight. For these reasons, money may bear a fair mask with it. At the
same time, this illegal money may be strong evidence against the perpetrators
and so to avoid this result, they need to convert their money into good money.
ML is an offence under the Money Laundering Prevention Act (MLPA), 2012

99
of Bangladesh. The institutions such as banks, insurance companies, and
money changers have to submit report to Bangladesh Financial Intelligence
Unit (BFIU) of Bangladesh Bank on suspicious transactions under MLPA,

97
United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances
1988. Art 3(1) (a) and (b).
98
William C. Gilmore, Money Laundering: The International Aspect (Edinburg University Press, UK,
1993). p. 2.
99
The Money Laundering Prevention Act, 2012 (Act No. 05 of 2012). Sec- 2(V).
43
2012 section 2(z). Doing any kind of transaction for which no report is needed
under this Act and concealing any act which covers the illegal source of the
money also come under ML activities. The MLPA, 2012 also included a list of
predicate offences, section-2(cc). If anybody commits the offence or helps to
commit it, then he will be imprisoned for not less than four years and not more
than twelve years including forfeiture of the property related to ML activities
and related crimes.100 Money obtained by an illegal action is not, of itself,
laundered money in most jurisdictions. An exception is being the United
Kingdom where mere possession of the proceeds of any crime is itself capable
of being a ML offence. The laundering offence comes from the attempt to
conceal its source, not because the transaction was itself illegal which is a
separate offence. 101
2.4 Classification of Money Laundering

ML is a multidimensional act, constituted both at national and international
dimension. The classification of ML is required in order to make an evaluation
of unusual transactions and events. It may be classified on the basis of its
stages and modes or techniques.
2.4.1 Stages of Money Laundering

ML can occur at three steps102 i.e. Placement, Layering and Integration. These
are explained below:
100
The Money Laundering Prevention Act, 2012 (Act No. 05 of 2012). Sec- 4(2).
101
The Proceeds of Crime Act 2002(USA). Sec-329.
102
Faggal Paul, “The Anti-Money Laundering Provisions of the Patriot Act: Should They be Allowed
to Sunset?” Saint Louis University Law Journal, Vol. 50:1361(USA, 2006).
44
Placement
ML occurs everywhere in the world including Bangladesh through different
stages, among them the placement is a common stage. Placement is a process
of placing dirty money into the financial system to move away the funds from
its original location. In the initial stage money launderers often deposited cash
by opening up a bank account in the name of unknown individuals or
organizations.103 It is very difficult to detect laundering fund due to massive
increasing of the placement of funds into the financial system. 104 The
launderers are using the smurfing105 process to avoid the suspicious transaction
report.106 Therefore, although financial institutions are maintaining the AML
execution programmes, the developing process of smurfing demonstrates the
difficulty of eradicating ML activities.107 Purchasing expensive property and
selling; creating legitimate business that typically deals in cash like hotels and
bars are among other mechanisms used in the placement stage in order to
obscure the source of illegitimate money.108
Layering
Another important stage of ML is layering. Layering is the process of moving
dirty money through different components of the financial system to obscure its
103
Bachus S. Alison, “From Drugs to Terrorism: The Focus Shifts in the International Fight against
Money Laundering after Sep. 11, 2001.”Arizona J. Int’l and Comp. Law, Vol. 21, No. 3 (2004). p. 842.
104
Daley J. Modelyn, “Effectiveness of United States and International Efforts to Combat International
Money Laundering.” St. Louis Warraw Transathantic Law Journal (2000). p. 175.
105
In this process a number of individuals make small deposits in a number of different depository institutions.
106
Sarah Jane Hughes, “Policing Money Laundering Through Fund Transfer: A Critique of Regulation
Under the Banking Secrecy Act.” Indian Law Journal, Vol. 67:283, (1992). p. 16
107
Faggal Paul, “The Anti-Money Laundering provisions of the Patriot Act: Should They be Allowed
to Sunset?” Saint Louis University Law Journal, Vol. 50:1361(USA, 2006).
108
Ibid.
45
original sources. Layering conceals the audit trial and provides anonymity.109
These are achieved by moving money to offshore bank accounts in the name of
Shell Companies, purchasing high value commodities like diamonds, and
transferring the same to different jurisdictions. Now Electric Fund Transfer
(EFT) has been included for such layering exercise. At the particular juncture
of the process, launderers separated the illicit proceeds from their sources
through complex and often illusory transactions disguising the provenance of
the funds to different jurisdictions. Different techniques like loan at low or no
interest rate, money exchange offices are utilized for the purpose of shares and
trust offices are utilized for the purpose of laundering money at this particular
juncture. There are a number of characteristics that might indicate ML
activities. Seemingly ludicrous financial transactions like large number of sales
and purchases subject to commission, numerous accounts, ostensibly
unconnected being consolidated into a smaller amount of accounts and lack of
concern over loses on investment, bank charges or professional advisor charges
are among the traits to be mentioned. 110 Therefore, once the money has worked
its way into the financial system, it would be rarely detected independently of
criminal investigation and hence needs agreement with other countries to have
success in stopping ML at the layering stage. 111
109
Nicholas Clark, “The Impact of Recent Money Laundering Legislation on Financial Intermediates.”
Dickinson Journal of International Law. Vol. 14, No. 3 (USA, 1996). p. 470.
110
Faggal Paul, “The Anti-Money Laundering provisions of the Patriot Act: Should They be Allowed
to Sunset?” Saint Louis University Law Journal, Vol. 50:1361 (USA, 2006).
111
Ibid.
46
Integration
Integration is the final stage of ML. The launderers generally use the
integration stage to launder their illegally earned money. It is the process of
mixing with clean money and developing it in the legitimate business and
economic activities and back to the launderer as clean money. 112 The
launderers normally accomplish this by setting up unknown institutions in
nations where secrecy is guaranteed.113 The integrated funds from a criminal
enterprise would very often be similar to legitimate business. New forms of
business give a platform for integration exercise. Now a person can start a
business with just a webpage and convert his illegal money to legal by showing
profits from webpage. Finally, integration of illicit proceeds can be fought
through the strengthening of asset forfeiture laws, by which governments can
seize the proceeds of criminal activity even when those proceeds have been
reinvested in ostensibly legitimate enterprises. The government of Bangladesh
is working to improve methods by which asset forfeiture regimes, and asset
sharing among law enforcement agencies of different countries, to make it
more difficult for criminals to protect their money from the law.
All the ML transactions need not go through the three stages, where one
stage begins-the others end. 114 The other ways/medium of ML is capital market
investments, real estate acquisitions, catering industry, gold and diamond
market and so on.
112
Mariano-Florentino Cuellar, “The Tenuous Relationship between the Fought against Money
Laundering and the Disruption of Criminal Finance.” Journal of Criminal Law Criminology Vol. 2,
No. 3 (North Western University, USA, 2003).
113
A Kathleen, Lacey and Barba Crutchfield George, Crackdown on Money Laundering: A
comparative Analysis of the Feasibility and Effectiveness of Domestics and Multilateral Policy
Reform. (23 NW. J. Int’l Law and Business, USA, 2003).
114
Faggal Paul, “The Anti-Money Laundering Provisions of the Patriot Act: Should They be Allowed
to Sunset?” Saint Louis University Law Journal, Vol. 50:1361 (USA, 2006).
47
2.4.2 Modes of Money Laundering

Mode of ML changes from time to time. At each of the three stages of ML
various modes or techniques are applied. It is really not possible to explain all
the techniques of ML exercises; however some techniques are illustrated for
the sake of understanding, for example,
(I) General Modes and
(II) Rare Modes
2.4.2.1 General Modes
There are some methods that money encompasses laundering including
financial and non-financial institutions to which the followings are general:
Hundi
Hundi is an alternative or parallel remittance system of Bangladesh. The
hawala is another such well known system in the Indian subcontinent and in
trade related to the Arabs, the chop shop/chitti banking or flying money system
has its origin in the traditional Chinese banking practices and the black market
peso exchange system prevalent in Latin America is of recent origin and also
used around the world.115 These systems are often referred to as an
‘underground banking’; this term is not always correct; as they often operate in
the open with complete legitimacy, and these services are often heavily and
effectively circulated. It exists and operates outside of, or parallel to
‘traditional’ banking or financial channels. It was developed in Bangladesh,
115
Jyoti Trehan, Crime and Money Laundering-The Indian Perspective (Oxford University Press,
India, 2004). Available at <http://money.howstuffworks.com/personal-finance/banking/international-
banking.htm> Accessed on 15 February 2014.
48
before the introduction of western banking practices, and it is currently a major
remittance system used around the world. 116 In hundi network the money is not
moved physically. The process is also speedier and cheaper.
Bulk Cash Smuggling
Bulk cash smuggling is a general mode of ML in Bangladesh. Bulk cash
smuggling means, physically smuggling of cash from one jurisdiction to
another, and it is deposited in a financial institution, such as an offshore bank,
with greater bank secrecy or less rigorous ML enforcement.117
Non Cash Proceeds
A non cash proceeds is also another mode of ML in Bangladesh. Non cash
proceed is a system where some of these steps i.e. placement, layering and
integration may be omitted, depending on the circumstances. The proceeds that
are already in the financial system would have no need for placement.118 These
non-cash proceeds include depreciation or write-offs on bad debts or credit
losses to name a few.
Black Market Peso Exchange (BMPE)
The Black Market Peso Exchange (BMPE) is a common mode of ML in Latin
American Countries. The BMPE is also used in Bangladesh in different name
and frame. The BMPE is a system by which drug money profits are laundered
116
India, 2004). Available at <http://money.howstuffworks.com/personal-finance/banking/international-
banking.htm> Accessed on 15 February 2014.
117
Kevin Sullivan.“How to Spot Bulk Cash Smuggling?” (6 July 2010). Website: <www.bankinfosecurity.
com/.../how-to-spot-bulk-cash-smuggling-p-604> Accessed on 7 December 2013.
118
Peter Reuter & Edwin M. Truman, Chasing Dirty Money: The Fight against Money Laundering
(Peterson Institute, USA, 2004). p. 169.
49
through the use of international trade and blocked currency accounts.119 For
example; a drug trafficker turns over dirty money to a peso broker in
Bangladesh. The peso broker then uses that drug money to purchase goods in
India for Bangladeshi importers. When the importers receive those goods and
sell them for persons in Bangladesh, they pay back the peso broker then give
the drug trafficker the equivalent in pesos without commission of the original,
dirty money that began the process. This method is also utilized extensively by
the drug cartels to repatriate drug proceeds commonly referred to as the BMPE.
Cheque
The use of cheque for payment is a common practice all over the world. The
launderers are using cheques to launder money. Cheque is an important
negotiable instrument which can be transferred by mere hand delivery. Cheque is
used to make safe and convenient payment. The third party purchasing or
utilizing counter cheques or bankers drafts drawn on different institutions and
clearing them via various third party accounts. Third party cheques and traveler’s
cheque are often purchased using proceeds of crime. Since these are negotiable
in many countries, the nexus with the source money is difficult to establish.
Credit Cards
The uses of credit cards are increasing day by day all over the world. A credit
card is a payment card issued to users as a system of payment. It allows the
119
Bill E. Branscum, “Colombian Black Market Peso Exchange: An Instrument of Commerce, or
Crime.” (1 January 2010). Website: <www.fraudsandscams.com/CBMPE/CBMPE.htm> Accessed
on 5 December 2013.
50
cardholder to pay for goods and services based on the holder’s promise to pay
for them.120 The issuer of the card creates a revolving account and grants a line
of credit the consumer or the user from which the user can borrow money for
payment to a merchant or as a cash advance to the user. Clearing credit and
charge card balances at the counters of different banks; such cards have a
number of uses and can be used across international border. For example, to
purchase assets, for payment of services or goods received or in a global
network of cash-dispending machines.121
Trade-based
Trade and business plays an important role in the development of a country. In
the era of globalization, trade and business is also increasing nationwide. The
launderers are using trade and business as a mode of ML. Trade-based ML is
an alternative remittance system that allows illegal organisations the
opportunity to earn; move and store proceeds disguised as legitimate trade.
Documents play a key role in international transactions. Both buyers and sellers
need documents for bookkeeping, accounting, taxation, export and import
formalities, as well as making payments using letters of credit and other
documentary payment methods. Value can be moved through this process by
false-invoicing, over-invoicing and under-invoicing commodities that are
imported or exported around the world in order to disguise the movement of
120
Steven M. Sheffrin, Economics: Principles in action (Upper Saddle River, New Jersey, USA, 2003).
p. 261.
121
Financial Action Task Force (FATF). “Global Money Laundering and Terrorist Financing Threat
Assessment.” Website: <.http://www.fatf-gafi.org/dataoecd/48/10/45724350.pdf.>
Accessed on 3 March 2013.
51
global trade. It is habitually used by launderers/criminal organisations to move
value around the world through the complex and sometimes confusing
documentation that is frequently associated with legitimate trade transactions.122
Moreover, methods can range from the purchase and re-sale of a luxury item to
make investment in business.
Cash-intensive Business
The practice of cash-intensive business is an alternative mode of ML. Cash-
intensive document is not an official pronouncement of the law or the position
of the service and cannot be used, cited, or relied upon as such. A business
typically involved in receiving cash will use its accounts to deposit both
legitimate and criminally derived cash, claiming all of it as legitimate earnings.
Often, the business will have no legitimate activity. 123
Real Estate Business
The culture of real estate business is increasing with the economic development
of a country like Bangladesh. Real estate is a property consisting of land and
the buildings on it, along with its natural resources such as crops, minerals, or
water; immovable property of this nature; an interest vested in this; (also) an
item of real property; (more generally) buildings or housing in general. The
business of real estate incorporated to buying, selling, or renting land, buildings
or housing. Real estate may be purchased with illegal proceeds, and then sold.
122
An invoice, bill or tab is a commercial document issued by a seller to the buyer, indicating the
product, quantities, and agreed prices for products or services the seller has provided the buyer. An
invoice indicates the sale transaction only. Available at <en.wikipedia.org/wiki/Invoice>
Accessed on 15.02.2014.
123
52
The proceeds from the sale appear to outsiders to be legitimate income.
Alternatively, the price of the property is manipulated; the seller will agree to a
contract that under-represents the value of the property, and will receive
criminal proceeds to make up the difference.124
It is convenient in Bangladesh to sell and buy properties as the payment of
tax is calculated on the basis of value fixed at government rate and not on
transacted amount. This has been going on for many years whether the amount
transacted involves the financial institutions or cash. It would be highly unfair to
discriminate between the two, because both in essence represent excess of
payments over the registered deed value, as is fixed by the relevant government
authority, to the seller or his representative by the buyer or his representative. For
systemic reasons, it would not be proper to treat such payments within the country
as ML, without revamping the documentation and registration arrangements. If the
same is considered ML, hardly anyone involved in all kinds of land or property
transfers by sales and purchases over the years would be spared. 125
Casinos
The use of casino is very much popular, in the era of free trade. Although, the use
of casino is a western culture, it impacts on the culture of Bangladesh. A casino is
a facility which houses and accommodates certain types of gambling activities.
Casinos are most commonly built near or combined with hotels, restaurants, retail
124
125
M.S. Siddiqui. “Need for Reviewing Anti-money Laundering Law to Serve Its Real Purpose.” The
Financial Express, Dhaka (27 July 2009).
53
shopping, cruise ships or other tourist attractions. An individual will walk into a
casino with cash and buy chips, play for a while and then cash in his chips, for
which he will be issued a check. The money launderer will then be able to deposit
the check into his bank, and claim it as gambling winnings.126
Structuring
The practice of structuring is a general mode of ML all over the world.
Structuring is often known as smurfing. It is a method of placement by which
cash is broken into smaller deposits of money, used to defeat suspicion of ML
and to avoid AML reporting requirements. It focuses on making funds
untraceable through diversification. Many countries have financial regulations
that require banks to file a report for any suspicious transaction over a certain set
amount.127 Launderers skirt this regulation by taking dirty money and depositing
it into many different accounts, investments, and even physical property, often
under different names and in different countries. A sub-component of this is to
use smaller amounts of cash to purchase bearer instruments, such as money
orders, and then ultimately deposit those, again in small amounts.128
2.4.2.2 Rare Modes
There are some alternative methods that money encompasses laundering including
financial and non-financial institutions to which the following are unique:
126
“National Money Laundering Threat Assessment.” (December, 2005). p. 33.
Website: <http://www.justice. gov/dea/pubs/pressrel/011106.pdf.> Accessed 3 March 2013.
127
In the United States, this smaller amount has to be below $10,000—the dollar amount at which U.S.
banks have to report the transaction to the government. Available at: <https://money.how stuffworks.
com/money laundering 3.htm.> Accessed on 15 February 2013.
128
“Structuring Financial Transactions to Evade Reporting Requirements.” Website: <http://www.buchananin
gersoll. com/news.php?NewsID=1424.> Accessed on 3 March 2014.
54
Waiver
The waiver generally used for making black money white in Bangladesh. The
economy of Bangladesh is flooded with a high component of black money. The
Government, needless to say, faced the urgent requirement of channeling this
huge amount of black money circulation into more productive means for the
upbringing and development of the country. To achieve this prerogative the
government introduced the Black Money to White Money scheme by giving
certain percentage of Tax.129 This scheme prompted huge sums of illegitimately
earned income to be pushed into the government machinery. According to the
National Board of Revenue (NBR) statistics, BDT Tk.12,996 crore has been
whitened and BDT Tk.1,368 crore has been collected as taxes since 1975.130 The
present government has been giving amnesty for black money from its first year
in office. In fiscal year 2009-10, it allowed whitening undisclosed money in four
sectors, where 1,923 people legalised BDT Tk 923 crore.131
Trusts
The practice of trust is also a mode of ML. Trust is a fiduciary relationship in
which one party, known as a trustor, gives another party, the trustee, the right to
hold title to property or assets for the benefit of a third party, the beneficiary.132
ML methods sometimes involve investments in fake companies, called ‘shells,’
or legitimate companies, called ‘fronts.’ These operations usually involve faking
129
The debate over allowing or disallowing of whitening of undisclosed sums of money is a strong
one. The proposed provision for legalising moneys that is off the books envisages a payment of a
flat penalty @10 percent.
130
Editorial, “Bangladesh’s Legalising Black Money.” The Daily Star, Dhaka (1 June 2012).
131
Ibid.
132
Website: <www.investopedia.com/terms/t/trust.asp > Accessed on 10 October 2013.
55
receipts and evidence to record profits for transactions that are actually from
funneled laundering funds. Businesses that deal primarily in cash and have a
relatively low weekly or monthly deposit level are often targets of laundering.
Service-oriented businesses, as opposed to goods-providing businesses, are also
commonly used, since there is less evidence of a service than of a purported
good. These are fake companies that exist for no other reason than to launder
money. They take in dirty money as ‘payment’ for supposed goods or services
but actually provide no goods or services; they simply create the appearance of
legitimate transactions through fake invoices and balance sheets. Trusts and shell
companies disguise the true owner of money. Trusts and corporate vehicles,
depending on the jurisdiction, need not disclose its true, beneficial, owner.133
Fake Inheritance
The practice of fake inheritance is a common mode of ML in Indian
Subcontinent. The technique of laundering money is related to inheritance of
jewellery and wealth. To this extent married women or men launderer
laundered their illegal proceed of earnings, for instance, at the time of opening
income tax file most of the people of Bangladesh shows/includes excess or non
existing wealth or ornaments, which have gained as a gift at the time of their
marriage. The Indian inheritance law permits a married woman to acquire
jewellery worth (Indian Rupee) Rs.5,00,000.134
133
134
India, 2004). p. 18. Available at <http://money.howstuffworks.com/personal-finance/banking/
international-banking.htm> Accessed on 15 February 2014.
56
Black Salaries
The launderers use the mode of black salaries to launder their illegally earned
money. Companies might have unregistered employees without a written
contract who are given cash salaries. Black cash might be used to pay them. It
is found in Bangladesh especially in garments factory.135
Multilevel Marketing (MLM) Companies
Multilevel Marketing (MLM) is a recent activity and trend added to the
business of Bangladesh. It is a concept used by many countries around the
world with USA, Canada, Singapore, Malaysia, Taiwan, and India almost for
last 55 years. And it entered the Bangladesh in 1998 through a Canadian based
company GGN (Global Guardian Network) and Bangladesh based company
Bangladesh Network System (BNS). Multi-Level Marketing (MLM) is a
business opportunity that goes by many names like-Multi-Level Marketing,
network marketing, direct selling person to person marketing, matrix
marketing, or one to one marketing etc.136 The business of Multilevel
Marketing (MLM) Company is very popular in Bangladesh. A large number of
people are involved in these sectors and they invested huge amount of capital
to earn profit although, they have not a clear concept of MLM business. On the
other hand, people are more formal and positive doing this business and they
are financially benefited. Bangladesh Bank has warned the people against
investing in MLM companies that offer abnormal profits in a short span of
135
“National Money Laundering Threat Assessment.” (December 2005). p. 33. Available at
<http://www.justice.gov/dea/pubs/pressrel/011106.pdf > Accessed on 15 February 2014.
136
Details in chapters 2.6.
57
time. The investors can get deceived by these companies that come up with
schemes offering 10 percent or more profits a month upon investments in gold
markets abroad or foreign exchanges. Although the Anticorruption
Commission has filed cases against several companies and the central bank has
stopped their operations, they have continued their business under different
names. According to the Register of Joint Stock Companies and Firms, there
are 70 MLM companies operating in Bangladesh.137
Unauthorized Expatriate
A large number of Bangladeshi workers are living around the world.
Unauthorized Expatriates are those people who are living all over the world
beyond their own nationality without taking proper approval or consent of the
concerned authority, for instance, around 50(Fifty) thousand Bangladeshi
workers are staying as illegal immigrants in Maldives. 138 The unauthorized
expatriates are sending their earned money from abroad using illegal channel.
Capital Flight
Capital flight is a sensitive way of ML in Bangladesh as well as all over the
world. There is no universal single definition of capital flight. The term ‘capital
flight’ is used in different modes. Generally capital flight means the movement
of money from one investment to another in search of greater stability or
increased returns. Specifically it refers to the movement of money from
investment in one country to another in order to avoid country-specific risk
137
Website: <bdnews24.com/aam/mr/sh/pks/bd/1920h> Accessed on 9 January 2014.
138
Editorial, “Expatriate Workers’ Plights in Maldives.” The Daily Star, Dhaka (11 May 2012).
58
such as high inflation or political turmoil or in search of higher returns. Capital
flight is seen most commonly in massive foreign capital outflows from a
specific country, often at times of currency instability. The most common cause
of capital flight is an anticipated devaluation of the home currency. Capital
flight is usually a symptom rather than a cause of financial crisis. Occasionally,
however, rumors of devaluation can trigger capital outflows. Not surprisingly,
episodes of capital flight are most frequent when exchange rates are unstable.
A loss of confidence may be caused by an excessively large foreign debt
burden, large fluctuations in commodity export prices, or chronic government
mismanagement of the domestic economy. Capital flight may affect the entire
financial system of a country.139
The modes of ML are endless. A lot of modes/techniques are not easily
attributed to one laundering phase alone with reporting of crime, the modus
operandi changes keeping in view the earlier detection.
2.5 Case Studies in Foreign Perspective

ML is a largely secretive and sensitive phenomenon. It is very difficult to
estimate or find out how much money is actually laundered in any country or
globally.140 It is also very difficult to find out the exact number of launderers,
how much money they launder, in which countries and sectors are included to
launder money as well as the techniques or modes which are used for ML.141
139
Website: < www.investorwords.com/704/capital_flight.html.> Accessed on 7 August 2014.
140
Personal interview with Dr. Abhinaya Chandra Saha, professor, Department of Accounting and
Information Management and Director, Institute of Business Administration (IBA), University of
Rajshahi, Bangladesh at his office on 23 December 2013.
141
The statistics provided are taken from different articles duly acknowledged and is meant to just
focus on the gravity and enormousity of the problem. It is mentionable that the researcher could not
find the recent concretized statistics due to the volatile nature of the statistics related to ML.
59
However, a sustained effort between 1996 and 2000 by the FATF to produce
such estimates failed. In fact, no direct estimates exists of how much money is
transferred through the financial system, whether broadly or narrowly defined,
for the purposes of converting illegal gains into a non traceable form. The US
government identifies the amount of laundered money through its
investigations. According to the 2002 National Money Laundering Strategy–an
annual report from 1999 to 2003 by the US Treasury to Congress on anti-
money laundering efforts–seizures of ML related assets in fiscal 2001
amounted to $386 million, while the corresponding figure for forfeited assets
was $241 million.142 Considering the billions of laundered dollars believed to
be out there, a few hundred million dollars annually is a negligible share of the
true total. John Walker (1995)143 was the first to make a serious attempt at
quantifying ML and initial output. His model suggests that US$2.85 trillion are
laundered globally. As per an estimate of the International Monetary Fund, the
aggregate size of ML in the world could be somewhere between 2-5% of the
worlds Gross Domestic Product (GDP). Although, ML is impossible to
measure with accuracy, it is estimated that US$300 billion to US$500 billion in
proceeds from serious crime (not tax evasion) is laundered each year.144
Though data on the size of ML is little, UK and US officials estimate that the
amount of money laundered annually in the financial system worldwide was
142
Peter Reuter and Edwin M. Truman, Chasing Dirty Money: The Fight Against Money Laundering
(Peterson Institute of International Economics, USA, 2004). p. 9.
143
He was a pioneer who attempted to measure money laundering worldwide, using an ad hoc
equation. The Walker Model examines two different aspects of money laundering process. First, it
scrutinizes money generated for laundering per country. Second, it examines flows of generated
money from one country to another. Cited in Brigitte Unger, The Scale and Impacts of Money
Laundering, UK. (Edward Elgar Publishing, UK, 2007). p. 16.
144
Scott, David. “Money Laundering and International Efforts to Fight It, Public Policy of the Private
Sector, Public Policy for the Private Sector,” The World Bank , Note No.48 (1995). Available at
<http://www.worldbank.org/html/fpd/notes/48/48scott.pdf.> Accessed on 15 February 2014.
60
roughly $500 billion–some 2% of global GDP.145 According to international
accounting firms, India is estimated to have a parallel economy of nearly 40%
of its $600 billion Gross Domestic Product. 146 The United Nations Office on
Drugs and Crime (UNODC) conducted a study to determine the magnitude of
illicit funds generated by drug trafficking and organised crimes and to
investigate to what extent these funds are laundered. The report estimates that
in 2009, criminal proceeds amounted to 3.6% of global GDP, with 2.7% (or
USD 1.6 trillion) being laundered. This figure is consistent with the 2-5% range
previously established by the International Monetary Fund (IMF) to estimate
the scale of ML. Less than 1% of global illicit financial flows is being seized
and frozen in 2009.147
The Supreme Court of the United States rendered two judgments in
favour of defendants, narrowing the application of the federal ML statute on 2
June 2008. In a unanimous opinion written by Justice Clarence Thomas, the
Court reversed Acuna, Mexico’s Humberto Cuellar's conviction and ruled that
hiding $81,000 in cash under the floorboard of a car and driving toward
Mexico is not enough to prove the driver was guilty of ML. Instead of the
prosecutors must also prove the driver was travelling to Mexico for the purpose
of hiding the true source of the funds. In fact, the prosecution had not made its
prima facie case. The Court further ruled that federal prosecutors have gone too
145
Quirk, Peter J. “Money Laundering: Muddying the Macroeconomy.”(Finance and Development.
International Monetary Fund, Vol.34, No.1, March 1997). p. 8. Available at <http://www.imf.org/
external/pubs/ft/fandd/1997/03/pdf/quirk.pdf.> Accessed on 15 February 2014.
146
Dhandapani Alagiri (ed.), Money Laundering: Issues and Perspectives (ICFAI University Press,
Hyderabad, India, 2006). p. 86.
147
The United Nations Office on Drugs and Crime (UNODC), Research Report titled ‘Estimating illicit
financial flows resulting from drug trafficking and other transnational organized crime’, (October, 2011).
Available at <www.fatf-gafi.org/pages/faq/moneylaundering> Accessed on 15 December 2014.
61
far in their use of ML charges to combat drug traffickers and organized crime;
that ML charges,148 apply only to profits of an illegal gambling ring and cannot
be used when the only evidence of a possible crime is when a courier headed to
the Texas-Mexico border with $81,000 in cash proceeds of a cannabis
transaction; it cannot be proven merely by showing that the funds were
concealed in a secret compartment of a Volkswagen Beetle; instead,
prosecutors must show that the purpose of transporting funds in a ML case was
to conceal their ownership, source or control; the secrecy must be part of a
larger design to disguise the source or nature of the money. 149 Later in another
case, in a divided decision, the Court reversed the convictions of Efrain Santos
of Indiana and Benedicto Diaz for ML based on cash from an illegal lottery. In
the plurality opinion, Justice Antonin Scalia wrote that the law referred to the
proceeds of some form of unlawful activity; paying off gambling winners and
compensating employees who collect the bets do not qualify as ML; the word
‘proceeds’ in the federal ML statute,150 applies only to transactions involving
criminal profits, not criminal receipts; those are expenses, and prosecutors must
show that profits were used to promote the illegal activity. Congress clarified
the meaning of the statute in the Fraud Enforcement and Recovery Act, 2009,
defining proceeds explicitly to include both profits and gross receipts.151
Franklin Jurado, the Harvard-educated economist went to prison for
cleaning $36 million for Jose Santacruz-Londono, the Colombian drug Lord in
148
The Money Laundering Control Act, 1986 (USA). Sec. 18 U.S.C. 1956(a)(2)(B)(i).
149
Website: < http:// mlaundering.wordpress.com/academic-analysis/ > Accessed on 12 December 2013.
150
The Money Laundering Control Act, 1986 (USA). Sec.18 U.S.C. 1956(a)(1)(A)(i)(h).
151
Website: < http:// mlaundering.wordpress.com/academic-analysis/ > Accessed on 12 December 2013.
62
1996. People with a whole lot of dirty money typically hire financial experts to
handle the laundering process. The whole idea is to make it impossible for
authorities to trace the dirty money while it is being cleaned.152
2.6 Case Studies in Bangladesh Perspective

Bangladesh holds seaports and long porous borders with India and Myanmar.
The regions of the golden triangle (Laos, Myanmar and Thailand) and golden
crescent (Afghanistan, Iran and Pakistan) have made a key transshipment point
for drugs produced.153 In addition to drug trafficking, corruption and trafficking
in persons are the principal sources of criminal proceeds for ML. Bangladesh is
also vulnerable to terrorist financing flows through hawala/hundi systems and by
cash courier. Bangladesh-based terrorist organization Jamaat-ul-Mujahideen
Bangladesh (JMB) has publicly claimed to receive funding from Saudi Arabia.154
The economy of Bangladesh relies heavily on remittances from expatriate
Bangladeshi workers. According to the BB, central bank of Bangladesh reports
that remittances through official channels have increased steadily since 2002,
rising to $11.65 billion in the year 2011 due to improved delivery time and
payment procedures by commercial banks and to include value-added services,
such as group life insurance. The BB, central Bank of Bangladesh stated that a
larger share of remittances is now transmitted through the formal sector than
152
Ahmed Ali. “Anti-money laundering measures still ineffective.” The Daily Star, Dhaka( 29 May 2004).
153
Almost 90 per cent of the world's illicitly-produced opiates originate in the two main production
areas- golden crescent and the golden triangle. Mohammad Anisur Rahman, “Drug abuse: A threat
to the nations.” The Financial Express, Dhaka (14 September 2013).
154
Money Laundering and Financial Crimes Country Database (May 2012) (United States Department
of State, Bureau for International Narcotics and Law Enforcement Affairs, INCSR 2012, Volume
11, Country Database. p. 46. Available at <www.state.gov/documents/organization/ 191510.pdf>
63
through hawala/hundi. Nevertheless, while money transfers outside official
channels are illegal, widespread use of the underground hawala/hundi system
continues and black market money exchanges remain popular because of the
non-convertibility of the local currency and intense scrutiny of foreign currency
transactions made through official channels. Remittances by expatriate workers
comprise the vast majority of hawala/hundi transactions, but hawala/hundi is
also used to avoid taxes and customs duties and is exploited by criminals as a
low-risk avenue to conceal the proceeds of crime. While the hundi system
continues to be Bangladesh’s principal ML vulnerability, non-governmental
organizations (NGOs), charities, and counterfeiting are areas of increasing
concern, especially with regard to TF.155
The Government of Bangladesh (GoB) adopted a controversial tax
amnesty plan aimed at encouraging investment in the capital markets in June
2011. The amnesty could undermine Bangladesh’s compliance with international
AML standards (including the criminalization of money laundering, confiscation
of the proceeds of crime, and cooperation between domestic competent
authorities) and defeat its progress in strengthening its AML legal framework
and implementation efforts. At the end of 2011, Bangladesh rescinded the
problematic tax amnesty programme, replacing it with another programme that
largely alleviates concerns of ML activities and related crimes.156
155
Website: <http://www.apgml.org/documents/docs/17/Bangladesh%20ME2%20-%20final120809.pdf.>
Accessed on 15 February 2013.
156
Money Laundering and Financial Crimes Country Database (May 2012) (United States Department
of State, Bureau for International Narcotics and Law Enforcement Affairs, INCSR 2012, Volume
11, Country Database. p. 46. Available at <www.state.gov/documents/ organization/191510.pdf>
64
Tarique Rahman and his business partner Giasuddin Al Mamun
transferred money to the Capital Street branch of Singapore’s City Bank had
been extorted from different firms including Nirman Construction Ltd,157 if
being the lowest bidder, was primarily selected for the job to install a power
plant in Tongi. In the case of Tarique Rahman vs Govt. of Bangladesh, Justice
Md. Muzammel Hossain opines, “…The sole object of repealing and amending
an Act is to get rid of certain provisions of obsolete matter and replacing the
same by subsequent amendment of an Act since right of repeal being inherent
in legislature alone.”158 In compliance with the contention, the bill not only
replaces the present ‘Money Laundering Prevention Act 2009,’ at once with the
‘Money Laundering Prevention Act 2012,’ but also aims at making an ‘up to
the hilt’ law to efface the dynamic crime of ML that poses as a thicket upon the
economy cornerstone of Bangladesh.159
The Destiny-2000 Ltd. started their functions after taking a registration
under the Department of Cooperatives (DoC) in the Ministry of Local
Government, Rural Development & Cooperatives in 2000 and now according
to its website, has 42 sister concerns. In 2012, a team of NBR has audited the
tax reports of the 12 entities of Destiny Group. Mr. Md. Alauddin160 said ‘the
Destiny-2000 Ltd. has raised hundreds of crores of BDT taka from people
through its cooperative window, which enjoys tax exemption.’ The tax
157
Unearthed the laundering of Tk 20.41 crore. But the firm was told that it would not get the job
unless Tarique, elder son of BNP Chairperson Khaleda Zia, and Mamun are paid $750,000. Tarique
Rahman vs Govt. of Bangladesh. 63 DLR (AD) (2011). p. 18.
158
Tarique Rahman vs Govt. of Bangladesh. 63 DLR (AD) (2011). p. 18.
159
Website: <http://www.nevisfinance.com/GFXZ/MoneyLaundering.jpg>Accessed on 15 February 2014.
160
Md. Alauddin was a member of the audit, intelligence and investigation of the NBR, Bangladesh.
65
regulator also scanned the accounts of the Cooperative to see if it has properly
distributed profits to its members or not. The central bank investigation has
found that the company is involved in banking activities–from deposit
collection to lending–illegally. It has around 70 lakh members and set a target
to take the number to 1 crore. The probe also found a link between the current
liquidity crisis in the banking sector and the booming MLM business. As on
31December 2011, the organisation collected nearly BDT Tk 2,000 crore in
deposits and share capital from people. Of the deposit, the bulk amount is lent
to its sister organisations and only a small portion to its members. However, the
Destiny did not try to borrow from the banks or capital markets to meet its
demand for capital. 161
The BB and others, the regulators following a series of news reports on
the issue over the last few days March-April, 2012 have moved to probe the
Destiny-2000 Limited scam spotted. The DoC, which is the principal regulator
of cooperative societies, has formed a high-powered committee to investigate
the matter. The National Board of Revenue (NBR) and the Anti-Corruption
Commission (ACC) have also moved to probe possible tax dodging and ML by
the MLM Company.162
The top sixteen officials of the Destiny 2000 Limitd were accused of
misappropriating money and ML of Destiny Multi-level Marketing. Of them,
161
The Daily Star, Dhaka (3 April 2012). Available at <www.thedailystar.net/newDesign/news-
details.php?nid=228790 > Accessed on 25 January 2014.
162
Ibid.
66
six were accused of ML case of Destiny Tree Plantation Project. The Deputy
Director Mohammad Mozahar Ali Sardar and the Assistant Director
Mohammad Toufiqul Islam of the Anti-Corruption Commission (ACC) filed
two cases against 22 Destiny officials on 31 July 2011 with Kalabagan Police
Station at Dhaka under the Money Laundering Prevention Act 2009 for
misappropriating BDT Tk 3,500 crore and siphoning it. There was allegation
that the accused secretly transferred BDT Tk 2,375 crore from tree plantation
project and BDT Tk 1,935 crore from MLM accounts in different banks. A
report published on the irregularities of Destiny-2000 Limited in various
newspapers following a inquiry by the BB in 2011where founded the proof of
illegal banking by Destiny Multipurpose Co-operative Society, a sister concern
of Destiny. Illegal banking by the company is creating disorder in the country’s
financial sector, said the BB probe report, which was sent to the finance
ministry on July 2011. A Dhaka court on 02 October 2011 ordered the
authorities to freeze 252 bank accounts of scandal-hit Destiny Group and
Destiny 2000 Limited. The latest case of fraud by Destiny 2000 Limited at
Panchagarh district came into public attention through a news item published in
vernacular daily Manabzamin on 27 October 2011.163 Just within 3 days of
lodging criminal cases against Destiny 2000 Limited at country’s southern
district of Rajshahi (Bagmara Police Station), cheated clients of Destiny 2000
Limited at Panchagarh district (northern part of Bangladesh) have
demonstrated on 25 October 2011 demanding refund of their invested money
and legal action against the fraudsters at Destiny 2000 Limited. However, the
163
The Vernacular Daily Manabzamin, Dhaka (27 October 2011). p. 11.
67
Government of Bangladesh also detected 45 Multi Level Marketing
Companies, including Destiny 2000 Limited are using false/fake address and
giving false information. 164 On 31 July 2012, the ACC sued Destiny officials
on charges of siphoning off BDT Tk 3.28 billion taka (39 million US$). The
multilevel company officials allegedly transferred crores of taka from the
company accounts to their personal accounts. 165
Sonali Bank Limited as well as Hall Mark Group of Bangladesh is
creating a gigantic negative impact on the banking sector. From a certain period
it has been observing a further caused by BDT Tk 35.47 billion (3,547 crore)
loan scam in a branch named Ruposhi Bangla branch of the Sonali Bank
Limited, Dhaka where a quite well known company named Hallmark had alone
swindled BDT Tk 25.00 billion (2,500 crore) approx through local letters of
credit, while T & Brothers took more than BDT Tk 6.00 billion (600 crore),
Paragon Group BDT Tk 1.47 billion (147 crore) approx, Nakshi Knit about BDT
Tk 670 million (67 crore), DN Sports about BDT Tk 340 million (34 crore) and
Khanjahan Ali took about BDT Tk 50 million (5 crore). This is the matter of
great-concern that it is unprecedented in the history of our banking sector. The
borrowers are neither well-known nor well-established companies. This huge
amount of money has been given to the companies by Sonali Bank Limited, in
completely irregular way which has been misused by the companies.166
164
The New Nation, Dhaka (26 October 2011).
165
Mahbub Alam, “Money Laundering: A Cancerous Practice Crippling Our Economy.” The
Independent, Dhaka (19 October 2012).
166
Ibid.
68
ML activities and related offences were also encouraged by the act of
Hallmark and Destiny 200 Limited. Some foreign shipping companies are also
involved in a large scale of ML bandwagon in collaboration with their local
agents, according to an investigation conducted by the BB. The report reveals
that seatrain shipping company named Orient Overseas Container Line
(OOCL) is involved in fraudulent activities that directly violate Bangladesh
Bank’s Foreign Exchange Regulation Act (FERA) 1947. The OOCL is Hong
Kong based container shipping and logistics service company which claims to
give 5% commission to their local traders Continental Traders Bangladesh
Limited (CTBL). The OOCL was actually providing 2.5% commission and
laundering the rest 2.5% from Bangladesh. Almost in all the cases, the mother
shipping companies are providing 2.5% commission to their local agents, but
the documents of the CTBL recorded 5% commission shows in the
investigation report issued by the BB, central bank of Bangladesh. Even though
the OOCL claims that it paid BDT Tk 13.5 crore as commission to the CTBL,
the audit and tax documents indicate otherwise. According to audit and tax
documents, the OOCL only paid BDT Tk 6.7 crore to CTBL and laundered the
remaining amount. 167
167
Mahbub Alam, “Money Laundering: A Cancerous Practice Crippling Our Economy.” The
Independent, Dhaka (19 October 2012).
69
2.7 Conclusion
ML is a big concern at national and international level. Cash transactions are
predominately used for ML as they facilitate concealment of the true ownership
and origin of money. The money launderers or criminals contaminate and
corrupt the structure of a country at all levels by way of ML. Further the
launderer adds to constant pursuit of profits and the expansion into new
associations, enabling them to penetrate the legitimate economy. The launderer
or criminal associations now tend to be organized like business enterprises and
to follow the same tendencies as legitimate firms, specializations growth,
expansion in international markets and linkage with other enterprises. The
holders of capital of illegal origin are prepared to bear considerable cost in
order to legalize its use.
The practice of ML is essentially based on a few defined principles of
the crime which remains largely invariable, but the technological developments
related to the modes of laundering money are increasing rapidly. Moreover, it
is becoming more and more complicated and indirect, which makes the task of
authorities prone to control ML, virtually impossible. The launderers are taking
advantage of the use of internet for transferring money. It is essential for
requisite authorities to ensure that the legislation related to ML is continually
updated and kept abreast of the latest development related to the modes of
laundering money. Preventing or combating ML activities and related crimes is
a key element in promoting a strong, sound and stable financial sector of a
country like Bangladesh.

Chapter Three
Proliferation of Money Laundering in Bangladesh
3.1 Introduction
The strategic geographical location, social culture, political integrity, economic
condition, and the national stability of a country are important factors for
proliferation of money laundering. Bangladesh holds borders with India on the
west, north and north east, Myanmar on the east and Bay of Bengal on the
south. In addition, the location of Bangladesh in between the golden triangle
(Laos, Myanmar, Thailand) and golden crescent (Afghanistan, Iran, Pakistan)
makes it further vulnerable to illegal inflow and outflow of assets or money.168
The area of Bangladesh is about 150,000 square kilometers and estimated
population is around 160 million. The Gross Domestic Product (GDP) of
Bangladesh at constant price in billion BDT is 4093.80 and GDP per capita in
BDT is 86731.00 in the year 2013-2014.169 The country has significant
earnings from expatriate Bangladeshis and from export of garment products,
tea, leather etc.
The funds or money involved in ML activities and related offences have
been increasing day by day. According to the FATF, the aggregate size of
168
Details in the previous chapter 2.6.
169
Bangladesh Economic Review, 2014.
71
global ML is between 2-5% of world economic output, or between $590 billion
and $1.5 trillion, most of which is gained from illicit drug trafficking,
corruption, fraud as well as from organised crime.170 The rise of global
financial market makes the process of money or fund transfer easier or possible
from one place to another place as well as from one country to another country
for use. At the same time, it also makes ML easier than ever. This chapter
explains the term ‘proliferation of money laundering’ and also examines its
nature, causes and consequences. This chapter also focuses on the sectors
through which ML occurs in Bangladesh.
3.2 Proliferation of Money Laundering

ML is a serious and growing problem in Bangladesh. Practically, it is a profit
generating crime and may occur anywhere in the world including Bangladesh.
The process of ML is of critical importance, as it enables the criminal to enjoy
these profits without jeopardizing their source.171 The general trend of money
launderer is to seek out areas in which there is a low risk of detection and under
weak or ineffective AML programme. ML preventing authorities and the
money launderers always changes their behaviour when trying to chase and
escape ML activities. Proliferation of money laundering, what the researcher
means for the purpose of this study, is rapid or sudden expansion of ML
170
Mahfuzur Rahman, Money Laundering Protirodh (3rd ed.; Borna Binnash, Dhaka, 2010). p. 35.
171
World Bank, “Policy Brief Money Laundering.” Available at <www1.worldbank.org/finance
/assets/images/PB9906_en.pdf.> Accessed on 21 February 2014.
72
including the reasons or causes behind it. To understand the term ‘proliferation
of money laundering’ it is required to make an evaluation of its nature, causes
and consequences.
3.2.1 Nature of Proliferation of Money Laundering

There are several ways to describe the nature of ML due to its rising trends, and
the varying typologies. To understand the nature of proliferation of money
laundering, ML activities may be explained under two main criteria:
i) Practical Perspective and
ii) Legal Perspective.
3.2.1.1 Practical Perspective
ML from practical perspective constructs the acts of ML from beginning to end
i.e. from placement, layering to integration.172 The common characteristic of
ML is the transfer of illegal money or fund into economic systems. ML is also
the process by which one conceals the existence, illegal source, or illegal
application of income, and then disguises that income to make it appear
legitimate.173 The scope of ML may be distinguished into three elements by
following the aforesaid definitions:
i) There is a sum of money derived from specific illegal activities;
172
Rick McDonell, “Money Laundering Methodologies and International and Regional
Countermeasures” presented at the conference on Gambling, Technology and Society: Regulatory
Challenges for the 21st Century (Sidney, 7-8 May 1998). p. 2. Available at <www.aic.gov.au/media.../
conferences/gambling/mcdonnell.pdf> Accessed on 5 February 2014.
173
Javier Garcia, “International Measures to Fight Money Laundering.” Journal of Money Laundering,
Vol. 4, No. 3 (UK, 2001). p. 7.
73
ii) To avoid the money from being confiscated or to save the criminal
from being prosecuted, the money needs to appear legal by being converted
into clean money; and
iii) This may be done by putting it through a number of steps that
include placement, layering, and integration. It may be assumed from the above
elements that ML is the movement of illegal money for the purpose of
disguising its origin and integrating it back into the formal legitimate economy.
In light of the implementation process, ML takes place when funds are placed
from illegal activities and then moved through financial institutions for the
purpose of disguising its origins and integrating it back into the formal
legitimate economy. ML is also a process of concealing, disguising, moving or
using money known to be the proceeds of crime. The aim of these activities is
to convert money from being illegitimate to being legitimate through the three
aforementioned steps.
The principles of hiding, moving, and investing have been used in the
process of ML activities and related crimes.174 Initially, the money or fund is
hidden from the direct association of the crime. Then it is moved through
financial and non-financial institutions to other jurisdictions. Finally, it is
invested into legitimate businesses so that it may be used just like any other form
of legitimate capital. Another expression of ML is to get it out, cover it up, and
bring it back to the legitimate economy in order to take maximum advantage of

174
The United Nation’s International Money Laundering Information Network (IMOLIN), (The
United Nations, 2006). Available at <www.anpec.org.br/encontro2006/artigos/A06A072.pdf>
74
it. ML is also used as an instrument for connecting the informal/illegal economy
to the formal/legal economy.175 Above all, the launderers or criminals launder
the ill-gotten gains, and then, moving them into the formal or legitimate
economy. This kind of conduct could also be done by means of capital flight
and tax evasion in which the money is derived from legitimate sources.176 The
laundered money or funds may be obtained from illegal assets such as drug
trafficking or corruption as well as it also obtained from legal assets such as
capital flight or tax evasion.177
3.2.1.2 Legal Perspective
The term ‘money laundering’ initially used as a case in the United States of
America, and then evolved through the enactment of legislations, such as the
Bank Secrecy Act of 1970 (USA) and the Money Laundering Control Act of
1986 (USA). This then developed into having an international scope through
the adoption of the United Nations Convention Against Illicit Traffic in
Narcotic Drugs and Psychotropic Substances (The Vienna Convention 1988).
From that period of time, the term ‘money laundering’ spread to the rest of the
world through the enactment of domestic legislations and regulations. In the
legal perspective, ML is understood as being formulated in a number of legal
instruments such as conventions, agreements, legislations, or regulations. The
different legal instruments included various elements in the definitions of ML.
175
Antoinette Verhage and Paul Ponsaers, ‘Power-seeking crime? The professional thief versus the
professional launderer,’ Crime, Law and Social Change, Vol. 51 No. 3-4, (2009). pp. 399-412.
176
Kris Hinterseer, Criminal Finance: The Political Economy of Money Laundering in a Comparative
Legal Context, (The Hague-London-New York: Kluwer Law International), 2002. p. 11.
Available at <www.worldcat.org/.../criminal-finance-the-political-economy-of-money-laundering-
in-a-comparative-legal-context/.../469306923> Accessed on 25 February 2014.
177
Ibid.
75
These elements involve the subject of crime, the elements of criminal acts, and
the types of criminal liability. The Vienna Convention 1988 elaborates the term
‘money laundering’ as:
…The conversion or transfer of property, knowing that such property is

derived from any offence or offences established in accordance with…or
from an act of participation in such offence or offences, for the purpose
of concealing or disguising the illicit origin of the property or of
assisting any person who is involved in the commission of such an
offence or offences to evade the legal consequences of his actions; the
concealment or disguise of the true nature, source, location, disposition,
movement, rights with respect to, or ownership of property, knowing
that such property is derived from an offence or offences established in
accordance with…or from an act of participation in such an offence or
offences;…the acquisition, possession or use of property, knowing, at
the time of receipt, that such property was derived from an offence or
offences established in accordance with…or from an act of participation
in such offence or offences; the possession of equipment or materials or
substances…knowing that they are being or are to be used in or for the
illicit cultivation, production or publicly inciting or inducing others, by
any means, to commit any of the offences established in accordance with
this article or to use narcotic drugs or psychotropic substances illicitly;
participation in, association or conspiracy to commit, attempts to commit
and aiding, abetting, facilitating and counseling the commission of any
178
of the offences established in accordance with this article.
Then the European Convention on Laundering, Search, Seizure and
Confiscation of Proceeds from Crime (The Strasbourg Convention 1990)
defines the term ‘money laundering’ as:

… a. the conversion or transfer of property, knowing that such property
is proceeds, for the purpose of concealing or disguising the illicit origin
of the property or of assisting any person who is involved in the
commission of the predicate offence to evade the legal consequences of
his actions; b. the concealment or disguise of the true nature, source,
location, disposition, movement, rights with respect to, or ownership of,
property, knowing that such property is proceeds; and, subject to its
constitutional principles and the basic concepts of its legal system; c. the
acquisition, possession or use of property, knowing, at the time of
receipt, that such property was proceeds; d. participation in, association
or conspiracy to commit, attempts to commit and aiding, abetting,
facilitating and counselling the commission of any of the offences
179
established in accordance with this article.
178
The United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic
Substances (1988). Art 3(1)(a)(b)(c).
179
The European Convention on Laundering, Search, Seizure and Confiscation of Proceeds from
Crime (1990). Art 6(1)(a)(b)(c)(d).
76
The European Community Council Directive on Prevention of the Use
of the Financial System for the Purpose of Money Laundering (1991) also
defines the term ‘money laundering’ as:
…the conversion or transfer of property, knowing that such property

is derived from criminal activity or from an act of participation in
such activity, for the purpose of concealing or disguising the illicit
origin of the property or of assisting any person who is involved in
the commission of such activity to evade the legal consequences of
his action;- the concealment or disguise of the true nature, source,
location, disposition, movement, rights with respect to, or ownership
of property, knowing that such property is derived from criminal
activity or from an act of participation in such activity;- the
acquisition, possession or use of property, knowing, at the time of
receipt, that such property was derived from criminal activity or from
an act of participation in such activity;- participation in, association
to commit, attempts to commit and aiding, abetting, facilitating and
counselling the commission of any of the actions mentioned in the
foregoing indents. Knowledge, intent or purpose required as an
element of the abovementioned activities may be inferred from
objective factual circumstances. Money laundering shall be regarded
as such even where the activities which generated the property to be
laundered were carried out in the territory of another Member State
180
or in that of a third country.
The United Nations Convention Against Transnational Organized Crime
(The Palermo Convention 2000) also elaborates the term ‘money laundering’ as:
…the conversion or transfer of property, knowing that such property

is the proceeds of crime, for the purpose of concealing or disguising
the illicit origin of the property or of helping any person who is
involved in the commission of the predicate offence to evade the
legal consequences of his or her action; the concealment or disguise
of the true nature, source, location, disposition, movement or
ownership of or rights with respect to property, knowing that such
property is the proceeds of crime;...the acquisition, possession or use
of property, knowing, at the time of receipt, that such property is the
proceeds of crime; participation in, association with or conspiracy to
commit, attempts to commit and aiding, abetting, facilitating and
counseling the commission of any of the offences established in
181
accordance with this article.
180
The European Community Council Directive on Prevention of the Use of the Financial System for
the Purpose of Money laundering (1991). Art 1(D).
181
The United Nations Convention Against Transnational Organized Crime (2000). Art 6(1)(a)(b).
77
The scope of ML has been elaborated in these legal instruments, and the
elements that construct the definitions remain relatively the same or even in
identical trend. All modes of ML may be established the same actus reus182
including the conversion or transfer of property, the concealment or disguise of
the true nature, source, location, disposition, movement, right with respect to,
or ownership of property, the acquisition, possession, or the use of property, the
participation in, association to or conspiracy to commit, and attempts to
commit, aid and facilitate.
The essential mental element of ML offences is mens rea,183 or all
instruments recognize knowledge to punish a launderer or criminal. It means
that the prosecutor must prove the actual knowledge of the defendant that they
have known the funds were derived from a specified crime. It is very difficult
to prove this kind of mental element in the stage of implementation. Realizing
this problem, the Vienna Convention 1988 considered knowledge, intent, or
purpose as factual circumstances. This means that the mental element of
laundering offences has been extended from the subjective intent of the
launderers or criminals to the objective circumstances surrounding the case. In
the formulation, there has been a shift of a mental element of ML from actual
knowledge to constructive knowledge. Thus, it has been assumed that the
182
Actus reus refers to the defendant’s criminal conduct which constructs the elements of crime as
formulated in a legislation. It is the essential element that has to be proved by a prosecutor before
the judge passes a sentence to the defendant.
183
Mens rea means a defendant’s criminal responsibility which has to be proved by a prosecutor in a
judicial proceeding. Generally, there are two types of criminal responsibility: subjective and
objective. Subjective responsibility consists of three kinds of fault: intention, recklessness and
negligence. Objective responsibility describes the fault based on the fact surrounding the case.
78
laundering offences might be committed while the launderers or criminals
either knew or reasonably ought to have known that the proceeds concerned
were derived from a specific crime.
The Vienna Convention 1988 also considered drugs-related crimes as
predicate offences of ML. With the changing characters of ML offences, the
subsequent international or regional agreements such as the FATF, the
Strasbourg Convention 1990, the European Community Directive 1991 and the
Palermo Convention 2000 considered the scope of predicate offences to all
serious crimes generating significant amounts of illegal funds. Meanwhile, at a
domestic level, countries have various classifications in considering the
predicate offences of ML. To identify the predicate offence as ML it may be
classified in three main models. These are the all crimes approach, the list
approach, and the threshold approach.184
The different classifications underlying the crime of ML could affect the
success of implementing and enforcing AML laws. The difficulties are
identified in the definition of ML that the proceeds are derived from a specified
crime and in conducting international cooperation. The difficulty also arises
when the prosecutor proves the relationship between the criminal proceeds and
the crime underlying it. Further, the difficulty arises when the dual criminality
principle should be implemented. The countries that carry out international

184
Predicate offences may be described by crimes approach reference to all offences or by the list
approach reference to a list of predicate offences or by threshold approach reference to a threshold
linked either to a category of serious offences or to a penalty of imprisonment applicable to the
predicate offences or the mixed approach reference to a combination of these approaches. Mahfuzur
Rahman, Money Laundering Protirodh (3rd ed.; Borna Binnash, Dhaka, 2010). p. 63.
79
cooperation should have the same predicate offences underlying the crime of
ML. The significance of this principle is that cooperation between two countries
could not be carried out if one of them does not consider any crime as predicate
offences. This condition may impact on the effectiveness and efficiency of
international cooperation mechanisms due to the lack of dual criminality.
The subject of ML may be explained into different categories. A money
launderer is the main offender who launders the money itself. Anyone who
helps a criminal to launder the proceeds of his crime is also considered as a
money launderer. The people may become money launderers by possessing
money known to be or suspected of being criminal activity proceeds. Above
all, a person who helps to create a ML scheme even if that person does not
actually take part in it, such as accountants, notaries, or lawyers who
recommend a tax evasion scheme is also a laundering.185
Money laundering may also be explained as domestic or national crime,
and international or transnational crime. As an international crime, it was
initially recognized by the United Nations treaties which then asked
participating states to criminalize the crime. As a transnational crime, ML is a
crime that is specifically concerned with the occurrence of the criminal
activities in more than one jurisdiction. Even though each country has similar
or identical elements of actus reus and mens rea, they have different predicate
offences underlying the crime of ML based on crimes approach, a list
185
Aniedi J. Ikpang, “A Critical Analysis of the Legal Mechanisms for Combating Money Laundering
in Nigeria.” African Journal of Law and Criminology, Vol. 1, No. 1, (August, 2011). pp. 116-130.
Available at <SSRN: http://ssrn.com/abstract=1904926> Accessed on 15 April 2014.
80
approach, and a threshold approach or mixed approach. This could occur
because each country takes into account different characteristics regarding the
crimes that potentially threaten its domestic affairs. In addition, each country
also has different capabilities in proving the nexus between ML and its predicate
offences. These differences lead to the problem in conducting interstate
cooperation, especially when a dual criminality requirement is obligatory.
3.2.2 Causes of Proliferation of Money Laundering

The process of ML is very dynamic and ever evolving. The money launderers
are inventing more and more complicated and sophisticated procedures and
using new technology for laundering money. To address these emerging
challenges, the global community has taken various initiatives against ML. In
accordance with international initiatives, the government of Bangladesh has
also acted on many fronts. It is necessary to know the causes of ML activities
to prevent it. To clear the causes of ML we may discuss it in following criteria:
i) Factors of Proliferation of Money Laundering
ii) Reasons of Criminal Engagement in Proliferation of Money Laundering and
iii) Causes of Increasing Money Laundering Activities and Related Crimes
3.2.2.1 Factors of Proliferation of Money Laundering
There are some factors that facilitated and sponsored to increase ML activities
and related crimes. 186
186
A.K.M. Shirajul Islam, Executive Director, BASA,“Asset Recovery (UNCAC) Chapter V: And the
Position of Bangladesh,” this paper was presented at the Fourth IAACA seminar on 25-28 June
2012 in Dalian, P.R China. Available at <http://www.yasni.com/shirajul+islam/check+people>
Accessed on 29 April 2014.
81
i) The globalisation of markets and financial flows, most evident in the

advent of the Internet. The money can now travel in nano seconds, and the
multiple jurisdiction leaps are made easily on a daily basis.
ii) The deregulation of financial markets has no consistency or coherence in

respect of AML regulations. Simultaneously today’s global market place
has brought with it very few if any restrictions.
iii) Globalisation implies global competition and increasing pressure to deliver

profits. The people who control the proceeds of crime may yield great
influence with legitimate businesses, which are hungry, sometimes even
desperate for profits.
iv) The underground and parallel banking system is an unofficial channel of

money transfer outside the international or national legal foreign currency
transfer framework. It is an efficient and clandestine way of moving
money around the world to avoid taxes, customs duties and currency
controls. The system does not leave any record and therefore there is no
chance of auditing. In addition the lack of law enforcing agencies cannot
detect any information for taking actions against these illegal transactions.
v) The geographical, social, economic and political context as well as foreign

policy of Bangladesh makes illegal transfer of money or assets vulnerable
inside or outside the country. The most common offences generating
substantial criminal proceeds are the main sources of ML, e.g. bribery,
abuse of public office, securities fraud, embezzlement, human trafficking,
extortion, and drug trafficking. The prevalent insurgencies and extremist or
terrorist activities in countries around Bangladesh are the cause of arms
trafficking, which in turn increases the chance of ML activities.
82
3.2.2.2 Reasons of Criminal Engagement in Proliferation of Money

Laundering
The criminals engage in ML activities for many reasons which are discussed
below: 187
i) Money represents the lifeblood of the organization that engages in criminal
conduct for financial gain because it covers operating expenses, replenishes
inventories, purchases the services of corrupt officials to escape detection
and further the interests of the illegal enterprise, and pays for an
extravagant lifestyle. To spend money in these ways, criminals must make
the money they derived illegally appear legitimate.
ii) A trail of money from an offense to criminals can become incriminating
evidence. Criminals must obscure or hide the source of their wealth or
alternatively disguise ownership or control to ensure that the illicit proceeds
are not used to prosecute them.
iii) The proceeds from crime often become the target of investigation and
seizure. To shield illegal earnings from suspicion and protect them from
seizure, criminals must conceal their existence or, alternatively, make them
look legitimate.
iv) Terrorist financing is done mainly to facilitate an extremist group by
providing financial support aiming to establish or circulate their ideology.
Such financial assistance may be provided directly or indirectly. The
amount of money may be significantly low with several in numbers.
187
Bangladesh Financial Intelligence Unit (BFIU), Bangladesh Bank (BB), “Guidance notes on
prevention of money laundering and terrorist financing.” Dhaka, Bangladesh (16 September 2012).
Available at <http://www.bangladesh-bank.org/aboutus/regulationguideline/aml/16sep2012guideline.
pdf> Accessed on 20 January 2014. pp. 3-5.
83
v) Money laundering preventing authority is trying to prevent ML activities. At
the same time, the money launderers seem to permanently change their
behaviour to escape their activities associated with ML. Launderer uses notice
changed techniques to avoid the supervision of ML preventing authority.
Launderers continuously explore new routes for laundering their money.
3.2.2.3 Causes of Increasing Money Laundering Activities and Related

Crimes
Money laundering activities and related crimes increase for many reasons in
Bangladesh. It is important to share tax information between the countries in the
era of globalization to prevent illegal money or assets transfer outside the
country. The reasons of increasing ML is the absence of Memoranda of
Understanding (MoU) for sharing tax information with other countries and also
the absence of effective AML laws and supervision of authority beyond selected
areas. Tax evasion is also another important cause of increasing ML activities.
During the era of financial globalization, the banks or FIs are more interested to
invest in emerging economics in searching for profits. Limited risks of exposure
and more profits in a short span of time is also the cause of increasing ML
activities. ML laundering activities are increasing in order to make black money
appear white money. Availability of instant corporations and corporate secrecy
laws–as the corporate law of certain countries enables launderers to hide behind
shell companies. Launderers are taking advantages of excellent electronic
communication to find out new ways of ML activities. Tight bank secrecy laws
are giving opportunity to the launderers to hide their original source of illegal
earnings. A government that is relatively invulnerable to outside pressures, a
high degree of economic dependence on the financial services sector, and a

84
geographical location that facilitates business travel to and from rich neighbors
contribute highly to the increase of ML. The above conditions help increase the
sophistication and employment of professional people for doing the task.
Corporate Social Responsibility (CSR) is the voluntary activities undertaken by a
company, association, organisation, and institute, corporate body and so on to
operate in an economic, social and environmentally sustainable manner.
Sometimes, the voluntary activities are used in washing illegal money through
hiding the source of earnings, and also by tax evasion. Many people’s investment
of money or wealth as a bribe to get works, jobs, and some other facilities and
privileges at national and international level, is also an important cause of ML.188
3.2.3 Consequences of Proliferation of Money Laundering

The consequence of proliferation of money laundering is very difficult to
estimate. The effect of ML activities may be discussed in two broad heads on
the basis of time frame i.e. short term effects of ML and long term effects of
ML. The short term effect of ML usually happens within one or two years–and
these include: losses to the victim and gains to the perpetrator of a crime;
distortion of consumption and saving; distortion of investment; artificial
increase in prices; unfair competition; changes in imports and exports; effect on
output, income and employment; lower or higher revenues for the public
sector; changes in the demand for money; increase in the volatility of interest
and exchange rates; greater availability of credit; higher capital inflows; and
distortion of economic statistics. 189
188
Personal interview with Dr. Rustam Ali Ahmed, Professor, Department of Finance and Banking
University of Rajshahi, Bangladesh on 22 April 2014.
189
Brigitte Unger, The Scale and Impacts of Money Laundering (UK: Edward Elgar Publishing, 2007). p. 16
85
The long term effect of ML usually happens within four years and these
are as follows: threatening privatization; changing in foreign direct investment;
risk for the financial sector, profits or solvability, liquidity; negative reputation
of the financial sector; illegal business contaminates legal business; corrupting
of officials both public and private; damaging government institutions and
weakening the collective ethical standards; negative effect on growth rates;
undermining political institutions and corrupting democratic culture;
undermining foreign policy goals; socio economic impact by increasing crime;
unhealthy distributions of wealth; increases terrorism; unpredictable changes in
money demand; prudential risks to the soundness of financial institutions and
financial system; contamination effect on legal financial transactions; increased
volatility of international capital flows due to unanticipated cross-border
transfers; proliferation of underground, unregulated thriving informal market.
Purpose of ML is not only to avoid detection, but also to avoid or evade tax. 190
ML activities and related crimes also create some trade imbalance and balance
of payment problems in the economy.191 Besides, for explaining the consequences
of ML may be discussed on the following sub headings:
i) Financial Sectors
ii) Social and Cultural Sectors
iii) Political Culture
iv) Growth of Predicate Offences and
v) Global Effects
190
Brigitte Unger, The Scale and Impacts of Money Laundering (UK: Edward Elgar Publishing, 2007). p. 16.
191
Website: <http://usinfo.state.gov/journals/ites/0501/ijee/state1.htm> Accessed on 15 February 2014.
86
3.2.3.1 Financial Sectors
Although, it is difficult to quantify the effects of ML, it is clear that ML is
detrimental to the economy of a country. Particularly in developing countries,
customer trust is fundamental to the growth of sound financial institutions and
the perceived risk to depositors and investors from institutional fraud and
corruption, is an obstacle to such trust.
 ML damages the financial institutions that are crucial to economic
growth, reduces productivity in the economy’s real sector by diverting
resources, and encourages crime and corruption, and can distort the
economy’s international trade and capital flows to the detriment of long-
term economic development.192
 ML has effects on the integrity of an individual financial institution. It
creates a damping impact on foreign direct investment when a country’s
commercial and financial sectors are apparently under the control and
influence of organized crime. Bangladesh often bears the modern ML
because the government is still in the process of establishing regulations
for newly privatized financial sectors. It is important to prevent ML
activities and related crimes for creating friendly business environment
and for lasting economic development. 193
192
International Finance Investment and Commerce Bank Limited (IFIC), “Guidelines on Prevention of
Money Laundering.” Dhaka, Bangladesh (June 2006). Available at<http://www.ificbank.com.bd/
GUIDELINES%20ON%20 PREVENTION%20OF%20MONEY% 20LAUNDERING.pdf.> Accessed
on 10 May 2013.
193
Rahman, op.cit., pp. 39-40.
87
 The integrity of the banking and financial services is heavily reliant on
the perception that it functions within a framework of high legal,
professional and ethical standards. A reputation for integrity is perhaps
one of the most valuable assets of a financial system and institution.
Therefore, on a macro level, ML poses a risk to confidence in the
financial system and its institutions.194
 ML has a direct impact on the Foreign Exchange Market (FOREX) in
any economy. The FOREX is vulnerable due to the volume of cash
involved in the trade.195 A part from the above impact on capital
formation, ML could lead to increase in the liability and heighten the
risks for assets quality in the financial system. When this happens, it
may create systemic risks for the financial services industry and
consequently to the loss of confidence and credibility in the system.
 The issues facing the world’s economies include errors in economic
policy resulting from artificially inflated financial sectors. Massive
influxes of dirty money or funds into particular areas of the economy that
are desirable to money launderers create false demand, and officials act
on this new demand by adjusting economic policy. When the laundering
process reaches a certain point or if law-enforcement officials start to
show interest, all of that money suddenly disappear without any
predictable economic cause and financial sector falls apart. 196
194
Joseph O. S. Sanusi, at the conference on Anti-Money Laundering in ECOWAS: Bringing the Anti-
Money Laundering Requirement in Compliance with International Standard in Lagos on 3 June 2003.
Available at <www.sachajournals.com/user/image/ikpang002.pdf>Accessed on 24 March 2014.
195
Quirk, Peter, Macro- Economic Implications of Money Laundering a publication of the monetary
and exchange department of the International Monetary Fund (IMF) (April 1996).
196
Julia Layton, “How Money Laundering Works”, How Stuff Works. Available at <http://money.
howstuffworks. com/money-laundering.htm.> Accessed on 15 February 2014.
88
 ML affects indigenous entrepreneurs for trade liberalization. Some
problems on local scale relate to taxation and small-business
competition. Laundered money is usually untaxed, meaning the rest of
us ultimately have to make up the loss in tax revenue. Proceeds of drug
sales and consequent ML activities are used in bringing goods to the
market, and such goods are sold below cost prices in the exporting
countries. Also, legitimate small businesses cannot compete with ML
front businesses that can afford to sell a product for cheaper price
because their primary purpose is to clean money, not to earn a profit.
They have so much cash coming in that they might even sell a product
or service below cost. This situation discourages domestic production
due to inviting pricing of the imported products. 197
 Financial institutions that rely on the proceeds of crime have additional
challenges in adequately managing their assets, liabilities and
operations. For example, large sums of laundered money may arrive at a
financial institution and then disappear suddenly, without notice,
through wire transfers in response to non-market factors, such as law
enforcement operations. This can result in liquidity problems that
hamper the smooth transaction of banks.198 Indeed, criminal activity has
been associated with a number of bank failures around the globe,
including the failure of the first Internet bank, the European Union
Bank. Furthermore, some financial crises such as the fraud, ML and
197
Joseph O. S. Sanusi, at the conference on Anti-Money Laundering in ECOWAS: Bringing the Anti-
Money Laundering Requirement in Compliance with International Standard in Lagos on 3 June
2003. Available at <www.sachajournals.com/user/image/ikpang002.pdf>Accessed on 24 March 2014.
198
Website: <www.academia.edu/.../MONEY_LAUNDERING_AND_ABUSE_OF_THE_ FINANCIAL_
SYSTEM> Accessed on 16 May 2014.
89
bribery scandal at Bank of Credit and Commerce International (BCCI)
in 1990 which was registered in Luxembourg with head offices in
Karachi and London. The Barings Bank also collapse in 1995 which was
an English merchant bank based in London as a risky derivatives
scheme carried out by a trader at a subsidiary unit had significant
criminal or fraud components. 199
 Michel Camdessus has estimated that the ML is between 2-5% of world
GDP or at least $600,000 million.200 In some emerging market countries,
these illicit proceeds manipulate government budgets, resulting in a loss
of control of economic policy by governments. In fact, in some cases, the
sheer magnitude of the accumulated asset base of laundered proceeds may
be used to corner markets or even small economies. ML also adversely
affects currencies and interest rates as launderers reinvest funds where
their schemes are less likely to be detected, rather than where rates of
return are higher. ML also increases the threat of monetary instability due
to the misallocation of resources from artificial distortions in asset and
commodity prices.201
 ML is also a problem in the world’s financial markets and offshore
centers, as well as for emerging markets. The emerging markets open
economies and financial sectors. Mr. Nand Kishore Singh pointed out
four important dimensions which are normal processes of emerging
markets. Firstly, moving towards greater current account convertibility
199
Website: <en.wikipedia.org/wiki/Barings_Bank> Accessed on 15 May 2014.
200
Michel Camdessus, the former managing director of the International Monetary Fund. Available at
<http://usinfo.state.gov/journals/ites/0501/ijee/state1.htm.> Accessed on 15 February 2014.
201
Website: <http://usinfo.state.gov/journals/ites/0501/ijee/state1.htm.> Accessed on 15 February 2014.
90
and then embracing full account convertibility, provide a great
opportunity, and a threat for ML to occur as emerging markets gradually
relax their exchange control regime. Secondly, in many economies
which are gradually privatizing their public monopolies, the scope of
ML has been seen to be dramatically enhanced. Thirdly, emerging
markets must be wary that expert-fastening regimes do not provide an
alibi for ML. There are many examples where emerging markets, in
trying to replace explicit export subsidiary regimes with export-
fastening regimes, speed up ML. Fourthly; most emerging markets
reform the financial system, their financial system thus becoming
increasingly deregulated. Simultaneous regular reform also takes place
in capital markets. There are problems associated with reforms of
financial systems, and integration of capital markets. Coupled with this
are rapid technological changes, which integrate markets and faster
movement of money and currency at dramatic speed. 202
 Banks are vulnerable to risks from money launderers on several fronts.
There is a thin line between a financial institution being suspected that it
is being used to launder money and the institution becoming criminally
involved with the activity. Banks that are exposed to laundering money
are most certain to face costs associated with the subsequent loss of
business on top of vast legal costs.203 Across the world, banks have
202
Nand Kishore Singh (N. K. Singh) is a politician, economist and former Indian Administrative
Service officer, in a seminar titled “Permanent Secretary for Taxation and Revenue matters,
including narcotic for the Government of India,” in panel discussions held at the United Nations,
New York on 10 June1998. Available at <www.globalpolitician.com/print.asp?id=415>
203
Website: <www.thedailystar.net/newDesign/news-details.php?nid=228790> Accessed on 3 April 2014.
91
become a target of ML operations and financial crime because they
provide a variety of services and instruments that may be used to
conceal the source of money. With their polished, articulate and
disarming behaviour, money launderers attempt to make bankers lower
their guard so as to achieve their objective. Though norms for record
keeping, reporting, account opening and transaction monitoring are
being introduced by central banks across the globe for checking the
incidence of ML and the employees of banks are also being trained to
recognise suspicious transactions, the predicament of the banker in the
context of ML is to sift the transactions representing legitimate business
and banking activity from the irregular/suspicious transactions.
Launderers generally use this channel in two stages to disguise the
origin of the funds first, when they place their ill gotten money into
financial system to legitimize the funds and introduce these funds in the
financial system and second, once these funds have entered the banking
system, through a series of transactions, they distance the funds from
illegal source. The banks and financial institutions through whom the
dirty money is laundered become unwitting victims of this crime.204
 There is also another important area of risk to the financial system is the
risk posed to the securities markets, most notably the derivatives
markets. Owing to the complexity of some derivative products, their
liquidity and the daily volume of transactions, these markets have the
ability to disguise cash flows and hence are attractive to money
204
92
launderers. However, their activities pose huge risk to these markets.
Firstly, brokers used to execute orders on behalf of ML clients may be
criminally liable for aiding and abetting money launderers. With regard
to local relations, individuals have colluded to take correspondingly
short and long positions so as to clean money debts being paid with dirty
money, at the same time profits now being clean money. Owing to their
capital, and collusion in positions, they have also in the past deliberately
manipulated market prices. If markets are not seen to be transparent and
the price system not exogenous of individual agent’s actions,
participants may retire from the market and thereby make the market’s
allocative efficiency diminish.205
 The other risk is owed to offshore banks, which can wash money by way
of derivative markets. Owing to the fact that these banks are foreign, it is
not a pre-requisite for them to abide by the same regulations as domestic
investors regarding overexposure to uncovered risks; they can take on
huge risk relative to their institutional size. If losses were to arise from
such positions the debts may not be fully paid, as the contracts
purchased may be only one step in the course of a complex laundering
chain that is untraceable. Thus, it is a probable scenario for huge losses
to be incurred by legitimate investors, causing damage to the derivates
markets. Hence, ML could pose a huge and worrying problem to the
financial system of a country like Bangladesh.206
205
Mahfuzur Rahman, Money Laundering Protirodh (3rd ed.; Borna Binnash, Dhaka, 2010). pp. 40-41.
206
Ibid., pp 41-42.
93
3.2.3.2 Social and Cultural Sectors
The overall development of a country depends on its social and cultural
development. ML activity affects the social and cultural development of a
country. The economic and political influence of criminal organizations can
weaken the social fabric, collective ethical standards, and the democratic
institutions of a society. This criminal influence also affects the democratic
system of a country. ML generates the criminal activity to continue. The good
image of a country had been badly dented by unpleasant activities of a few
misguided and immoral elements that cosset in ML and criminal activities.207
ML activity increases the government expenditure due to enforcement of
AML laws and health care expenditures for instance, for the treatment of drug
addicts. Another negative effect is that ML transfers economic power from the
market, government, and citizens to criminals.208 Furthermore, the economic
power of criminal affects all elements of a society. In extreme cases, it may
lead to the virtual take-over of legitimate government. Overall, ML presents the
world community with a complex and dynamic challenge.
The success of ML means the criminal activity mixing with the socio-
cultural end without the possibility of being traced. This success of ML
encourages criminals to continue their illicit schemes because they get to spend
the profit with no repercussions. This leads to more fraud and more corporate
207
V. E. Inim, “Money Laundering, History, Processes and Impact.” This paper was presented at a
seminar on ‘Money Laundering’ at Eko Hotel Lagos, 2000. Available at <papers.ssrn.com/sol3/
Delivery.cfm?abstractid=1904926> Accessed on 20 March 2014.
208
India, 2004). p. 65.
94
embezzling,209 more drugs on the streets, more drug-related crime, law-
enforcement resources stretched beyond their means and a general loss of
morale on the part of legitimate business people who do not break the law and
do not make nearly the profits that the criminals do. 210
3.2.3.3 Political Culture
The sovereignty of a country depends on its political integrity. ML activity
affects the political integrity of a country. ML is also linked with the criminal
activity. Organized crime may infiltrate into financial institutions, acquire
control of large sectors of the economy through investment, or offer bribes to
public officials and indeed governments. The infiltration and sometimes
saturation of dirty money into legitimate financial sectors and national accounts
may threaten economic and political stability. The illegal money or assets is used
in political campaigns during elections in order to appear legal. ML thus
infiltrates into the political arena and influences governance if the chosen party
wins. For instance, President Ernesto Samper of Columbia was accused of
funding his political campaign with about US$ 6 million donated by the Cali
Cocaine association in the 1996 elections.211
Money laundering may also undermine the democratic and economic
basis of societies, resulting in a weakening of institutions and a loss of
209
Corporate embezzling means more workers losing their pensions when the corporation collapses.
Julia Layton, “How Money Laundering Works”, How Stuff Works. Website: <http://money.
howstuffworks .com/money-laundering5.htm.> Accessed on 15 February 2014.
210
Ibid.
211
George Henry Millard.“Drugs and Organized Crime in Latin America.” Journal of Money
Laundering Vo. 1, No. 1 (UK, November 1997).
95
confidence in the rule of law.212 The global nature of ML requires global
standards and international cooperation if we are to reduce the ability of
criminals to launder their proceeds and carry out their criminal activities.
3.2.3.4 Growth of Predicate Offences
Bangladesh faces a range of serious ML issues. It is a threat to the good
functioning of the financial system of Bangladesh. However, it also influences
the growth of predicate offence. The organised criminal activity often made
connections through hidden financial transaction records. The criminal
activities will not continue without using profit earned from those activities. To
continue the criminal activity needs an area to use those illegally earned fund
which derived from robbery, extortion, embezzlement or fraud. The fund or
earnings may be used or restored for victims of ML and related offences to
continue the criminal activities.213
The most common offences generating substantial criminal proceeds are
bribery, abuse of public office, securities fraud, embezzlement, human
trafficking, extortion, and drug trafficking. 214 The Money Laundering
Prevention Act 2009 adopts a list-based approach to the range of predicate
offences covered by the ML offence. The list of predicate offences is set out at
212
G8 Communiqué; (Birmingham, 17 May 1998). Available at <www.g7 utoronto.cal /summit/1998
birning ham/finalcom.> Accessed on 10 May 2013.
213
Roberto Durrieu, Rethinking Money Laundering & Financing of Terrorism in International Law,
(Buenos Aires, Argentina, March 2013). p. 24.
214
Asia Pacific Group (APG), “Anti-Money Laundering and Combating the Financing of Terrorism
Bangladesh.” Mutual Evaluation Report (8 July 2009). Available at <http://www.apgml.org/documents
/docs/17/Bangladesh%20ME2%20-%20final120809.pdf.> Accessed on 9 March 2014.
96
section 2(q). In Bangladesh, section 2(q) of the Money Laundering Prevention
Act 2009 highlights that ‘predicate offence’ means:
“...the offences, the proceeds derived from committing those offences

are laundered or attempt to be laundered and will include the
following offences: i. corruption and bribery; ii. counterfeiting
currency; iii. counterfeiting documents; iv. extortion; v. fraud; vi.
Forgery; vii. illicit arms trafficking; viii. illicit dealing in narcotic
drugs and psychotropic substances; ix. illicit dealing in stolen or
other goods; x. kidnapping, illegal restraint, hostage-taking; xi.
murder, grievous bodily injury; xii. woman and child trafficking; xiii.
smuggling and unauthorised cross-border transfer of domestic and
foreign currency; xiv. theft or robbery or dacoity, trafficking in
human beings and illegal immigration; xv. dowry; xvi. any other
offence which Bangladesh Bank with the approval of the government
and by notification in the official gazette declares as predicate
offence for the purpose of this ordinance.”
While the list contains a number of the designated categories of offences
there are some significant omissions, these being: terrorism and terrorist financing,
sexual exploitation, counterfeiting and piracy of products, environmental crime,
and smuggling of money or funds, and piracy. The launderers take market
advantage through transactions by using price sensitive information of the capital
market before it becomes public and try to control or manipulate the market to
gain personal advantage (Insider trading and market manipulation). But section
2(q) of the Money Laundering Prevention Act (MLPA) 2009 provides a
streamlined procedure for the inclusion of further predicate offences. This is by
means of a declaration of the BB, with the approval of the government and by
notification in the official gazette. The MLPA does not expressly extend the ML
offence to the proceeds of predicate offences which have occurred outside
Bangladesh. As noted, predicate offence is defined at section 2(q) and the
predicate offences are listed therein. The definition of predicate offence has not
97
been extended to include such conduct where it occurs in another country. It was
asserted by Bangladesh authorities that this requirement had been satisfied,
because the ML offences include bringing proceeds of crime to Bangladesh from
abroad. It does not follow from this that the crime which generated the proceeds
also occurred abroad. Most of the offences which make up the categories of
predicate offences listed in section 2(q) are criminalised within the Penal Code
1860.215 Section 4 of the Penal Code provides that: The provisions of this code
apply also to any offence committed by-(1) any citizen of Bangladesh in any place
without and beyond Bangladesh. It is explained in section 4 that the word offence
includes every act committed outside Bangladesh which if committed in
Bangladesh, would be punishable under the Penal Code 1860.216
3.2.3.5 Global Effects
ML makes international relation between two or more countries using their
officials and legal systems. It undermines free enterprise and threatens financial
stability by crowding out the private sector, because legitimate businesses
cannot compete with the lower prices for goods and services that businesses
using laundered funds may offer.217 There are few specific challenges posed by
ML activities throughout the world. Above all, the fact that organised crime
recognizes no territorial boundaries or the niceties of sovereignty poses a
fundamental challenge for the global society. ML has emerged as a threat to
215
The Penal Code 1860 (Act No. XLV of 1860).
216
Details in the following chapter 4.2.1.1.
217
Alagiri, Dhandapani (Ed.), Money Laundering: Issues and Perspectives (Hyderabad: ICFAI
University Press, India, 2006). p. iii.
98
global societies, facilitated by the removal of capital controls and the
liberalisation of global finance. ML activity is the lifeblood of transnational
criminal networks.218
Apart from destabilising the fiscal policy and budgeting statistics of the
world economic plans, ML has sustained the influence of a great number of
international crimes. ML sustains the hard drug trade all over the world, much
as it is responsible for the re-capitalisation of the trade, since no international
crime can truly thrive without ML. It is this prospect that sustains the various
international mafia groups and their criminal operations in the developing
countries. Terrorists and persons engaged in the weapons trade often employ
laundered money to fund their activities. Extremists, guerrillas and other
aggressive groups use these weapons in uprisings against their governments,
often agitating their regional surroundings. 219
The events of 11 September 2001 (9/11) led to a destabilisation of the
international system, with the United States of America (USA), the global
hegemonic power, embarking upon a ‘War on Terror’ and corresponding
military campaigns in Afghanistan and Iraq. This created a cleavage amongst
allies, and gave the instability present in the Middle East.220
Money is moving from one place to another and a real currency is
exchanged for virtual currencies and moved to other identities, and then the
218
“G7 Finance Ministers vow to hit Money Laundering.” Toronto Star (11 July 2000). p. A7.
Available at <www.g8.utoronto.ca/governance/rudich_g8g.pdf.> Accessed on 14 May 2014.
219
Website: <www.afp.gov.au/~/media/afp/pdf/m/money-laundering-02.pdf> Accessed on 15 March 2014.
220
Website: <www.globalresearch.ca/9-11...w...> Accessed on 11 March 2014.
99
virtual cash is redeemed for real money. Money is essential for any kind of
social, cultural, political and economic development of a place. Once upon a
time Antwerpen of Belgium was a busy and economically developed town and
the trend of development was upward for money flows through ML activities.
Now the economic condition of that town has gone downward as the trend of
ML activities has almost stopped. 221
3.3 Proliferation of Money Laundering in Bangladesh

The economy of Bangladesh has been expanding, having grown 5-6% every
year since 1996. The economic growth is partially fueled by garment exports
and remittances from Bangladeshis working overseas, mainly in the Middle
East and East Asia.222 However, there are many factors hindering Bangladesh
economy including inefficient state-owned enterprises, delays in exploiting
natural gas resources, insufficient power supplies and slow implementation of
economic reforms. In addition, nearly two-thirds of the population is employed
in the agriculture sector, although more than half of the country’s GDP is
generated through the service sector. 223 In view of the above, proliferation of
money laundering hampers the economic growth of Bangladesh.
The main target of the money launderers is the financial sectors which
accept cash and facilitate domestic and international fund transferred to hide
221
Personal interview with Mr. Abdul Gani, a Bangladeshi origin businessman living in Antwerpen,
Belgium since 1975 over cell phone on 5 July 2013.
222
Website: <www.bankersacademy.com/resources/free-tutorials/288-aml-bangladesh> Accessed on
10 March 2014.
223
Country Profile and Demographics: National Economy. Website: <siakhenn.tripod.com/economy.h...>
100
and obscure their illicit funds. The launderers also encourage the criminals and
terrorists to operate and expand their criminal pursuits, in addition to fostering
illegal activities such as corruption, drug trafficking, illicit trafficking and
exploitation of human beings, arms trafficking, smuggling and so on.224 ML
may occur through many sectors of Bangladesh i.e. banks, financial institutions,
insurance companies, money changers, companies or organizations remitting or
transferring money, other business organizations etc. Besides these, the stock
dealer and stock broker, portfolio manager and merchant bank, security
custodian, asset manager, non-profit organizations/institutions, non government
organizations; non financial businesses and professions, and such other
government approved organizations. Among them the following two sectors
are selected for the research work:
i) Proliferation of Money Laundering through Banks and
ii) Proliferation of Money Laundering through Capital Market
3.3.1 Proliferation of Money Laundering through Banks

Banking sector plays an important role in the economic development of a
country, especially for Bangladesh. A sound and efficient banking system is
one of the most important preconditions to achieve economic development of a
country. The term ‘money laundering’ is typically used to refer to any financial
transaction that was meant to be kept secret, but was eventually found out. In
many cases it refers to the process of concealing a source of money, which is
224
Bangladesh Financial Intelligence Unit (BFIU), Bangladesh Bank (BB), op.cit., p. 3.
101
often earned by illegal means such as drug trafficking, health care fraud, and
smuggling, just to name a few. Various laundering techniques may be used by
individuals, groups, officials, and corporations. The goal of a ML operation is
usually to hide either the source or the destination of money; in many cases it
aims to make illegal transactions appear legitimate and legal. 225
ML occurs in Bangladesh through banks by manipulation in the Books
of Accounts, fraudulent encashment of negotiable instruments, unauthorized
handling of the securities pledged or hypothecated to the banks, embezzlement,
misappropriation of funds, pilferage of cash etc by the bank employees,
account holders and also by third parties. This section focuses on the
vulnerabilities of some products, services and structure that may pose
significant risk of ML activities and related crimes in Bangladesh.226
3.3.1.1 Lease and Term Loan Finance
ML occurs in Bangladesh through lease and term loan finance. Lease finance is
offered to medium size business for procuring financial fixed asset backed
against industrial/ commercial/office equipment, generators, vehicles etc.
Financing term may vary between 1- 4 years depending on the purchase date
and also the current condition of the asset. Repayment may be made through
equal monthly rentals basis. Term financing to cater to capital/fixed
225
Mohammad Jahid Iqbal, “Banking Sector’s Performance in Bangladesh-An Application of Selected
Camels Ratio.” Asian Institute of Technology School of Management, Thailand (May
2012).Available at <www.pmbf.ait.asia/sites/default/files/report/report_jahidiqbal.pdf.> Accessed
on 25 March 2014.
226
Ibid.
102
expenditure needs such as procurement of machineries, renovation or extension
of factory space etc. finance is offered usually for a term of 1- 5 years. The
term loan repayment through equal monthly installments (EMI) may be secured
against collateral security. A company may take lease or term loan finance
from a bank or financial institution and repay the loan from illegal source, and
thus bring illegal money in the formal financial system in absence of proper
measures. The firm may also repay the loan amount even before maturity
period if they are not asked about the sources of fund. In case of financial or
capital lease, the asset purchased with FIs financing facility may be sold
immediately after repayment of the loan through illegal money and sold
proceeds may be shown as legal. In Bangladesh, the money launderers and
terrorist financer are usually using this financial instrument for placement and
layering of their ill-gotten money or funds.227
3.3.1.2 National and International Factoring
The national and international factoring is another way of ML in Bangladesh.
Factoring provides advance cash against invoice or bill. It is collateral free,
immediate, flexible and automatic revolving advance finance supports. In
national and international factoring there is a provision that the two firms must
be members of factor chain national and international or some association that
may ensure the creditworthiness of the firms. In absence of this kind of private
227
pdf> Accessed on 20 January 2014. p. 16.
103
sector watchdog in the local factoring, the supplier and the buyer may ally
together to legalize their proceeds of crime. Without conducting any bonafide
transaction the supplier may get finance from banks and banks may get
repayment from buyer. Banks may be focused on getting repayment without
considering the sources fund which can be taken as an opportunity by the
money launderer to place their ill-gotten money or funds.228
3.3.1.3 Private Placement of Equity/ Securitization of Assets
Money laundering may occur through private placement of equity or
securitization of assets in Bangladesh. Private placements of debt and equity
securities offer a range of alternatives when it comes to raising capital for a
company, whether for growth capital, acquisitions, shareholder liquidity,
refinancing or restructuring. Securitization is the process through which an
issuer creates a financial instrument by combining other financial assets and
then marketing different tiers of the repackaged instruments to investors. The
process may encompass any type of financial asset and promotes liquidity in
the marketplace. Mortgage-backed securities are a perfect example of
securitization. Using the mortgage-backed security example, individual retail
investors are able to purchase portions of a mortgage as a type of bond.
Without the securitization of mortgages, retail investors may not be able to
afford to buy a large pool of mortgages. Some banks offer financing facilities
to firms through private placement of equity and securitization of assets. Banks
228
104
sell those financial instruments to private investors who may take this as an
opportunity to make their money legal. Later on the money launderers may sell
these instruments and bring their money in the formal financial system. 229
3.3.1.4 Personal Loan/Car Loan/Home Loan
The corrupt public/private officials, politically exposed persons, different
professionals, business men and so on laundered their illegally earned money or
assets in many ways among them by taking personal loan/car loan/home loan
from banks or FIs is a common scenario in Bangladesh. Personal loan/car
loan/home loan is an amount given to an individual to use for personal benefit
that must be paid off at a specified time. Any person may take personal loan
from banks and repay it by illegally earned money; thus the persons may launder
money and bring it in the formal channel. After taking home loan or car loan,
money launderers can repay those with their illegally earned money, and later by
selling that home/car, they may show the proceeds as legal money.230
3.3.1.5 Small and Medium Enterprise (SME)/ Women Entrepreneur

Loan
The launderer or criminals are laundering their illegally earned money or funds
by taking loan in the form of Small and Medium Enterprise (SME) or Women
Entrepreneur Loan in Bangladesh. Entrepreneurship is one of the indispensable
ways to economic self-sufficiency around the world. Small and Medium
Enterprises (SMEs) have historically been one of the steeples of the enterprise
229
230
Ibid.
105
landscape within economies. In the developing country like Bangladesh where
well-paid employment is scare, entrepreneurship may be the only way through
which most individuals may rise above poverty. Small, medium and women
entrepreneurs may take loan facilities from banks or financial institutes and repay
that (in some cases before maturity) with illegally earned money or funds. They
also do so only to validate their money by even not utilizing the loan. In this way
the launderer may bring the illegal money in the formal financial system.231
3.3.1.6 Deposit Scheme
The heart of a bank is deposit. Without sufficient deposit a bank cannot run
smoothly. The launderers are taking advantage of the deposit scheme to launder
their illegally earned money in Bangladesh. Deposit is a transaction involving a
transfer of funds to another party for safekeeping. It is also a portion of funds
that is used as security or collateral for the delivery of a good. Money is given
in advance to a customer’s account at a financial institution to show intention
to complete the purchase of a property. Banks or financial institutes may also
sell deposit products with at least a three months maturity period. At the same
time, the depositor may also encash their deposit money prior to the maturity
date with prior approval from Bangladesh Bank, foregoing interest income.
This deposit product may be used as lucrative vehicle to place ill-gotten money
in the financial system in absence of strong measures in preventing ML
activities and related offences.232
231
232
Ibid.
106
3.3.1.7 Loan Backed Money Laundering
Loan backed ML is a common practice in Bangladesh. In the loan backed
money laundering method, a launderer or criminal provides an associate with a
specific amount of illegitimate money. The associate then provides a loan or
mortgage back to the money laundering for the same amount with the entire
necessary loan or mortgage documentation. This creates an illusion that the
trafficker’s funds are legitimate. The scheme is reinforced through legislatively
scheduled payments made on the loan by the money launderer. 233
3.3.1.8 Structural Vulnerabilities
The launderers are taking advantage of structural vulnerabilities of banks or
financial and non-financial institutes and other related organizations in Bangladesh.
Banks or FIs are yet to develop sufficient capacity to verify the identity and source
of funds of their clients. The human resources do not seem sufficient and are not
skilled and trained enough to trace ML and TF activities. None of the banks has
AML software to monitor and report transactions of a suspicious nature of money
transactions to the BFIU of BB. A skilled and powerful controlling body is required
to prevent ML through the banks of Bangladesh.234
3.3.1.9 Property Dealing
The property dealing is also a mode of ML. The sale of property to integrate
laundered money back into the economy is a common practice amongst
233
234
Ibid.
107
launderers/criminals of Bangladesh. For instance, many criminal groups use
shell companies to buy property; hence proceeds from the sale would be
considered legitimate.235
3.3.1.10 Front Companies and False Loans
The use of front company is a common practice to launder money in Bangladesh.
The sanction of false loan in favour of the front company by the banks is also
another mode of ML in Bangladesh. A subsidiary or sell company used to shield
another company from liability or scrutiny. A front company may be used to
protect a parent corporation or brand from negative publicity in the event of a
mishap, and may also be used to conceal illegal activities. Front companies that
are incorporated in countries with corporate secrecy laws, in which criminals lend
themselves their own laundered proceeds in an apparently legitimate transaction.
The BB, central bank of Bangladesh has found a big fraud case at time
of investigation in a branch named Ruposhi Bangla Hotel of the state-owned
Sonali Bank limited disbursed loan of about 37 billion(3,547crore) taka (about
457 million U.S. dollars) to six local companies including Hallmark Group
between 2010-2012 on forged documents. Among the total loan, the quite well
known Hallmark Group alone swindled about 27 billion taka (333 million
USD). Despondently, Hallmark is not the only company that is involved in a
large scale of ML.236
235
236
Details in the previous chapter 2.6.
108
3.3.1.11 Foreign Bank Complicity
The foreign bank complicity is also another mode of ML in Bangladesh. ML
using known foreign banks represents a higher order of sophistication and
presents a very difficult target for law enforcement. The willing assistance of
the foreign banks is frequently protected against law enforcement scrutiny.
This is not only through criminals, but also by banking laws and regulations of
other sovereign countries. The World Bank examines the flow of money from
deposed dictators in North Africa, with help from the UK’s Serious Fraud
Office. Meanwhile, US authorities investigated HSBC, the banking group, for
ML in the past year, and Barclays, the UK bank, paid a $298m fine in 2010 as
part of an agreement to settle a US investigation into sanctions violations. 237
3.3.1.12 Invoices (Import/Export/Local Trading)
Invoice is an important element of import and export in international level and
local trading at domestic level. The use of false invoices by import/export
companies has proven to be a very effective way of integrating illicit proceeds
back into the economy. This involves the overvaluation of entry documents to
justify the funds later deposited in domestic banks and/or the value of funds
received from exports. It is not unusual in the practice of business in Bangladesh
to present a false invoice. It may be done in various ways, in price or in amount, or
in quality or category of goods. Showing the price of a good, more or less than the
purchased one or showing the amount of goods as far more or far less than
237
Caroline Binham, “Money laundering made difficult.” The Financial Times (13 October 2011).
Available at <www.ft.com/cms/s/.../d603cb2e-f53b-11e0-9023-00144feab49a.html>
109
imported or bringing a good other than mentioned in the invoice. However,
officially the invoice as a document remains clean and clear, the activities done by
businessmen with the help of the concerned custom officers do not complement
with the invoice.
Agriculture Ministry of Bangladesh requested the BB to inspect a case
in 2011, where an importer submitted import documents to release import
goods (TSP and DAP Fertilizer) within agri-subsidize programme at higher
price than Fertilizer Market Bulletin (FMB) market price. Then the BFIU of
BB inspected this case in two different Banks. Inspection team found that
goods imported from China quoted price about $100 above per metric ton than
FMB report price. The importer imported 5100m/ton fertilizer (TSP 1100
m/ton and DAP 4000 m/ton) through over invoicing and excess payment of $5,
96,320/- was made. Inspection report was sent to the Agriculture Ministry and
Foreign Exchange Policy Department by the BFIU to take appropriate action
against the importer under the Foreign Exchange Regulation Act 1947.238
3.3.1.13 Working Order Financing
The use of working order is a general mode of ML in Bangladesh. Working Order
(WO) financing offered by banks against WO to bridge the gap between time of
processing the order and receipt of payment. WO financing may be made through
term loan or short term working capital financing as required but not extending the
life of the order. The launderers are using false WO to launder money.
238
Annual Report 2011-2012, Bangladesh Financial Intelligence Unit (BFIU), Bangladesh Bank (BB),
Dhaka.
110
3.3.1.14 Automated Teller Machines (ATM)
The use of ATM in money transaction is a new phenomenon in Bangladesh.
Automated Teller Machines (ATM) card users are a new target of fraudsters as
the use of plastic money is on the rise. According to the banking industry,
around 10 lakh credit cards worth $120 billion are active in the economy. In
June 2012, a credit card scam involving over Tk 10.00 crore was detected at the
United Commercial Bank Limited (UCBL). The bank identified four of its top
and mid-ranking officials, who withdrew the amount from the UCBL using 21
credit cards between 2007 and 2012.239 Credit card division in charge and his
supporting officials issued twenty cards to their relatives and friends. Card
holders withdraw fund using their cards in ATM machines and card cheques. In
every case the cards were credited showing cash deposits. But cash was not
physically deposited at any branch of the bank rather credit card division in
charge and his close associates fraudulently arranged to show cash deposits to
those credit cards. The fraudulent activities were continued for some days and
the group embezzled about Tk.10.00 crore. The activity came to the knowledge
of bank’s high authority when reconciliation was done properly. An
investigation is under process. 240 It was found that in almost all the cases of
debit and credit card fraud, bank employees were involved, either directly or
indirectly, and they provided the fraudsters with information about clients.
239
Sajjadur Rahman and Rafiul Islam, “ATM forgery unearthed,” The Daily Star, Dhaka
(25 July 2013).
240
Annual Report 2011-2012, Bangladesh Financial Intelligence Unit (BFIU), Bangladesh Bank
(BB), Dhaka.
111
Bangladesh is a third world country with an under developed banking
system, particularly in terms of the services and customer care provided by the
government run banks. Nowadays, the private banks are also trying to imitate the
banking structure of the more developed countries, but this attempt is often
foiled by inexpert or political government policies executed by the BB, the
central bank of Bangladesh. The outcome is a banking system fostering
corruption and illegal monetary activities, laundering etc. by the politically
powerful and criminals, while at the same time making the attainment of services
or the performance of international transactions difficult for the ordinary citizens,
students studying abroad or through distance learning, general customers etc.
The common function of a bank is to collect deposit and to lend it for
earning profit. All the banks have three main targets i.e. deposit, advance and
profit (yearly) but at the same time these will have to be secured. It is important
for the persons in authority to get promoted in service which they can achieve
by fulfilling their targets. It is possible that for this reason the manager of a
branch or a person in authority may assist a moneyed man who is also an
influential person in the society, to find a way to regularize or legalise his/her
illegitimate earning. The social reality is that the manager or a person in
authority has to live his life, get promoted, manage his family as well as keep
the influential persons happy in the society.
3.3.2 Proliferation of Money Laundering through Capital Market

Capital market is a market where buyers and sellers engage in trade of financial
securities like bonds, stocks, etc. The buying/selling is undertaken by

112
participants such as individuals and institutions. Capital markets help to invest
surplus funds from savers to institutions which then invest them into productive
use. Generally, this market trades mostly in long-term securities. Capital market
consists of primary markets and secondary markets. Primary markets deal with
trade of new issues of stocks and other securities, whereas secondary market
deals with the exchange of existing or previously-issued securities. Another
important division in the capital market is made on the basis of the nature of
security traded, i.e. stock market and bond market. Money launderers habitually
targeted the various types of businesses that participate in capital market in
Bangladesh. For instance, a variety of products and services to retail, usually
individual and institutional investors—buying and selling stocks, bonds, and
mutual fund shares through capital market. It is possible to evade funds or to
launder money through using the mutual fund accounts of stock market. Some
specific types of securities products that may pose significant risk of ML and TF
which are discussed below.
3.3.2.1 Broker-Dealers
In the relationship era, broker-dealers relationship is an important factor in case
of laundering money in Bangladesh. The brokers or dealers are active
participant in the securities market. A broker or dealer acts as an agent for an
investor, and enters the securities markets on behalf of an investor to buy or
sell a security. In this buying and selling process, some dealers provide
liquidity to the capital market by its own capacity of buying and selling. A
specific vulnerability associated with broker-dealers is their reliance on another
financial institution’s Customer Due Diligence (CDD)/ Know Your Customer

113
(KYC) process. A broker-dealer might assume that, because another financial
institution has opened an account for a client, so the client does not pose
ML/TF risks for them. The CDD/KYC vulnerability is most problematic in
relation to the funding of a securities account. If illicit assets are successfully
placed at a depository institution, the broker-dealer may assume that, because
the funds are from an institution which is subject to Anti-Money Laundering
(AML)/ Countering/ Combating the Financing of Terrorism (CFT) rules, the
client does not pose a ML/TF risk and therefore will accept cheques from that
institution to fund a securities account. Once a securities account is funded, a
client may engage in a number of transactions that further conceal the source of
his or her illicit funds, thereby successfully layering and integrating illicit
assets that were placed through a depository institution. The proper CDD/KYC
process has to ensure for each institution in preventing ML in Bangladesh. 241
3.3.2.2 Asset Managers, Custodian and Portfolio Managers
The role of asset managers, custodian and portfolio managers are very
important in smooth functioning in the capital market of Bangladesh. The
launderers may take advantage from them. Brokers and dealers in securities
may be distinguished from those securities intermediaries that are regulated as
asset manager, custodian and portfolio managers. The roles of a broker and a
dealer are clearly delineated from those of custodians or managers. In fact,
different registration and regulatory standards may apply for them.
Nonetheless, functions may be housed in the same entity by means of multiple
241
Bangladesh Financial Intelligence Unit (BFIU), Bangladesh Bank (BB), “Guidelines on Prevention
of Money Laundering & Combating Financing of Terrorism for Capital Market Intermediaries,”
Dhaka, Bangladesh (2013). p. 20.
114
registrations. Such advisory functions and broker-dealer functions may be
conducted under the same registration. Role of the asset manager, custodian
and portfolio manager is generally to advise on the composition of an
investment portfolio or to hold securities of local or foreign clients or to
manage the contents of investment accounts for retail or institutional clients
respectively. Portfolio management typically involves the provision of
financial services in a managed relationship with clients who are often of high
net worthy. The value and complexity of products offered to high net worth
clients, together with the international nature of the business, make the
provision of wealth management services potentially attractive to money
launderers, to disguise their illicit assets. The custodian, regardless of the
nationality of an investor, has same potential to money launderer as portfolio
management and asset management services. 242
3.3.2.3 Trust, Nominee, and Omnibus Accounts
Trust, nominee and omnibus accounts are important element maintaining
accounts in the capital market of Bangladesh. Trust and nominee accounts
present ML vulnerabilities in the layering and integration stages. A particular
risk involves if there is no requirement of collection of beneficial ownership
information for individuals. As with shell companies or a front individual, a lack
of beneficial ownership information regarding the individuals who benefit from
the account may mask an individual’s identity such that he or she would gain
242
115
access to a financial system when such access would otherwise be restricted or
forbidden. An omnibus account is an account established for an entity that is
acting as an intermediary on behalf of multiple individuals or entities.243
3.3.2.4 Shell Companies
Money laundering may occur in the capital market of Bangladesh through shell
or front companies. Shell or front companies are non-publicly traded
corporation or limited liability company that might have no physical presence
and generates little or no independent economic value. These companies are
commonly organized in a way that makes their ownership and transaction
information easier to conceal. On the other hand, publicly traded shell or front
companies may be used for illicit purposes. ML vulnerabilities associated with
shell companies are heightened when the company is privately held, such that
beneficial ownership may be obscured. In particular or individuals entities in
high-risk areas/ jurisdictions or conflict zones may disguise their true identities
through a series of shell companies located in various jurisdictions to
participate in a financial system. Otherwise, they would not be able to access.
Shell or front companies may also be used to introduce illicit funds into a
financial system and/or generate illicit funds through manipulative or
fraudulent securities activities. In addition, a shell or front company may be
established to accept payments from criminal organizations for non-existent
243
116
services. These payments, which appear legitimate, can be deposited into
depository or brokerage accounts and used to purchase securities products that
are easily transferable or redeemable.244
3.3.2.5 Margin Trading
The launderers are taking advantage of margin trading to launder money
through capital market of Bangladesh. The characteristics of the securities
industry is that the money or funds may be used to both disguise the proceeds
of criminal activity and to generate further profits. The use of margin account
trading involves the investor borrowing funds to carry out trading. The
securities themselves are used as collateral for the loan. By influencing the
timing and value of trades and leverage, a launderer may potentially use the
proceeds of a scheme to generate more funds. 245
3.3.2.6 Transfer Pricing
Money laundering may be occurred in the capital market of Bangladesh
through transfer pricing. Large capitalization stocks are subject to a high degree
of transparency, and subject to general market forces, generally fluctuate within
an established price band. However, the market price on small capitalization
stocks, which may be rarely traded, and may be subject to more extreme price
movements. In addition, the price of such an illiquid stock may be substantially
affected by relatively small transactions. This mechanism has been exploited

244
245
Ibid.
117
for ML purposes where block trades of illiquid stocks are transacted at a pre-
agreed price between two parties. In such transactions, parties agree to the
initial purchase of an illiquid security at an artificially low price with the same
security being bought back some time later by the original seller or an associate
at a significantly higher price. 246
3.3.2.7 Cheques
The use of cheque is a general practice of transactions in the capital market of
Bangladesh. A cheque is a document that orders a payment of money from a
bank account. It is a negotiable instrument and it is as like as a bill of exchange.
Cheques may be used to fund securities account with a securities intermediary.
In addition, the use of cheques is not limited to those drawn from a depository
account, may also be involved in issuing pay order/bank draft. Money
launderers may purchase pay orders/bank draft, pay order with cash over a
period of time or through a series of transactions in order to avoid verge
currency reporting requirements. These cheques may then be deposited into
securities accounts until a desired amount is reached and used to purchase a
security, which is then sold or transferred. Another vulnerability identified is
the increasing use of the securities industry in offshore jurisdictions by
criminals attempting to avoid domestic seizure of their assets. The funds could
also be transferred electronically to facilitate them for the same purpose. The
246
118
use of this method of disguising funds has resulted in a reduction in the
effectiveness of domestic seizure/forfeiture actions, marking a change in the
laundering techniques used by launderers. The launderers are taking advantage
of offshore banking. It is more difficult in offshore banking system for the law
enforcement organ of the government of Bangladesh to trace and seize assets
held offshore.247
3.3.2.8 Low Priced Securities and Private Placement
A number of low priced securities are available in the capital market of
Bangladesh. Besides, the transactions of private placement are common incident
in the capital market of Bangladesh. Low priced securities refer to low-value
equity interests in companies that are publicly traded or are about to become so.
The issuers of these shares generally have legitimate business operations and
revenue streams. However, some publicly traded low priced securities are really
shell companies that may be used for a reverse merger. In some cases, issuers of
these shares often represent with physical securities to deposit with a securities
intermediary. These shares may be traded on over-the-counter (OTC) markets or
on bulletin boards. Such stocks are typically bearer securities, ownership of these
shares often be registered with the issuer and/or a transfer agent. The ML/TF
vulnerabilities posed by these securities are two-fold. First, these types of
securities are often used to generate illicit assets through market manipulation,
insider trading, and fraud. Illicit actors can either use existing shares that are
247
119
already publicly traded, or start a shell company for the express purpose of
engaging in those illicit activities. In addition, criminal organizations have also
been known to use illicit assets generated outside the securities industry to
engage in market manipulation and fraud. Second, these securities can be
acquired by investing illicit assets into a company that is about to become public.
Once the company goes public, the money launderer can sell his or her stake,
thereby giving funds the appearance of having been derived from a legitimate
securities transaction. Moreover, criminal organizations can also initially invest
in a private company that they can then use as a front company for commingling
illicit and legitimate assets. They can then take this company publicly through an
offering in the public securities markets, thus creating what appear to be
legitimate offering revenues.248 Alternatively, criminal organizations can acquire
a publicly traded company and use it to launder illicit assets.
3.3.2.9 Short Selling
The transaction of short selling is a common scenario in the capital market of
Bangladesh. In the securities industry short selling generally involves the
practice of selling securities that are not actually owned by the seller, or to be
borrowed for delivery. In terms of short sale, the seller does not borrow or
arrange to borrow the securities in time to make delivery to the buyer within
the standard settlement period. The investment strategy behind short selling is
to earn profit, and to return it to the borrower through purchasing the securities
248
120
at a lower price, and selling it at high price. Sometimes, short selling may be
linked to market manipulation or insider trading, which are considered as
predicate offences that could be the basis for money laundering.249
3.3.2.10 Insider Trading
Insider trading is also an important and commonly used mode of ML in the
capital market of Bangladesh. Insider trading involves situations where the
person who buys and sells securities, whether a company insider or not, does so
in violation of a fiduciary duty or other relationship of trust and confidence,
while in possession of material, non-public information about the security. This
includes situations where a person in possession of material, non-public
information provides this information to someone else for trading where,
depending on the circumstances, the recipient of the information can violate the
rule of insider trading of the capital market of Bangladesh as well.250 Insider
trading is unique to the securities industry and generates illicit assets. As a
predicate offence for money laundering this type of misconduct is reportable as
Suspicious Transaction Reports (STR) and has proven useful in assisting law
enforcement and regulators prosecute such misconduct.251 The illicit assets
generated by insider trading can be laundered through the securities industry
itself or through other parts of the financial sector. The most common example
of laundering would be the simple transfer of illicit proceeds to a bank account.
249
250
Securities and Exchange Ordinance 1969 (Ordinance No. XVII of 1969). Sec-19, 19A.
251
The Money Laundering Prevention Act 2012 (Act No.05 of 2012). Sec- 2.
121
3.3.2.11 Market Manipulation
The launderers are always taking advantage of market manipulation, in the
capital market of Bangladesh. Market manipulation generally refers to a conduct
that is intended to deceive investors by controlling or artificially affecting the
market for a security. In particular, the manipulator’s purpose is to drive the
price of a security up or down in order to profit from price differentials. There
are a number of methods that manipulators use to achieve these results. The most
pervasive market manipulation method involves what is colloquially referred to
as a scheme of pump-and-dump. This scheme involves touting a company’s
stock with false or misleading statements, often in conjunction with securities
trades that raise the price of the security or make it appear as if the securities
trading volume is higher than it actually is. Later on the security price is
artificially raised (pumped); the security is then sold (dumped) for a profit. Often
the underlying security is low priced, illiquid, and trades with little volume.
Another most used method is circular trading. In this mechanism a group of
syndicated persons manipulate share price by buying and then selling of share at
their own from different corner at a predetermined price. 252
3.3.2.12 Securities Fraud
The fraud of securities is a common incident in the capital market of
Bangladesh. Securities fraud broadly refers to deceptive practices in connection
with the buy and sale of securities. The securities fraud encompasses insider
252
122
trading and market manipulation activities and poses significant ML/TF risks
for the Capital Market Intermediaries (CMI). For instance, Bangladesh share
market scam is ongoing stock market turmoil in the two Bangladeshi stock
exchanges, Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange
(CSE). Millions of small investors have lost all of their investments due to the
stock market crash. The crash is deemed to be a scam and exacerbating due to
government failure. The stock market was in turbulence throughout much in
2009, with the trend starting to turn grim. The trend was initiated by the end of
the two year political crisis and re-emergence of democracy when Awami
League won the December 2008 polls, and was largely unaffected by the BDR
Mutiny. The market was heavily aided by the entrance of Grameen Phone into
the capital market, when the index rose by 22% over a single day on 16
November 2009. Share prices continued to fluctuate, reaching the annual high
in mid-2009 before plummeting by the end of 2009, with retail investors
threatening a hunger strike. It is mentionable that, Bangladesh also faced such a
stock market crash in 1996. The market continued to be turbulent throughout
2010, with the DSE hitting its all-time high revenue and the largest fall in a
single day since the 1996 market crash, within the space of a month. The
capital markets of Bangladesh were overvalued and overheated at the end of
2010. The BB, central bank of Bangladesh had taken measures to cool the
market down and control inflation by putting a leash on the liquidity. The
conservative monetary measures affected the capital market, with the market
falling once on 13 December, 2010 by 285 points, over 3% of the Dhaka Stock
123
Exchange General Index (DGEN Index) which stood at around 8,500 points.
The capital markets suffered a second fall on 19 December, 2010, with the
index falling a further 551 points, or about 7%. This 7% fall in the Dhaka Stock
Exchange’s index on a single day was the largest fall in the history of the Stock
Exchange of Bangladesh, which surpassing the market crash of 1996. A
number of stock market analysts, who believed the market was overvalued,
opine the fall of the stock market was normal. 253
The regulatory body of the Bangladesh Securities and Exchange
Commission, along with the Bangladesh Bank, were taken conservative
measures to pacify the fall. As a result, the market ameliorated the next day by
1.9%.Within December 2010 and January 2011, the DGEN index fell from 8,500
by 1,800 points, a total 21% fall, with masterminds of the crash making about
BDT 50 billion ($ 667 million) out of the scam. The market send into further
turmoil by falling 5% on 12 June, 2011 and 4% on 11 October, 2011. The fall
finally triggered small investors to go on a fast-unto-death on 16 October after
forming the Bangladesh Capital Market Investors’ Council. The market stood at
around 5,500 index points in October 2011 from 8,900 only a year ago. Protests
continued throughout the months, ones taking place in front of the DSE office in
November 2011, with protesters sitting in throughout nights. 254
253
Website: <http://en.wikipedia.org/wiki/2011_Bangladesh_share_market_scam.> Accessed on 20
May 2014.
254
Ibid.
124
The government of Bangladesh formed a four-man probe committee to
investigate the stock market crash on 24 January 2011.255 The committee
provided their findings after three months, on 7 April 2011. It identified an
array of chicanery performed by some 60 influential individuals that resulted in
the market crash. The committee interviewed all members of both the DSE and
CSE, and consulted journalists and analysts before presenting their report. The
committee found various irregularities, including the existence of omnibus
accounts that allowed some market players to make exorbitant profits at the
expense of the retail investors. Among the 60 identified persons, it primarily
included chairman of Beximco Salman F Rahman, former DSE president
Rakibur Rahman, SEC chairman Ziaul Khandaker, SEC member Mansur Alam
and BNP politician Mosaddek Ali Falu. The report mentioned that pro-
government business tycoons, including Salman F Rahman and Rakibur
Rahman, exerted influence within the Stock Exchange Commission (SEC) by
influencing the appointment of its members. The report ended with
recommendations to reform the SEC drastically and asked the government to
publish the names of the influential persons and to remain cognizant in
countering their influences.256 The report resulted in the dismissal of SEC
chairman Mr. Md. Ziaul Haque Khondker along with other SEC members
accused. However, the Finance Minister AMA Muhit stated that the State
255
The four-man probe committee was formed under the Securities and Exchange Ordinance, 1969.
Sec-21(1)(A), headed by former Bangladesh Bank Governor Ibrahim Khaled, and other three
members are Dr. Tawfiq Ahmed Chowdhury, Mohammad Abdul Bari FCA and Barrister Nahid
Kabir. Investigation Report, Share Market Investigation Committee, 2011, Dhaka, Bangladesh (31
March 2011).
256
Investigation Report, Share Market Investigation Committee, 2011, Dhaka, Bangladesh (31 March 2011).
125
would neither disclose the names of the accused officially nor take punitive
measures without further investigation.257Yet, the further investigation and
their report is not come to light.
3.4 Conclusion
Money laundering is a mode of money, assets or wealth fabrication and generates
crime worthwhile. The perpendicular applicability of the crime of laundering
money makes it a big business in Bangladesh and in the world today. Launderers
hide the source of newly acquired wealth in order to escape prosecution for the
predicate offences. ML emerges as a parallel economic system, within a nation,
controlled by the launderers –which menace is highly diabolical in nature. ML
affects the financial system of a country to destroy and perish sound economy. It
diminishes government tax revenue and therefore, indirectly harms honest
taxpayers, also makes government tax collection more difficult.
Money launderers are extremely imaginative in creating new schemes to
circumvent a particular government’s counter measures. A national system
should be flexible enough to detect and respond to new ML schemes. The
AML measures often force launderers to move to parts of the economy with
weak or ineffective measures to deal with the problem. Again, a national
system should allow flexibility to extend countermeasures to new areas of its
own economy. The government of Bangladesh needs to work with other states
to ensure that the launderers cannot continue to operate merely by moving to
another location in which ML is tolerated.

257
Website: <http://en.wikipedia.org/wiki/2011_Bangladesh_share_market_scam.> Accessed on 20
May 2014.
126
The money launderers outsmart the enforcing agencies and deploy a team
of experts like chartered accountants, attorneys, bankers to disguise their illicit
money and masquerade it as legitimate income. Bankers play the most
significant role and without their connivance the operation cannot be carried
out. Development of new high-tech coupled with wire transfer of funds has
further aggravated the difficulties to detect the movement of slush funds. The
government of Bangladesh has to keep pace with the ever changing, dynamics
and innovative way of ML which keeps money launderers/criminals staying
beyond the hand of law. Bangladesh is under the threat of ML activities and
related crimes that has fallen the state under the observation of the regional and
international AML organs.

Chapter Four
Laws Concerning Money Laundering in Bangladesh
4.1 Introduction
ML has evolved greatly at national and international level over the last few
decades. ML activity distorts asset and the prices of commodity. It also leads to
misallocation of resources. 258 This realization had instigated the domestic or
national and global or international community to take up initiatives to prevent
ML activities and related crimes. Most of the countries of the world including
Bangladesh have already introduced AML laws. The government of
Bangladesh introduced the Anti-Money Laundering Act 2002 to prevent ML
activities. The Act was amended in 2009 to provide a provision of stock market
manipulation in Bangladesh. At the same time, the Anti Terrorism Act 2009
was also enacted. Further repealing the Money Laundering Prevention Act
2009, the Money Laundering Prevention Act 2012 was enacted to introduce a
provision to make admissibility of foreign documents in the courts of
Bangladesh provided by the foreign government and to back siphon off money
from abroad. Similarly, the Anti Terrorism Act 2009 was also amended in 2012
and 2013 to meet international standards and to establish an effective regime in
Bangladesh to deal with terror funding.
258
128
This chapter concentrates on the relevant provisions of domestic AML
laws as well as the transnational initiatives in preventing ML activities in
Bangladesh. This chapter also focuses on the drawbacks of the existing AML
laws in Bangladesh.
4.2 Relevant Provisions of Domestic Anti-Money Laundering

Laws
The government of Bangladesh introduced AML laws to prevent ML activities
in Bangladesh. The expression of AML laws is not used to mean any particular
law or laws concerning ML activities. It encompasses the Money Laundering
Prevention Act 2012, Anti Terrorism Act 2009 (amended in 2012 and 2013),
Penal Code 1860, The Arms Act 1878, Code of Criminal Procedure1898, The
Customs Act 1969, Foreign Exchange Regulations Act 1947, Criminal Law
(Amendment) Act 1958, Mutual Assistance in Criminal Matters Act 2012 and
Mutual Legal Assistance Act 2012.
4.2.1 The Money Laundering Prevention Act 2012

The Money Laundering Prevention Act 2012 was enacted to prevent ML
activities and to provide for confiscation of property derived from or involved
in ML activities. The provisions of the Act may be discussed under the
following sub-headings:
i) Money Laundering as an Offence
ii) Establishment of Bangladesh Financial Intelligent Unit (BFIU)
iii) Supervision
129
iv) Reporting Organisations or Institutes
v) Reporting or Compliance Requirements
vi) Penalties
vii) Summons, Searches and Seizures
viii) Freezing or Attachment of Property
4.2.1.1 Money Laundering as an Offence
ML is an offence when transfer of money or property involves in the following
purposes: 259
 concealing or disguising the illicit nature, source, location, ownership or
control of the proceeds of crime; or
 assisting any person involved in the commission of the predicate offence
to evade the legal consequences of such offence;
 smuggling money or property earned through legal or illegal means to
foreign country;
 knowingly transferring or remitting the proceeds of crime to a foreign
country or remitting or bringing them into Bangladesh from a foreign
country with the intention of hiding or disguising its illegal source; or
 concluding or attempting to conclude financial transactions in such a
manner so as to reporting requirement under this Act may be avoided;
259
The Money Laundering Prevention Act, 2012 (Act No. 05 of 2012). Sec-2 (V).
130
 converting or moving or transferring property, with the intention to
instigate or assist for committing a predicate offence;
 acquiring, possessing or using any property, knowing that such property
is the proceeds of an offence;
 performing such activities so as to conceal or disguise the illegal source
of the proceeds of crime;
 participating in, associating with, conspiring, attempting, abetting,
instigating or counseling to commit any offences for instance, corruption
and bribery; counterfeiting currency; counterfeiting documents;
extortion; fraud; forgery; illicit arms trafficking; illicit dealing in
narcotic drugs and psychotropic substances; illicit dealing in stolen and
other goods; kidnapping, illegal restraint, hostage-taking; murder,
grievous bodily injury; woman and child trafficking; smuggling and
unauthorized cross-border transfer of domestic and foreign currency;
theft or robbery or dacoity; trafficking in human beings and illegal
immigration; dowry; Terrorism and Terrorist Financing; Counterfeiting
and Piracy of Products; Environmental Crime; Sexual Exploitation;
Taking market advantage through transactions by using price sensitive
information of the capital market before it becomes public and trying to
control or manipulate the market to gain personal advantage (Insider
trading and market manipulation) etc. 260
260
The Money Laundering Prevention Act, 2012 (Act No. 05 of 2012). Sec-2 (CC).
131
4.2.1.2 Establishment of Bangladesh Financial Intelligent Unit (BFIU)
The Financial Intelligent Unit (FIU) was established in BB on 16 May 2007 for
receiving, analyzing and disseminating Suspicious Transaction Reports (STRs),261
TF and Cash Transaction Reports (CTRs) related to ML activities. The Anti
Money Laundering Division (AMLD) is now working as a separate unit in the
BB as Bangladesh Financial Intelligence Unit (BFIU). 262
4.2.1.3 Supervision
Bangladesh Bank (BB) is the core implementing and supervising agency of
Bangladesh in preventing ML activities and related crimes. The BB exercises
the following powers and responsibilities to prevent ML and to resist any
such activities:263
 to analyze or review information related to cash transactions and
suspicious transactions received from any reporting organization and to
collect additional information relating thereto for the purpose of analyzing
or reviewing from the reporting organizations and maintain data on the
same and, as the case may be, provide with the said information to the
relevant law enforcement agencies for taking necessary actions;
 to ask for any information or obtain a report from reporting organizations
with regard to any transaction in which there are reasonable grounds to
believe that the transaction is involved in ML or a predicate offence;
261
Suspicious transaction means such transactions–(i) which deviates from usual transactions; (ii) of
which there is ground to suspect that, (1) the property is the proceeds of an offence, (2) it is
financing to any terrorist activity, a terrorist group or an individual terrorist; (iii) which is, for the
purposes of this Act, any other transaction or attempt of transaction delineated in the instructions
issued by Bangladesh Bank from time to time. Ibid., Sec-2(z).
262
The Money Laundering Prevention Act, 2012 (Act No. 05 of 2012). Sec-24.
263
Ibid., Sec-23.
132
 to issue an order to any reporting organization to suspend or freeze
transactions of any account for a period not exceeding 30 (thirty) days if
there are reasonable grounds to suspect that any money or property has
been deposited into the account by committing any offence; Provided
that such order may be extended for additional period of a maximum of
6 (six) months by 30 (thirty) days, if it appears necessary to find out
correct information relating to transactions of the account;
 to issue, from time to time, any direction necessary for the prevention of
ML to the reporting organizations;
 to monitor whether the reporting organizations have properly submitted
information and reports requested by the BB and whether they have duly
complied with the directions issued by it, and where necessary, carry out
on-site inspections of the reporting organizations to ascertain the same;
 to arrange meetings and seminars including training for the officers and
staff of any organization or institution, including the reporting
organizations, considered necessary for the purpose of ensuring proper
implementation of this Act by the BB;
 to carry out any other functions necessary for the purposes of this AML Act.
4.2.1.4 Reporting and Compliance Organisations or Institutes
Reporting and compliance of STRs and CTRs is necessary for the instructed
organizations and institutions to prevent ML activities in Bangladesh.264 The
following organisations or institutes are the reporting and compliance
264
Anti Money Laundering (AML) Circular No.08, Bangladesh Bank (BB), Head Office, Dhaka (21
December 2005).
133
organisation in Bangladesh, based on the Money Laundering Prevention Act
2012, and the Anti Terrorism Act 2009 (amended in 2012 and 2013).
i) Banks
ii) Financial Institutions
iii) Insurer
iv) Money Changer
v) Any company or institution which remits or transfers money or
money value
vi) Any other institution carrying out its business with the approval
of the BB
vii) Stock Dealer and Stock Broker, Portfolio Manager and Merchant
Bank, Security Custodian, and Asset Manager
viii) Non Profit Organization, Non Government Organization, and Co-
operative Society
ix) Real Estate Developer
x) Dealer in precious metals or stones
xi) Trust and company service provider
xii) Lawyer, notary, other legal professional and accountant
xiii) Any other institution which the BB may, from time to time,
notify with the approval of the government of Bangladesh.265
4.2.1.5 Reporting or Compliance Requirements
The reporting organisations have some responsibilities in the prevention of ML
activities and related crimes. The reporting organisations or institutes are to
remain conscious and alert to detect unusual or suspicious transactions during
day to day business. When any suspicious transaction is detected, a STR has to
be submitted immediately to the General Manager, Bangladesh Financial
265
The Money Laundering Prevention Act, 2012 (Act No. 05 of 2012). Sec-2 (w).
134
Intelligence Unit (BFIU) of Bangladesh Bank (BB), Head Office, Dhaka.266
The responsibilities of the reporting organisations or institutes in preventing
ML activities are as follows:267
 to maintain complete and correct information with regard to the

clients identity of those with whom they deal;
 to preserve all records including the records of the verification of

identity of any client’s Beneficial Owner (BO) account or any related
account for at least 5(five) years from the date of closure or the
business relationship ended;
 to provide information related to client’s identity and transactions of

their accounts to the BB from time to time, on its demand;
 if any suspicious transaction or attempt of such transaction is

observed, to report the matter as STR to the BB immediately on its
own accord.
4.2.1.6 Penalties
The BB may impose a fine on any reporting organization if violates the
directions of the BB which at least taka 50 (fifty) thousand but not exceeding
taka 25 (twenty five) lacs. The BB may also cancel the license or the
authorization for carrying out commercial activities of the said organization or
any of its branches, service centers, booths or agents, or as the case may be,
shall inform the registration or licensing authority about the fact so that the
relevant authority may take appropriate measures against the organization. 268
266
The Money Laundering Prevention Act, 2012 (Act No. 05 of 2012). Sec-25(1).
267
Ibid.,Sec-25(1)(a)(b)(c)(d).
268
Ibid., Sec-25(2).
135
In addition to the above mentioned provisions there are some other
provisions of penalties imposed by the BB. These are:
i) The BB may impose a fine on any reporting organization for failing to
provide with the requested information timely under this section which may
extend to a maximum of Taka 5 (five) lacs at the rate of Taka 10 (ten) thousand
per day and if any organization is fined more than 3(three) times in 1(one)
financial year, the BB may suspend the registration or license of the
organization or any of its branches, service centers, booths or agents for the
purpose of closing its operation within Bangladesh or, as the case may be, shall
inform the registration or licensing authority about the fact so that the relevant
authority may take appropriate measures against the organization. 269
ii) The BB may also impose a fine on any reporting organization if
provides with false information or statement requested under this section not
less than Taka 20 (twenty) thousand but not exceeding Taka 5 (five) lacs and if
any organization is fined more than 3(three) times in 1(one) financial year, the
BB may suspend the registration or license of the organization or any of its
branches, service centers, booths or agents for the purpose of closing its
operation within Bangladesh or, as the case may be, shall inform the
registration or licensing authority about the fact so that the relevant authority
may take appropriate measures against the said organization. 270
269
270
Ibid., Sec-23(4).
136
iii) The BB may impose a fine on any reporting organization for failing to
comply with any instruction given by the BB under this Act which may extend to
a maximum of Taka 5 (five) lacs at the rate of Taka 10 (ten) thousand per day for
each of such non compliance and if any organization is fined more than 3(three)
times in 1(one) financial year, the BB may suspend the registration or license of
the organization or any of its branches, service centers, booths or agents for the
purpose of closing its operation within Bangladesh or, as the case may be, shall
inform the registration or licensing authority about the fact so that the relevant
authority may take appropriate measures against the said organization.271
iv) The BB may impose a fine on any reporting organization for failings
to comply with any order for freezing or suspension of transaction issued by
the BB not less than the balance held on that account but not more than twice
of the balance held at the time of issuing the order. 272
v) If any person or entity or reporting organization fails to pay any fine
imposed by the BB, the BB may recover the fine from accounts maintained in
the name of the relevant person, entity or reporting organization in any bank or
financial institution or the BB, and in this regard if any amount of the fine
remains unrealized, the BB may, if necessary, make an application before the
court for recovery and the court may pass such order as it deems fit. 273
271
272
Ibid., Sec-23(6).
273
Ibid., Sec-23(7).
137
vi) If any reporting organization is imposed fine under this Act, the BB
may also impose a fine not less than Taka 10 (ten) thousand but not exceeding
taka 5 (five) lacs on the responsible owner, directors, officers and staff or persons
employed on contractual basis of that reporting organization and, where necessary,
may direct the relevant organization to take necessary administrative actions. 274
4.2.1.7 Summons, Searches and Seizures
On the basis of written application of Anti Corruption Commission (ACC) or
person authorised by the ACC the court will issue summons, searches, legal
seizures of property to this effect that the property of the accused in whatever
condition it may remain will be banned from sale or transfer.275 Special Judges
may be appointed for investigation and trial of ML cases under section 3 of the
Criminal Law (Amendment) Act 1958 (Act No. XL of 1958).276 The BB may
issue order to any Bank/FI to freeze an account for 30 days where there are
grounds to suspect that the transaction involves proceeds of crime.277
4.2.1.8 Freezing or Attachment of Property
The ACC or person authorised by the ACC will apply to the court to issue
freezing or attachment order for the properties of the person who is accused
under the Money Laundering Prevention Act 2012, wherever the property
situated, within or outside Bangladesh. Mutual Legal Assistance Request
(MLAR) through the Attorney General Office is needed if the property is
outside of Bangladesh. 278
274
275
Ibid., Sec-10.
276
Ibid., Sec-9.
277
Ibid., Sec-23.
278
Ibid., Sec-14.
138
4.2.2 The Anti Terrorism Act 2009 (amended in 2012 and 2013)
The government of Bangladesh enacted the Anti Terrorism Act 2009 to prevent
Terrorist Financing (TF). The Act has been amended in 2012 and 2013. The
amended provisions were made for the courts to accept videos, still
photographs and audio clips used in social media as evidence. The amended
law also provides for capital punishment and stiff financial penalties for
terrorism and subversive activities, depending upon the gravity of the crimes.
The provisions of the Act may be discussed under the following sub-headings:
i) Terrorist Financing is an Offence
ii) Supervision
iii) Reporting Organisations or Institutes
iv) Reporting or Compliance Requirements
v) Penalties
4.2.2.1 Terrorist Financing is an Offence
Terrorist financing is an offence. It can be simply defined as financial support, in
any form of terrorism or of those who encourage, plan, or engage in terrorism.
The offences relating to financing terrorist activities-If any person or entity
knowingly provides or expresses the intention to provide money or knowingly
receives money or knowingly makes arrangement for money or knowingly
instigates another person or entity to provide or receive or make arrangement for
money, services, material support or any other property to another person or
entity and where there are reasonable grounds to believe that the same have been
139
used or may be used in full or partially for any purpose by a terrorist person,
entity or group or organization, the related person or the said entity shall be
deemed to have committed the offence of financing terrorist activities.279
The techniques used to launder money are essentially the same as those
used to conceal the sources of, and uses for TF. Besides, the funds used to
support terrorism may originate from legitimate sources or from criminal
activities or both. Nonetheless, disguising the source of TF, regardless of
whether the source is of legitimate or illicit origin, is important. If the source
can be concealed, it remains available for future TF activities. Similarly, it is
important for terrorists to conceal the use of the funds so that the financing
activity goes undetected. There is a significant difference between ML and TF
is that the funds involved may originate from legitimate sources as well as
criminal activities. Such legitimate sources may include donations or gifts of
cash or other assets to organizations, such as foundations or charities that, in
turn, are utilized to support terrorist activities or terrorist organizations.
4.2.2.2 Supervision
Bangladesh Bank (BB) is the core implementing and supervising agency in
preventing TF activities. BB may take necessary steps to prevent and identify any
transaction carried out by any reporting agency with intent to commit an offence
under the Anti Terrorism Act 2009 (including amendment of 2012 and 2013) and
for this purpose it shall have the following powers and authority, namely: 280
279
The Anti Terrorism Act, 2009 (Act No. 16 of 2009). Sec-7.
280
Ibid., Sec-15.
140
 to call for a report relating to any suspicious transaction from any

reporting agency;
 to provide the reports received in accordance with any suspicious

transaction from any reporting agency to the respective law
enforcement agencies for taking necessary steps or, as the case may be,
provide them to foreign law enforcement agencies upon their request or
exchange information relating to the reports;
 to collect and preserve all statistics and records;
 to create and maintain a database containing the reports of all suspicious

transactions;
 to analyze reports relating to suspicious transactions;
 if there are reasonable grounds to suspect that a transaction is connected

to terrorist activities, to issue a written order to the respective reporting
agency to suspend or freeze transactions of that relevant account for a
period not exceeding 30 (thirty) days and, if it appears necessary to
reveal correct information relating to transactions of the said account,
such suspension or freezing order may be extended for an additional
term not exceeding 6 (six) months by 30 (thirty) days at a time;
 to monitor and supervise the activities of reporting agency;
 to give directions to the reporting agencies to take preventive steps to

prevent financing of terrorist activities; connected with financing of
terrorist activities; and
 to provide training to officers and employees of the reporting agencies

for the purpose of identification and prevention of suspicious
transactions connected with financing of terrorist activities.
141
4.2.2.3 Reporting Organisations or Institutes
The reporting organisations or institutes are to remain conscious and alert to
detect unusual/suspicious transactions during day to day business. When any
suspicious transaction is detected, a STR has to be submitted immediately to
the General Manager, Bangladesh Financial Intelligence Unit (BFIU),
Bangladesh Bank (BB), Head Office, Dhaka. 281 The responsibilities of
reporting organisations or institutes to combat financing of terrorism are:
 Every reporting agency shall take necessary measures, with
appropriate caution and responsibility, to prevent and identify
financial transactions which are connected to any offence under this
Act and if any suspicious transaction is identified, the agency shall
spontaneously report it to the BB without any delay.
 The Board of Directors, or in the absence of the Board of Directors,
the Chief Executive Officer, by whatever name called, of each
reporting organization shall approve and issue directions regarding
the duties of its officers, and shall ascertain whether the directions
issued by the BB,282 which are applicable to the reporting agency,
have been complied with or not.283
4.2.2.4 Reporting or Compliance Requirements

 The BB, on identification of a reporting agency or its client as being
involved in a suspicious transaction connected to financing of terrorist
281
The Anti Terrorism Act, 2009 (Act No. 16 of 2009). Sec-16(1).
282
Ibid., Sec-15.
283
Ibid., Sec-16.
142
activities, shall inform the same to the relevant law enforcement agency
and provide all necessary cooperation to facilitate their inquiries and
investigations into the matter.
 If the trial of any offence committed in another country is pending, the
BB shall take steps to seize the accounts of any person or entity pursuant
to any international, regional or bilateral agreement, United Nations
conventions ratified by the Government of Bangladesh or respective
resolutions of the United Nations Security Council.
 The fund seized and shall be subject to disposal by the concerned court
pursuant to the concerned agreements, conventions or resolutions
adopted by the United Nations Security Council.284
 In order to dispose of the responsibilities mentioned in this Act i.e. the
governmental, semi-governmental, autonomous bodies shall provide
requested information or, as the case may be, spontaneously provide
information to the BFIU. 285
 The BFIU shall, on demand or, as the cases may be, spontaneously
provide information relating to terrorist activities or financing of
terrorist activities to FIUs of other countries.
 For the purpose of investigation relating to financing of terrorist
activities, the law enforcement agencies shall have the right to access
any document or file of any bank under an order from a competent court
or tribunal or with the approval of the BB.286
284
The Anti Terrorism Act, 2009 (Act No. 16 of 2009). Sec-15(3).
285
Ibid., Sec-15(1-3).
286
143
4.2.2.5 Penalties
The following penalties are imposed under the Anti Terrorism Act 2009
(including amendment of 2012 and 2013):
 if any reporting agency fails to comply with the directions issued by the
BB287 or knowingly provides any wrong or false information or
statement, the said reporting agency shall be liable to pay a fine
determined and directed by the BB not exceeding Taka 10 (ten) lacs and
the BB may suspend the registration or license with intent to stop
operation of the said agency or any of its branches, service centers,
booths or agents within Bangladesh or, as the case may be, shall inform
the registering or licensing authority about the subject matter to take
appropriate action against the agency. 288
 if any reporting agency fails to pay or does not pay any fine imposed by
the BB,289 the BB may recover the amount from the reporting agency by
debiting its accounts maintained in any bank or FI or the BB and in case
of any unrealized or unpaid amount, the BB may, if necessary, apply
before the concerned court for recovery.290
4.2.3 Penal Code 1860

According to the Penal Code 1860 applicable in Bangladesh, the act of aiding
any person in illegal transfer, conversion or concealing of any property
amounts to money laundering and as such is punishable in accordance with the
287
288
Ibid., Sec-16(3).
289
Ibid., Sec-16(3).
290
Ibid., Sec-16(4).
144
Money Laundering Prevention Act 2012.291 Moreover, the Penal Code makes
dishonest or fraudulent removal or concealment of property, dishonestly
received or retained stolen property and any assistance in concealing the stolen
property a crime. Most of the offences which make up the categories of
predicate offences are criminalised within the Penal Code 1860. In addition the
section 4 of the Penal Code 1860 also provides that “the provisions of this code
apply also to any offence committed by (1) any citizen of Bangladesh in any
place without and beyond Bangladesh.” It is explained in section 4 that the
word ‘offence’ includes every act committed outside Bangladesh which if
committed in Bangladesh, would be punishable under the Penal Code.292
4.2.4 The Arms Act 1878

Trafficking of arms is a mode of ML which is controlled and prosecuted by the
Arms Act 1878. The government of Bangladesh also prohibits or restricts the
bringing into or taking out of Bangladesh of any goods of specified description
by air, sea or land, by notification in the official Gazette from time to time.293
The goods which are specified to prohibits or restricts to bring into and taking
out of Bangladesh, unless there is something repugnant in the subject or
context defined under the Arms Act 1878: 294
 “cannon” includes all howitzers, mortars, wall-pieces, mitrailleuses and
other ordnance and machine-guns, all parts of the same, and all
carriages, platforms and appliances for mounting, transporting and
serving the same;

291
The Money Laundering Prevention Act, 2012 (Act No. 05 of 2012). Sec-2(CC).
292
Penal Code 1860 (Act No. XLV of 1860). Sec-4.
293
The Customs Act, 1969(Act No. IV of 1969). Sec-16.
294
The Arms Act, 1878 (Act No. XI of 1878). Sec-4.
145
 “arms” includes fire-arms, bayonets, swords, daggers, spears, spearheads
and bows and arrows, also cannon and parts of arms, and machinery for
manufacturing arms;
 “ammunition” includes all articles specially designed for torpedo service
and submarine mining, rockets, gun-cotton, dynamite, lithofracteur and
other explosive or fulminating material, gunflint, gun-wads, percussion-
caps, fuses and friction-tubes, all parts of ammunition and all machinery for
manufacturing ammunition, but does not include lead, sulphur or saltpeter;
 “military stores,” means any military stores to which the government of
Bangladesh may apply any section of the Arms Act 1878, and to apply
any part from time to time, by notification in the official Gazette,
specially extend such section in such part, and includes all lead, sulphur,
saltpeter and other material to which the government may extent such
section from time to time; and
 “license” means a license granted under the Arms Act 1878, and
“licensed” means holding such license.
4.2.5 The Code of Criminal Procedure (CrPC) 1898

The Code of Criminal Procedure (CrPC) 1898 (Act No. V of 1898) containing
a general provision for forfeiture of property upon conclusion of an inquiry or
investigation under section 517(1) is as follows:
“When an inquiry of a trial in any Criminal Court is concluded, the Court

may make such order as it thinks fit for the disposal by destruction,
confiscation or delivery to any person claiming to be entitled to possession
thereof or otherwise of any property or document produced before it or in
its custody or regarding which any offence appears to have been committed
or which has been used for the commission of any offence.”
146
It is clear from the terms of section 517 that both proceeds and
instruments of crime can be forfeited, as well as property corresponding value.
A forfeiture order pursuant to section 517 of the CrPC can apply to property
held in the names of third parties, as well as to the indirect proceeds of crime.
Provisional measures include freezing and or seizing. The CrPC confers a
power upon police officers to seize property pursuant to section 98. However,
the context indicates that the power is restricted to seizure of physical objects.
The CrPC does not contain any provisions for freezing of property. Section
517(4) of CrPC enables a person to contain entitlement to property which is
subject to forfeiture.
4.2.6 Criminal Law (Amendment) Act 1958

There is no provision that the burden of proof lies with the accused, in the
Money Laundering Prevention Act 2012. Collecting evidence of corroborative
elements with predicate offences is important to prosecute. When any person is
charged, the fact that such person or any other person through him or on his
behalf, is in possession, for which he cannot satisfactorily account, of
pecuniary resources or property disproportionate to his known sources of
income, or that such person has, on or about the time of offence with which he
is charged, obtained an accretion to his pecuniary resources or property for
which he cannot satisfactorily account, may be proved, and may be taken into
consideration as a relevant fact in deciding whether he is guilty of the particular
offence with which he is charged.295
295
The Criminal Law (Amendment) Act, 1958 (Act No. XL of 1958). Sec-7.
147
4.2.7 The Customs Act 1969

The launderers are laundering their earned money in many ways among them the
bulk cash smuggling is one. The Customs Act 1969 plays an effective role in
preventing bulk cash smuggling. The Act specified to restrict the following
goods in bringing in, whether by air or land or sea, into Bangladesh: i)
counterfeit coin; ii) forged or counterfeit currency notes and any other
counterfeit product; iii) any obscene book, pamphlet, paper, drawing, painting,
representation, figure, photograph, film or article, video or audio recording, CDs
or recording on any other media; iv) goods having applied thereto a counterfeit
trade mark or a false trade description; v) goods made or produced outside
Bangladesh and having applied thereto any name or trade mark, being or
purporting to be the name or trade mark of any manufacturer, dealer or trader in
Bangladesh unless- the name or trade mark is, as to every application thereof,
accompanied by a definite indication of the goods having been made or produced
in a place outside Bangladesh; and the country in which that place is situated is
in that indication shown in letters as large and conspicuous as any letter in the
name or trade mark, and in the same language and character as the name or trade
mark; vi) piece-goods manufactured outside Bangladesh (such as are ordinarily
sold by length or by the piece), unless the real length thereof in standard metres
or other measurement for the time being applying in Bangladesh has been
conspicuously stamped on each piece in Arabic numerals; vii) goods made or
produced outside Bangladesh and intended for sale, and having applied thereto, a
design in which copyright exists and in respect of the class to which the goods
belong and any fraudulent or obvious imitation of such design except when the
148
application of such design has been made with the license or written consent of
the registered proprietor of the design; and viii) goods or items produced outside
Bangladesh involving infringement of copyright or infringement of layout design
of integrated circuit that are intended for sale or use for commercial purposes
within the territory of Bangladesh.296 Except this provisions, the government of
Bangladesh also prohibits or restricts the bringing into or taking out of
Bangladesh of any goods of specified description by air, sea or land, from time
to time, by notification in the official Gazette.297
4.2.8 The Foreign Exchange Regulation Act 1947

The government of Bangladesh controls import and export of certain currency
under the Foreign Exchange Regulation Act 1947. The government also
prohibits or restricts import and export by notification in the official Gazette,
subject to such exemptions, if any, as may be contained in the notification, no
person shall, except with the general or special permission of the BB and on
payment of the prescribed fee, if any, bring or send into Bangladesh any gold or
silver or any currency notes or bank notes or coin whether Bangladesh or
foreign.298 Besides, no person shall, except with the general or special
permission of the BB or the written permission of a person authorised in this
behalf by the BB, take or send out of Bangladesh any gold, jewellery or precious
stones, or Bangladesh currency notes, bank notes or coin or foreign exchange.299
296
The Customs Act, 1969(Act No. IV of 1969). Sec-15.
297
Ibid., Sec-16.
298
The Foreign Exchange Regulation Act, 1947 (Act No. VII of 1947). Sec- 8(1).
299
Ibid., Sec- 8(II).
149
4.2.9 Mutual Legal Assistance on Criminal Matters Act 2012

The government of Bangladesh has enacted Mutual Legal Assistance on
Criminal Matters Act 2012 to enhance international cooperation in preventing
ML activities and related offences. In the process of responding to international
concern, the Government of Bangladesh has formed a national coordination
committee in July 2009 to make policies and directive on anti money
laundering and combat financing of terrorism. The committee was also charged
with improving the campaign against extremism through exchanges between
law enforcement and intelligence agencies. The government of Bangladesh has
formed a central and several regional taskforces on 27 January 2002 to combat
ML activities and Hundi in Bangladesh.
In 2010, the government formulated a strong anti militancy National
Education Policy, which highlights the need for reforming the Madrassa
curriculum. The government also introduced anti extremism chapters in
academic text books. Additionally, the Ministry of Education has been
organizing awareness programmes against terrorism in different schools and
colleges. The government also formulated ‘National Counter Terrorism
Strategy’ in 2011. In August 2011, Bangladesh acceded to the Palermo
Convention against Transnational Organised Crimes.
The BFIU of the BB has taken effective steps to curb terrorism
financing. The BB has already issued a circular to all state owned and private
commercial banks regarding the procedure for handling ML and related

150
matters. It is learnt from the BB that so far it was possible to conclude
agreements for mutual legal assistance with thirteen countries only. We have to
go a long way ahead in this regard. Bangladesh also has to find its way for
tapping benefit from all international agencies which are helpful for recovery
of assets. It requires competent expertise and resources. International
cooperation in line with the spirit of United Nations Convention Against
Corruption (UNCAC) is very much required for the purpose. In short, while the
focus of AML remains with banking, insurance, securities, real estate, prize-
winning and casino sectors, the law presents more general provisions and new
detailed requirements on addressing ML. However, the remedies and sanctions
are not yet addressed with adequate measures and the enforceability of many
provisions is still questionable.
4.2.10 The Mutual Legal Assistance Act 2012

ML and Terrorism is a global phenomenon. Neither is one country responsible
for it, nor is any one country obligated to remove it single handedly. It is a
collective responsibility for which every country must play its role collectively.
Bangladesh is trying its best to contribute to world peace by taking a strong
stance on local, regional and international terrorism. The government of
Bangladesh enacted the Mutual Legal Assistance Act 2012 which provides a
legal framework for inter-country cooperation in carrying out enquiries,
prosecutions and trial of criminal activities. This law empowers the
government of Bangladesh to freeze properties of criminals and terrorists and
their equipment used in criminal activities in line with the request of a foreign
151
country. Bangladesh and India signed an extradition treaty for disrupting the
regional connections and networks among terrorist outfits in South Asia on 28
January 2013. Additionally, Bangladesh and India have agreed to implement a
Coordinated Border Management Plan (CBMP) and has agreed to increase the
number of joint patrolling with a view to curbing criminal activities, including
terrorism, along the long and porous border.
Bangladesh signed an agreement with the USA on 22 October 2013,
which aims to enhance counterterrorism cooperation between the two countries
in terms of capacity building, information sharing, and ensuring increased
exchanges between law enforcement agencies. 300 The South Asian Association
for Regional Cooperation (SAARC) member nations may play effective role to
work together to prevent and fight regional terrorism. A regional framework to
fight terrorism is on the cards. Further, Bangladesh received full membership
of the Conference on Interaction and Confidence Building Measures in Asia
(CICA) on 20 May 2014.301 The CICA pursues multilateral cooperation in the
fields of peace, security and stability in Asia.
4.3 Transnational Steps to Control Money Laundering

ML is a global phenomenon. It is very difficult to prevent ML activities for a
country singly due to its domestic and global character. The government of
Bangladesh acted with regional and international organizations to prevent ML
300
Website: <www.cageuk.org/.../rahman’s-arrest-shines-light-uk-complicity-bangladesh- reign-terror-0 ->
301
Website:<en.wikipedia.org/.../Conference_on_Interaction_and_Confidence-Building_Measures_in_Asia->
152
activities in Bangladesh. The steps of regional and international organizations
in preventing ML activities are correlated with the domestic AML laws of
Bangladesh. In the era of globalization, the integration of the world’s financial
transactions is increasing with the implementation of new technologies. The
barriers to the free movement of capital have been reduced for international
free trade agreement. The money launderers are taking advantages of this
prospect to hide their ill-gotten gains. They are able to quickly move their
criminally derived cash proceeds between national jurisdiction, complicating
the task to facing and confiscating these assets. Now a large number of states
are concerned about the issue and they already have introduced laws and
regulations to prevent ML. The action of the international level to combat ML
begins in 1988 with two important initiatives, the United Nations Convention
against Illicit Traffic in Narcotics, Drugs and Psychotropic Substances and the
Basel Committee on Banking Regulations and Supervisory Practices. The
following international organizations are also playing effective role in
preventing ML activities in Bangladesh:
i) The United Nations,
ii) The Basel Committee on Banking Supervision (BCBS)
iii) The Financial Action Task Force (FATF)
iv) Council of Europe Convention on Laundering, Search, Seizure and
Confiscation of the Proceeds of Crime, and
v) Other Organizations
153
4.3.1 The United Nations

The United Nations (UN) is an international organization founded in 1945 with
the broadest range of membership (193 members from all across the world up
to 2011).302 The UN actively operates a global programme against ML and
terrorist activities- part of the UN Office of Drugs and Crime (UNODC). The
UN has adopted international treaties or conventions to prevent ML activities
that obligate the ratifying countries to reflect those treaties or conventions in
their local laws. In certain cases, the United Nations Security Council has the
authority to bind all member countries through a Security Council Resolution,
regardless of other actions on the part of an individual country. The following
conventions are playing effective roles to prevent ML activities in Bangladesh
as well as worldwide:
i) The United Nations Convention Against Illicit Traffic in Narcotic Drugs

and Psychotropic Substances (Vienna Convention of 1988);
ii) The United Nations Convention Against Transnational Organized Crime

(the Palermo Convention of 2000);
iii) International Convention for the Suppression of the Financing of

Terrorism (1999); and
iv) The Global Programme against Money Laundering (GPML) (1997).
4.3.1.1 United Nations Convention Against Illicit Traffic in Narcotic

Drugs and Psychotropic Substances
The United Nations Convention Against Illicit Traffic in Narcotic Drugs and
Psychotropic Substances (Vienna Convention of 1988) calls for prevention of
302
Website: <en.wikipedia.org/wiki/United_Nations -> Accessed on 17 March 2015.
154
laundering of proceeds of drug crimes and other connected activities and
confiscation of proceeds derived from illicit traffic in narcotic, drugs and
psychotropic substances.303 This UN Convention was one of the historic
conventions in as much as the parties to the convention recognized the links
between illicit drug traffic and other related organized criminal activities which
undermine the legitimate economies and threaten the stability, security and
sovereignty of states and that illicit drug trafficking is an international criminal
activity that generates large profit and wealth, enabling transnational, criminal
organizations to penetrate, contaminate and corrupt the structures of
government, society at all levels. Bangladesh is a member state of this
convention. The government of Bangladesh enacted AML laws and included
the provisions of illicit traffic in narcotic, drugs and psychotropic substances as
a criminal and punishable offence. Based on the convention many other
countries have framed their national legislations. Council of Europe
Convention on laundering is motivated by this convention as well as this
convention gave a framework for FATF to work.
4.3.1.2 United Nations Convention Against Transnational Organized

Crime (UNTOC)
The United Nations Convention Against Transnational Organized Crime (the
Palermo Convention of 2000), named after the city in which it was signed as
Palermo Convention in order to fight against internationally organized crimes.

303
The Convention was adopted by the United Nations Conference for the adoption of a Convention
against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, held at Vienna from 25
November to 20 December 1988. The Convention entered into force on 11 November 1990. As of
June 2014; there were 189 parties to the convention. Available at <http://treaties.un.org/pages/View
Details.aspx?> Accessed on 10 May 2014.
155
This convention has come into force from 29 September 2003, having been
signed by 147 countries (as of August 2014). Bangladesh is a member of this
convention and ratified it on 13 July 2011.304 The Palermo Convention
specifically obligates each ratifying country to
 criminalize ML and include all serious crimes as predicate offenses,
whether committed in or outside of the country, and permit the required
criminal knowledge or intent to be inferred from objective facts;
 establish regulatory regimes to deter and detect all forms of ML,
including customer identification, record-keeping and reporting of
suspicious transactions;
 authorize the cooperation and exchange of information among
administrative, regulatory, law enforcement and other authorities, both
domestically and internationally, and consider the establishment of a
financial intelligence unit to collect, analyze and disseminate
information; and
 promote international cooperation.
4.3.1.3 International Convention for the Suppression of the Financing of

Terrorism
The financing of terrorism was an international concern prior to the attacks on
the United States on 11 September 2001. In response to this concern, the UN
adopted the International Convention for the Suppression of the Financing of
Terrorism (1999). The convention came into force on 10 April 2002, with 132
304
Website: <en.wikipedia.org/wiki/Vienna_Convention_on_Diplomatic_Relations> Accessed on 22
August 2014.
156
countries signing the convention and 186 countries ratifying it including
Bangladesh (as of August 2013).305 The convention requires ratifying states to
criminalize terrorism, terrorist organizations and terrorist acts. Under this
convention, it is unlawful for any person to provide or collect funds with the
(1) intent that the funds be used for, or (2) knowledge that the funds be used to,
carry out any of the acts of terrorism defined in the other specified conventions
that are annexed to this convention.
4.3.1.4 The Global Programme against Money Laundering (GPML)
The Global Programme against Money Laundering (GPML) was established in
1997 in response to the mandate given to UNODC by the 1988 UN Convention
against Illicit Traffic in Narcotic Drugs and Psychotropic Substances. The
GPML mandate was strengthened by United Nations General Assembly
Special Session (UNGASS) in 1998. UN Security Council Resolutions:
1267(1999), 1373(2001), 1544(2004), 1566(2004) and 1624 (2005) call on UN
Members states to combat terrorism, including financing of terrorism. GMPL
has capacities and a special mandate to assist UN member states in ratifying
and implementing the international standards related to ML and financing of
terrorism.306 The GPML is the key instrument of the United Nations Office of
Drug Control and Crime Prevention in this task. Through the GPML, the
United Nations helps member states to introduce legislation against ML and to
305
Website: <en.wikipedia.org/wiki/Terrorist_Financing_Convention> Accessed on 22 August 2014.
306
157
assist them in detecting, seizing and confiscating illicit proceeds, as required
under UN related instruments and worldwide accepted standards by providing
relevant and appropriate technical assistance upon request from States. The
programme encourages AML policy development, monitors and analyses the
problems and responses, raises public awareness about ML and acts as a
coordinator of joint AML initiatives by the United Nations with other
international organizations. Three further conventions have been adopted or
specified provisions for ML and other related crimes where Bangladesh is a
member state:
i) International Convention for the Suppression of the Financing of
Terrorism (1999);
ii) United Nations Convention against Transnational Organized Crime
(2000); and
iii) United Nations Convention against Corruption (2003).
4.3.2 Basel Committee on Banking Supervision (BCBS)

The Basel Committee on Banking Supervision (BCBS) is a committee on
banking supervisory authorities that was established by the central bank
governors of the group of ten countries i.e. Belgium, Canada, France,
Germany, Italy, Japan, Netherlands, Sweden, Switzerland, United Kingdom
and United States in 1774.307 It provides a forum for regular cooperation on
banking supervisory matters. The Committee also frames guidelines and
standards in different areas-some of the better known among them are the
307
Website: <en.wikipedia.org/wiki/Basel_Committee_on_Banking_Supervision> Accessed on 22
August 2014.
158
international standards on capital adequacy, the core principles for effective
banking supervision and the settlement on cross-border banking supervision.
The purpose of the BCBS is to encourage convergence toward common
approaches and standards. The committee is not a classical multilateral
organisation in part because it has no founding treaty. The BCBS does not issue
binding regulation; rather, it functions as an informal forum in which policy
solutions and standards are developed.
Bangladesh is a member of financial stability board of the BCBS.
Individual countries are represented by their central banks, or by the relevant
authorities with formal responsibility for prudential supervision of banking
where that authority is not the central bank. The committee has no formal
international supervisory authority or force of law. Rather, it formulates broad
supervisory standards and guidelines and recommends statements of best
practices on a wide range of bank/financial institution supervisory issues. These
standards and guidelines are adopted with the expectation that the appropriate
authorities within each country will take all necessary steps to implement them
through detailed measures, statutory, regulatory or otherwise, that best suit that
country’s national system. The BCBS provides a forum for regular cooperation
on banking supervisory matters. Its objective is to enhance understanding of key
supervisory issues and improve the quality of banking supervision worldwide.308
The Basel statement of principles on the prevention of criminal use of
banking system was significant breakthrough on the financial front to have
308
Website: <www.bis.org/bcbs/index.htm> Accessed on 10 May 2014.
159
controlling mechanism for ML on an international plane.309 The statement of
principles not only restrict itself to drug related ML but also extends to all
aspects of laundering through the banking system, i.e. the deposit, transfer
and/or concealment of money derived from illicit activities whether robbery,
terrorism, fraud or drugs. It seeks to deny the banking system to those involved
in ML by the application of four basic principles:
i) Know Your Customer (KYC)–Bank management mandates to
detect fake identity of their clients and to determine their
customer’s true identity, and have effective procedures for
verifying the bonafides of a new customer;
ii) Compliance with laws–Bank management should ensure high
ethical standards in complying with laws and regulation and keep a
vigil not to provide services when any ML activity is suspected;
iii) Corporation with law enforcement agencies to prevent ML
activities and related crimes; and
iv) Policies and procedures to adhere to the statement to determine ML
activities and related crimes.
4.3.3 The Financial Action Task Force (FATF)

The Financial Action Task Force (FATF) is an inter-governmental organisation
founded by G7 countries (Canada, France, Germany, Italy, Japan, and United
Kingdom) created in 1989. The present members of FATF are 36. The 36
members of FATF are at the core of global efforts to combat ML and TF. Also 27
309
Website: < http:// www bis.org/publ/bc.bsel137pdf> Accessed on 10 May 2014.
160
international and regional organizations which are associate members or observers
of the FATF are participating in its work.310 The purpose of the FATF is to
develop and promote the national and international policies to combat ML and TF.
The FATF provides a complete set of counter measures against ML
covering the criminal justice system and law enforcement, the financial system
and its regulation, and international co-operation. The FATF set out the
principles according to their particular circumstances and constitutional
frameworks. The objectives of the FATF are to set standards and promote
effective implementation of legal, regulatory and operational measures for
combating ML, TF and other related threats to the integrity of the international
financial system. The FATF is therefore a policy making body which works to
generate the necessary political will to bring about national legislative and
regulatory reforms in these areas. 311
The FATF has developed a series of recommendations that are
recognised as the international standard for combating of ML and the financing
of terrorism and proliferation of weapons of mass destruction. They form the
basis for a co-ordinated response to these threats to the integrity of the financial
system and help ensure a level playing field. First issued in 1990, the FATF
Recommendations were revised in 1996, 2001, and 2003 and most recently in
2012 to ensure that they remain up to date and relevant, and they are intended
to be of universal application.
310
Website: <http://www.fatf-gafi.org/document/5/0,3343,en_32236869_34310917_1_1_1_1,00.html.>
311
Website: <http:// www.fatf- gafi.org.> Accessed on 10 May 2014.
161
The FATF monitors the progress of its members in implementing
necessary measures, reviews ML and TF techniques and counter-measures, and
promotes the adoption and implementation of appropriate measures globally. In
collaboration with other international stakeholders, the FATF works to identify
national-level vulnerabilities with the aim of protecting the international
financial system from misuse.
4.3.4 Council of Europe Convention on Laundering, Search, Seizure

and Confiscation of the Proceeds of Crime
Council of Europe Convention on Laundering, Search, Seizure and Confiscation
of the Proceeds of Crime, popularly known as Strasbourg Convention, it was
intended to extend the provisions on international cooperation against the
activities of international organized criminality in general beyond the area of
drug trafficking.312 The aim of this convention is to facilitate international co-
operation and mutual assistance in investigating crime and tracking down,
seizing and confiscating the proceeds thereof. The convention is also intended to
assist states in attaining a similar degree of efficiency even in the absence of full
legislative harmony. Parties undertake in particular: to criminalise the laundering
of the proceeds of crime; to confiscate instrumentalities and proceeds (or
property the value of which corresponds to such proceeds). For the purposes of
international co-operation, the convention provides for: forms of investigative
assistance for example, assistance in procuring evidence, transfer of information
to another country without a request, adoption of common investigative
312
Website: <http://conventions,coe.int/treaty/en/treaties/Html/141.htm.> Accessed on 10 May 2014.
162
techniques, lifting of bank secrecy etc.; provisional measures: freezing of bank
accounts, seizure of property to prevent its removal; measures to confiscate the
proceeds of crime: enforcement by the requested country of a confiscation order
made abroad, institution by the requested State, of domestic proceedings leading
to confiscation at the request of another country.313
4.3.5 Other Organizations

ML is an increasingly ramified, complex phenomenon that must be tackled in
an integrated and interdisciplinary fashion.314 Towards this there are many
organizations throughout the world working coordinately. Some of the
prominent ones are discussed below:
i) Wolfsberg Anti Money Laundering Principles

ii) International Money Laundering Information Network (IMoLIN)
iii) Egmont Group of Financial Intelligence Units
iv) Asia-Pacific Group on Money Laundering (APG) and
v) International Organization of Securities Commissioners (IOSCO)
4.3.5.1 Wolfsberg Anti Money Laundering Principles
Wolfsberg anti money laundering principles are important step in the fight
against money laundering, corruption and other related serious crimes.315
Transparency International (TI), a Berlin based NGO in collaboration with 11
International Private Banks, ABN AMRO Bank N.V., Bank of Tokyo-
313
Website: <conventions.coe.int/Treaty/Commun/QueVoulezVous.asp?NT> Accessed on 24 August 2014.
314
Ernesto Savona, Responding to Money Laundering: International perspectives, (Harwood
Academic Publishers, Netherlands, 1997). p. 1.
315
The original principles were made public on 30 October 2000 in Zurich Switzerland. Available at
<http://www.wolfsberg-principles.com.> Accessed on 10 May 2014.
163
Mitsubishi Ltd., Barclays Bank, Citigroup, Credit Suisse Group, Deutsche
Bank AG, Goldman Sachs, HSBC, J.P. Morgan Private Bank, Santander
Central Hispano, under the expert participation of Stanley Morris and Prof.
Mark Pieth came out with these principles as important global guidance for
sound business conduct in international private banking.316 The Wolfsberg anti
money laundering principles is important due to the fact that they come from
initiative by private sector, governments and their regulatory and law
enforcement agencies, or by government representatives acting through
international forms such as the Financial Action Task Force (FATF). Normally,
most initiatives to date have been public sector led by the Basel Committee of
Bank Supervisors. The Wolfsberg Principles are a non-binding set of best
practice guidelines governing the establishment and maintenance of relationships
between private bankers and clients.317
4.3.5.2 International Money Laundering Information Network (IMoLIN)
IMoLIN is an internet-based network assisting governments, organizations and
individuals in the fight against ML and the financing of terrorism administered
by UN office on Drugs and Crime. IMoLIN has been developed with the
cooperation of the world's leading AML organizations. It provides with an
international database called Anti-Money Laundering International Database
316
Société Générale, and UBS AG, “Global Anti-Money-Laundering Guidelines for Private Banking.”
Available at <http://www.wolfsberg-principles.com> Accessed on 10 May 2014.
317
Kris Hinterseer, “The Wolfsberg Anti-Money Laundering Principles,” Journal of Money
Laundering Control, Vol. 5, No.1 (Elsevier, Netherlands, 2001). pp. 25-41.
164
(AMLID) that analyses the jurisdictions of national AML legislation. It is
intended as a tool for practitioners to assist them in their international
cooperation and exchange of information efforts. Currently, the AMLID 2nd
Round of Legal Analysis has been launched by UNODC on 27 February 2006,
IMoLIN has twelve participating organization, 318 four international
Organizations, 319 and five international financial institutions.320
4.3.5.3 Egmont Group of Financial Intelligence Units
The Egmont Group is the coordinating body for the international group of
Financial Intelligence Units (FIUs) formed in 1995 at the Egmont Arenberg
Palace in Brussels, to promote and enhance international cooperation in the
fight against ML and financing of terrorism. Now known as the Egmont Group
of Financial Intelligence Units, Egmont Group FIUs meet regularly to find
ways to promote the development of FIUs and to cooperate, especially in the
areas of information exchange, training and the sharing of expertise. The
Egmont Group has evolved over the years and is currently (2013) comprised of
139 members FIUs from across the world FIUs are responsible for the money
318
Asia/Pacific Group on Money Laundering (APG), Caribbean Financial Action Task Force
(CFATF),Commonwealth Secretariat (COMSEC), Council of Europe–MONEYVAL, Eastern and
Southern Africa Anti-Money Laundering Group (ESAAMLG), Eurasian Group (EAG), Financial
Action Task Force (FATF), Financial Action Task Force on Money Laundering in South America
(GAFISUD), Inter-Governmental Action Group Against Money Laundering and Terrorist Financing
in West Africa (GIABA),International Criminal Police Organization (Interpol), Organization of
American States/Inter-American Drug Abuse Control Commission (OAS/CICAD), United Nations
Office on Drugs and Crime Global Programme against Money Laundering, Proceeds of Crime and
the Financing of Terrorism (GPML). Website: <http://www.imolin.org/imolin/index.html.>
319
European Commission (EC), International Organization of Securities Commissions (IOSCO),
Offshore Group of Banking Supervisors (OGBS) and the Egmont Group. Ibid.
320
Asian Development Bank (ADB), International Monetary Fund (IMF), World Bank
(IBRD/IDA),European Bank for Reconstruction and Development (EBRD) and Inter-American
Development Bank (IDB). Ibid.
165
trail, and to counter ML and TF.321 The Egmont Group also provided a forum
for FIUs around the world to improve cooperation in the fight against ML and
the financing of terrorism and to foster the implementation of domestic
programs in this field. 322 This support includes:
 Expanding and systematizing international cooperation in the
reciprocal exchange of information;
 Increasing the effectiveness of the FIUs by offering training and
promoting personnel exchanges to improve the expertise and
capabilities of personnel employed by FIUs;
 Fostering better and secure communication among the FIUs through
the application of technology, such as the Egmont Secure Web
(ESW);
 Fostering increased coordination and support among the operational
divisions of member of the FIUs;
 Promoting the operational autonomy of the FIUs; and
 Promoting the establishment of the FIUs in conjunction with
jurisdictions with an AML/CFT programme in place, or in areas with
a programme in the early stages of development.
321
Bangladesh Financial Intelligence Unit (BFIU) of Bangladesh has got the membership of
prestigious Egmont Group on 3 July 2013 as its 132nd member. Website: <en.wikipedia.org/.../Egmont_
Group_of_Financial_Intelligence_Units -.> Accessed on 10 May 2014.
322
Website: <en.wikipedia.org/.../Egmont_Group_of_Financial_Intelligence_Units -.>
166
 The FIUs are an essential component of the international fight
against ML, the financing of terrorism, and related crime. The FIU is
a central, national agency responsible for receiving, and as permitted,
requesting, analysing and disseminating to the competent authorities,
disclosures of financial information:(i) concerning suspected
proceeds of crime and potential financing of terrorism, or (ii)
required by national legislation or regulation has been adopted at the
plenary meeting of the Egmont Group in Rome in November 1996,
as amended at the Egmont Plenary Meeting in Guernsey in June
2004. Their ability to transform data into financial intelligence is a
key element in the fight against ML and the financing of terrorism.323
The FIUs participating in the Egmont Group affirm their
commitment to encourage the development of the FIUs and co-
operation among and between them in the interest of combating ML
and in assisting with the global fight against TF.324
4.3.5.4 Asia-Pacific Group on Money Laundering (APG or APGML)
The Asia-Pacific Group on Money Laundering (APG or APGML) is working
in many fronts to prevent ML activities both at the domestic and the
international levels. It is an international organization consisting of 41 member
countries/jurisdictions, a number of international and regional observers
including the United Nations, IMF and World Bank.325 Bangladesh is a
founding member of APG and has been participating in annual plenary meeting
323
Website: <http://www.egmontgroup.org/PRESS_RELEASE_version_27_MAY_2008_G.pdf>
324
Website: <http://www.egmontgroup.org/statement_of_purpose.pdf.> Accessed on 12 May 2014.
325
Website: <en.wikipedia.org/wiki/Asia/Pacific_Group_on_Money_Laundering-> Accessed on 12 May 2014.
167
since 1997. The key functions of APG is to assess APG members’ compliance
with the global AML standards through mutual evaluations; coordinate
technical assistance and training with donor agencies and APG jurisdictions to
improve compliance with the AML standards; co-operate with the international
AML network; conduct research into ML methods, trends, risks and
vulnerabilities; contribute to the global AML policy development by active
Associate Membership of FATF. The APG has five key roles:326
i) To assess compliance by APG members with the global standards
through a robust mutual evaluation program.
ii) To coordinate bi-lateral and donor-agency technical assistance and
training in the Asia/Pacific region in order to improve compliance by
APG members with the global standards.
iii) To participate in, and co-operate with, the international AML network -
primarily with the FATF and with other regional AML groups.
iv) To conduct research and analysis into ML trends and methods to better
inform APG members of systematic and other associated risks and
vulnerabilities and
v) To provide information to the private sector to better inform them of
international developments in AML/CFT and provide a forum for them
to engage with the APG.
326
Website: < www.apgml.org/about-us/page.aspx?p=91ce25ec-db8a-424c...>Accessed on 12 May 2014.
168
The APG assists its members to establish national coordination
mechanisms to better utilise resources to combat ML and TF. It also contributes
to the global policy development of AML and counter terrorism financing
standards by active Associate Membership status in the FATF. At the same time,
the APG also assists its members to establish coordinated domestic systems for
reporting and investigating suspicious transaction reports and to develop
effective capacities to investigate and prosecute ML and the financing of
terrorism offences.
4.3.5.5 International Organization of Securities Commissioners

The International Organization of Securities Commissioners (IOSCO) is an
organization of securities commissioners and administrators that have day to
day responsibilities for securities regulation and the administration of securities
laws in their respective countries. At present IOSCO is comprised with 182
members (109 ordinary, 11 associates, and 62affiliate).327
The IOSCO passed a resolution on ML in 1992. Like other international
organizations of this type, IOSCO does not have law-making authority. Similar
to the Basel Committee and International Association of Insurance Supervisors
(IAIS), it relies on its members to implement its recommendations within their
respective countries. Thus one can see the effectiveness of efforts taken by the
international community to fight the menace of ML. As the financial systems
of the world grow increasingly interconnected, international cooperation has
327
Website: <en.wikipedia.org/.../International_Organization_of_Securities_Commissions ->Accessed
on 31 May 2014.
169
been, and must continue to be, fundamental in curtailing the growing influence
on national economies of drug trafficking, financial fraud, other serious
transnational organized crime, and the laundering of proceeds of such crimes.328
The international effort to develop and implement effective AML
controls has been marked by the persistent, ever present need to balance, on the
one hand, the interests of government in access to financial records and even
affirmative disclosure of suspicious activity, against, on the other hand, the
interests of financial institutions is being free from unduly burdensome
regulation, along with the interests of their customers in maintaining an
appropriate degree of financial privacy. At one hand the international
community is responding: trans governmental groups, made up of financial,
regulatory and specialists of judiciary, are working in a variety of ways to share
information and expertise to fight against ML activities and other related
crimes, while on the other still, the crime of ML, and the fight against it, are
both relatively recent phenomena, and much work remains to be done.
4.4 Drawbacks of the Existing Anti-Money Laundering Laws in

Bangladesh
The government of Bangladesh is working to prevent ML activities and related
crimes in different ways such as enacting AML laws and by implementing
effective preventing measures. The effort of AML laws and their preventive
328
Joseph M. Myers, Assistant Director (International Programs) Financial Crimes Enforcement
Network, in a seminar on “International Strategies to Combat Money Laundering on the Prevention
and Control of Financial Fraud Beijing,” held at U.S. Department of the Treasury for the
International Symposium on 19-22 October 1998. Available at <http://www.icclr.law.ubc.ca/
Publications/Reports/myer_pap.pdf> Accessed on 10 May 2014.
170
measures do not seem sufficient to prevent ML in Bangladesh. There are so
many problems found in preventing ML activities and related crimes. The
foregoing discussion reveals many flaws and difficulties in preventing ML
in Bangladesh.
4.4.1 Weaknesses of Enforcement Mechanism

The administrative functionaries of BB and ACC are under the control of the
government of Bangladesh. It is important to control both the launderers and
administrative pools/mechanism by proper AML laws as well as sincere effort
of the government. A proper and effective preventing measure depends on the
comprehensive AML laws, which may control the abuse of the legal process.
Police officers do not work independently against ML activities and
related crime. They have to depend on the approval of District Magistrate to
investigate ML activities and related crimes, without taking approval they cannot
investigate such types of offences.329 The courts are not able to take cognizance
of such types of offences without prior sanction of the government.330 There is a
need to amend the provisions of AML laws to make the functions of police and
judges more effective in preventing ML activities and related crimes.
The human trafficking clauses are not included in the Money Laundering
Prevention Act 2012. On the other hand, the FATF and the APG, especially the
USA, have long been pressing the government of Bangladesh to include a
329
The Anti Terrorism Act 2009 (Act No. 16 of 2009). Sec-40(1).
330
Ibid., Sec-40(2).
171
provision in the Anti Terrorism Act 2009 (amended in 2012 and 2013) that a
terrorist of any other country of the world to be treated as a terrorist of
Bangladesh and make the local laws on anti-terrorism equally applicable to
foreign terrorists. However, the government of Bangladesh is still hesitant about
declaring a terrorist of another country as a terrorist of Bangladesh.331
4.4.2 Growth of Technology

Growth of information and communications technology may be a great tool for
the economic development of a country like Bangladesh. The use of technology
may improve economic opportunities for the poor, increase delivery of services
to the underserved, improve governance, and benefit social change. At the
same time, the launderers are also taking the opportunity of technological
development to launder money. Cyber finance is the growing concept in a
developing economy like Bangladesh. A large amount of money is stored in
digital form. Money can be transferred through electronic and online gateways
to multiple accounts. This convergence leads to a greater problem of tackling
of different issues at one time. Besides, most of the people of Bangladesh have
not confronted with hybrid crimes. The hybrid crimes with many attributes
converging cyber crimes such as identity theft, illegal access to e-mail, and
credit card fraud are coming together with ML and related activities. The law
enforcement agencies do not matched up with the speed of growing technology,
specifically the lame situation of cyber crimes.
331
Editorial, “Bangladesh’s Legalising Black Money.” The Daily Star, Dhaka (2 June 2012).
172
4.4.3 Lack of Proper Information

A good business depends upon a good client. As a business organization, bank
and capital market should pay particular attention to their clients under the
Know Your Customer (KYC) norms. Banks and capital market should have a
sound knowledge about their customer’s personal identity, and their business
pattern, financial transactions and commitments to prevent ML activities and
related crimes.332 However, these KYC norms do not cover the alternative
remittance systems (ARS) such as informal alternative remittance system or
ethnic alternative remittance system or underground banking or hundi as BB
including other banks and capital market cannot regulate them.333 The
government of Bangladesh may take initiative to prevent such type of
remittance system by adopting formal alternative remittance system.
4.4.4 Governmental Interference

The government of Bangladesh legalising the undisclosed sums of money that
is off the books envisages a payment of a flat penalty at the rate of 10 percent.
However, there is a multi-layered tax slabs under the tax laws of Bangladesh.
This facility of making black money white is likely to take effect in the
economy of Bangladesh, despite strong reservations of the various bodies
representing the business community. Furthermore, it is a serious question
332
International Finance Investment and Commerce Bank Limited (IFIC), Head Office, Dhaka,
Bangladesh “Guidelines on Prevention of Money Laundering,” (June 2006).
Available at <http://www.ificbank.com.bd GUIDELINES%20ON%20PREVENTION% 20OF%
20MONEY%20LAUNDERING.pdf> Accessed on 10 May 2014.
333
173
how exactly does the government intend to legalise ill-gotten money as a
signatory state of different international AML statutes. The undisclosed sums
are commonly associated with corruption, crime or other illegal activities. 334
Negotiation could play an important role to solve the aforesaid dispute.
The dispute may be solved outside the court or by following other than the
judicial procedure or by negotiation with the government authority on case to
case basis with charging penalties to avoid any kind of social, cultural,
political, and economic impact.
4.4.5 Improper Endorsement

People are moving from one place to another and one country to another for
work, business or profession, medical treatment, tourism, and for other
necessities. During the time of traveling, it is usual for some people to carry
excess money without the consent of proper authority and thereby violating the
rules of customs to meet up personal need, to avoid lengthy procedural
complicacy, and to save time. The government of Bangladesh may take proper
steps to simplify the endorsement procedure to avoid any complicacy.
4.4.6 Tricky Policies

Money launderers are using some tricky policies to launder money by using
false or fake invoice/under invoice/over invoice at the time of opening a Letter
of Credit (LC). The launderers are also using fake accounts and instruments at
the time of money or fund transfer. The use of debit and credit cards in ATM
machines, card cheques, cyber space, online transactions, online bank accounts,
334
Editorial, “Bangladesh’s Legalising Black Money,” The Daily Star, Dhaka (2 June 2012).
174
and electronic payments are also another mode of ML. BB is now under
pressure to detect or to find out the tricky policy and new techniques of ML.
There is a need to add new provisions in existing AML laws of Bangladesh to
prevent the use of tricky policy and new techniques of ML.
4.4.7 Inadequate Reporting

The implementation of existing rules, regulations and laws in practice is a big
challenge for the financial and non-financial institutions and other organs due
to weak legal system and political influences. In many cases, launderer tries to
convince weak regulatory administration by using their laundered money. So, it
is not always easy for a developing country like Bangladesh to check ML and
to take action against all the fictitious transactions. There is a need of support
of legal authorities like BB and government administration to ensure adequate
reporting in order to prevent ML activities and related crimes.
4.4.8 Remittance Flow

A large number of Bangladeshi people are living worldwide for education,
research work, services, professional needs, and business. Most of them are
living abroad with taking prior permission and approval from the legal
authority and the rest are staying illegally. Only in Saudi Arabia, 2.5 million
Bangladeshi people are living among them 1.5 million are staying there without
taking proper approval from the legal authority. The unauthorized expatriates
are sending their earned money from abroad using illegal channels.335 To solve
the problem government should take effective initiative to legalize those people
who are staying there illegally.
335
Personal interview with Mr. Md. Belal Hossain on 15 July 2013 at Macca, a Bangladeshi origin
hotel business man living at Macca since 1999.
175
4.4.9 Lack of Proof/Evidence

The execution of AML laws and effective preventing measures depends on
proof/evidence. Collecting evidence of corroborative elements with predicate
offences is also necessary to prosecute. However, as per section 7 of the Criminal
Law (Amendment) Act 1958, when any person is charged of possessing pecuniary
resources or property which is disproportionate to his known sources of income,
for which he cannot satisfactorily account, it may be taken as a relevant fact in
deciding whether he is guilty of the particular offence with which he is charged.
4.4.10 Alternative Dispute Resolution (ADR)

Alternative dispute resolution (ADR) includes dispute resolution processes and
techniques that act as a means for disagreeing parties to come to an agreement
short of litigation. 336 The assigned or designated or prescribed law enforcing
organ of the government of India follows the concept of ADR to solve the
disputes related to ML. Generally, they solve their problem outside the court on
case to case basis with charging penalties to avoid any kind of social, political
and economic impacts. A few numbers of disputes in connection with ML
activities go to the court for settlement.337 The government of Bangladesh may
introduce a provision of ADR in AML laws to get a better result in preventing
ML activities in Bangladesh.
336
Also known as external dispute resolution in some countries, such as Australia and India.
337
Personal interview with professor Dr. S. S. Chatterji, Head and Dean, Department of Law,
University of Calcutta at chairman office of the Department of law, University of Rajshahi, Bangladesh
on 7 June 2013.
176
4.5 Conclusion
The Prevention of Money Laundering Act 2012 and the Anti Terrorism Act 2009
(amended in 2012 and 2013) introduced to accomplish the conditions of the Asia
Pacific Group on Money Laundering (APG or APGML), a global organisation
that monitors different countries’ compliance with international AML and
combating TF standards. The AML laws of Bangladesh widened the definition
of ML. The AML laws of Bangladesh have added some provisions to prevent
ML activities and related crimes through any Bangladeshi institution or
individual. At the same time, the AML laws expanded the list of ‘predicate
offence’ through which money or wealth could be laundered at home or abroad.
Terrorism or financing terrorist activities, violation of intellectual property
rights, extortion, environmental crimes, and tax related crimes have also been
included. The new AML laws have also expanded the list of organisations that
must submit reports to the central bank about suspicious transactions.
Bangladesh is a newly active nation at the national and international arena
in preventing or controlling illegal transfer of money or assets at home or abroad
and recovery of the same. Bangladesh needs enabling infrastructure, minimum
expertise and institutional strengths to prevent ML activities and related crimes.
The country is far behind in building ability to derive full supports from the
international bodies. The proceedings of ML related cases inside Bangladesh
takes much longer time in obtaining court verdict required for recovery of assets
from outside the country. The influence of political and business forces are so
177
strong in the country that if they can manage to delay the matter and get a longer
time, in most cases they manage the events in their favour with the change of
government in power. Bangladesh has to find the way for tapping benefit from
all international agencies which are helpful for recovery of assets.
ML is not only a national problems, it is also a global problem and
ought to draw national and global concerns. Both the national and international
nature of ML requires domestic and international law enforcement cooperation
to successfully investigate and prosecute the ML activities and related crimes.
The existing AML laws of Bangladesh are not adequate to prevent proliferation
of money laundering in Bangladesh. There is a need of international
cooperation among judicial and law enforcement authorities, and also charging
on penalties against launderers to prevent or control ML in Bangladesh.

Chapter Five
Implementation of Anti Money Laundering Laws in
Bangladesh
5.1 Introduction
The government of Bangladesh has started to improve the preventing measures
of ML through getting membership of the Asia Pacific Group on Money
Laundering (APGML) in 1997. Later on, the government of Bangladesh enacted
the Anti-Money Laundering Act 2002 which was repealed by the Money
Laundering Prevention Act 2009. Further, the government of Bangladesh
enacted the Money Laundering Prevention Act 2012, repealing the Money
Laundering Prevention Act 2009, and also enacted the Anti Terrorism Act 2009
(amended in 2012 and 2013) to meet the international standards in preventing
ML and Terrorist Financing (TF). In 2007, the government of Bangladesh
recognized the Central Bank’s Anti-Money Laundering Department (AMLD) as
the country’s official Financial Intelligence Unit (FIU). The government of
Bangladesh has taken effective AML measures in different sectors, particularly
in the banking and non-banking financial institutions, securities market and
insurance sectors through issuing guidelines i.e., “Guidance Notes on Prevention
of Money Laundering and Terrorist Financing” and “Guidelines on Prevention of
Money Laundering & Combating Financing of Terrorism for Capital Market

179
Intermediaries”, Bangladesh Financial Intelligence Unit (BFIU) of Bangladesh
Bank (BB) in 2012 and 2013 respectively. At the same time, the FATF
encourages Bangladesh to address its remaining deficiencies and continue the
process of implementing its action plan.
This chapter discusses the role of governmental institutions engaged in
implementation of the provisions of AML laws, circulars and guidelines with a
view to preventing ML activities and associated crimes in Bangladesh. This
chapter deals with both of their operational and functional frameworks. The
obstacles and challenges faced in implementation by the concerned authority or
institutions engaged in preventing ML activities and related crimes in
Bangladesh are also focused in this chapter.
5.2 Administrative Rules and Guidelines for Banks/FIs of

Bangladesh
The process of ML is very dynamic and ever evolving. The money launderers
are inventing more and more complicated and sophisticated procedures and
using new technology for laundering money. To address these emerging
challenges, the global community has taken various initiatives against ML. In
accordance with international initiatives, the BB also introduced guidelines/
policies338 for the following purposes:
338
Under the Money Laundering Prevention Act 2012 (Act No.05 of 2012) and the Anti Terrorism Act
2009 (amended in 2012 and 2013) (Act No.16 of 2009).
180
i) Appointment of Compliance Officer
ii) Customer Identification
iii) Employee Identification
iv) Compliance Programme
v) Record Keeping
vi) Control Mechanism
vii) Training and Awareness
5.2.1 Appointment of Compliance Officer
The financial sector plays an important role in the economy of Bangladesh. The
government of Bangladesh has taken different initiatives to prevent ML
activities through banks or Financial Institutes (FIs). To ensure AML
compliance programme every banks or FIs formed two committees:
i) Central Compliance Unit (CCU) and
ii) Branch Compliance Unit (BCU).
5.2.1.1 Central Compliance Unit (CCU)

The CCU is formed under the leadership of a high official of each banks/FIs at
their Head Office to arrange for internal monitoring and control. In order to
accomplish properly the jurisdiction and function of the CCU, each financial
institution will determine institutional strategy and programme. The CCU
issues instructions for their branches. These instructions prepare on the basis of
combination of issues in monitoring of transactions, internal control, policies

181
and procedures from the point of view of preventing ML. The CCU is
responsible and dedicated solely to banks or FIs to perform their compliance
functions.339 The following responsibilities belong to CCU:
 to prepare an overall assessment report after evaluating the self assessment
reports received from the branches and to submit it with comments and
recommendations to the chief executive of the banks or FIs;
 to prepare an assessment report on the basis of the submitted checklist
of inspected branches by the Internal Audit Department on that
particular quarter; and
 to submit a half-yearly report to the BFIU within 60 days after the end
of that particular half-year.340
The CCU is headed by the Chief Anti-Money Laundering Compliance
Officer (CAMLCO). The CAMLCO is appointed by banks or FIs at each of
their head office to implement and enforce AML policies, procedures and
measures. The CAMLCO reports directly to the Chief Executive Officer/
Managing Director from time to time about his/her activities. The CAMLCO is
also responsible to coordinate and monitor day to day compliance with
applicable AML related laws, rules and regulations as well as with its internal
policies, practices, procedures and controls. The designated CAMLCO, directly
or through CCU, is a central point of contact for communicating with the
339
340
Ibid.
182
regulatory and/or investigation agencies regarding issues related to financial
institution’s AML programme. The position of the CAMLCO is not below the
third rank in seniority in organisational hierarchy. The CAMLCO is
experienced with working knowledge of the diverse financial products offered
by the financial institutions. The person also obtains relevant financial
institutional and compliance experience as an internal auditor or regulatory
examiner, with exposure to different financial institutional products and
businesses. Product and financial institutional knowledge could be obtained
from being an external or internal auditor, or as an experienced operational
staff. The CAMLCO should have a minimum of seven years of working
experience, with a minimum of three years at a managerial/administrative level.
Each financial institution prepares a detailed specification of the role and
obligations of the CAMLCO. Depending on the scale and nature of the
financial institution the designated CAMLCO may choose to delegate duties or
rely on suitably qualified staff for their practical performance whilst remaining
responsible and accountable for the operation of the designated functions. The
CAMLCO is responsible for the following works: 341
 to monitor, review and coordinate application and enforcement of the
financial institution’s compliance policies including AML compliance
policy. This compliance policy will include an AML risk assessment,
practices, procedures and controls for account opening, KYC procedures
341
183
and ongoing account/transaction monitoring for detecting suspicious
transaction/account activity, and a written AML training plan;
 to monitor changes of laws/regulations and directives of the BB and
revise its internal policies accordingly;
 to respond to compliance questions and concerns of the staff and advise
regional offices/branches/units and assist in providing solutions to
potential issues involving compliance and risk;
 to ensure that the financial institution’s AML policy is complete and up-
to-date, to maintain ongoing awareness of new and changing business
activities and products and to identify potential compliance issues which
considered by the financial institution;
 to develop the compliance knowledge of all staff, especially the compliance
personnel and conduct training courses in the institution in this regard;
 to develop and maintain ongoing relationships with regulatory authorities,

external and internal auditors, regional/branch/unit heads and compliance
resources to assist in early identification of compliance issues;
 to assist in review of control procedures in the financial institution to

ensure legal and regulatory compliance and in the development of
adequate and sufficient testing procedures to prevent and detect
compliance lapses;
 to monitor the business through self-testing for AML compliance and

take any required corrective action;
 to manage the Suspicious Transaction Report (STR)/ Suspicious
Activity Report (SAR) process;

184
 to review transactions referred by divisional, regional, branch or unit
compliance officers as suspicious;
 to review the transaction monitoring reports (directly or together with
account management personnel);
 to ensure that internal Suspicious Activity Reports (SARs);
 to reflect the uniform standard for suspicious activity involving possible
money laundering or terrorist financing established in its policy;
 to accompany by documentation of the branch’s decision to retain or
terminate the account as required under its policy;
 to advise to other branches of the institution who are known to have a
relationship with the customer;
 to report to the Chief Executive Officer, and the Board of Directors of
the institution when the suspicious activity is judged to represent
significant risk to the institution, including reputation risk;
 to ensure a documented plan of corrective action, appropriate for the
seriousness of the suspicious activity, be prepared and approved by the
branch manager;
 to maintain a review and follow up process to ensure that planned
corrective action, including possible termination of an account, be taken
in a timely manner; and
 to manage the process for reporting suspicious activity to the BFIU after
appropriate internal consultation.

185
5.2.1.2 Branch Compliance Unit (BCU)
The Branch Anti-Money Laundering Compliance Officer (BAMLCO) is
appointed by banks or FIs at each of their branches. The BAMLCO is a second
man of a branch and have a minimum three year experience in related field.342
The responsibilities of a BAMLCO are as follows:
 to manage the transaction monitoring process;

 to report any suspicious activity to Branch Manager, and if necessary to
the CAMLCO;
 to provide training to branch staff;
 to communicate to all staffs in case of any changes in national or its own
policy; and
 to submit branch returns to CAMLCO timely.
5.2.2 Customer Identification
The correct and complete identification of a customer is important to keep the
financial sector free from ML activities and related crimes. 343 It is necessary to
collect adequate information up to its satisfaction about the customer’s identity
and underlying purpose of establishing relationship with the banks or FIs.344
342
343
A customer is defined as: any person or institution maintaining an account of any type with a bank or
financial institution or having banking related business; the person or institution as true beneficial
owner in whose favour the account is operated; the trustee, intermediary or true beneficial owner of
the transaction of the accounts operated by the trust and professional intermediaries (such as
lawyer/law firm, chartered accountant, etc) under the existing legal infrastructure. Anti Money
Laundering (AML) Circular No.24 dated 3 March 2010 (BB, Head Office, Dhaka).
344
186
The conduct of Customer Due Diligence (CDD) is also important to protect
banks or FIs from the risks of ML by customers’ willful or unwilling activities.
The CDD follows the following criteria:
5.2.2.1 Know Your Customer (KYC)
Know Your Customer (KYC) programme is an essential part of a bank or FI.
The correct and sufficiently verified information about a customer is the most
effective defense against ML activities. However, inadequate KYC programme
may be subject to significant risks, especially legal and reputation risk. Sound
KYC policies keep the banks or FIs safe and sound, and also protect the
integrity of its system by reducing ML, TF and other related offences.
It is required for all reporting agencies to maintain correct and concrete
information with regard to identity of its customer during the operation of their
accounts.345 If the financial institution is unable to identify the customer and
verify that customer’s identity using reliable, independent source documents,
data or information, and to identify the beneficial owner, and to take reasonable
measures to verify the identity of the beneficial owner and unable to obtaining
information on the purpose and intended nature of the business relationship, it
should not open the account, commence business relations or perform the
transaction; or should terminate the business relationship; and should consider
making a STRs report in relation to the customer.346 When a business
relationship is being established, the nature of the business that the customer
345
The Money Laundering Prevention Act, 2012 (Act No. 05 of 2012), Sec-25(1)
346
The Anti Terrorism Act, 2009 (Act No. 16 of 2009). Sec-15(1)
187
expects to conduct with the institution should be ascertained at the outset to
establish what might be expected later as normal activity. This information
should be updated as appropriate, and as opportunities arise. The banks or FIs
need to have a clear understanding of the business carried out by their
customers to judge whether a transaction is or is not suspicious.
5.2.2.2 Identifying Real Person
Identifying real person is important to prevent ML and related crimes through
banks or FIs. The banks or FIs has to establish to its satisfaction that it is
dealing with a real person (natural, corporate or legal), and must verify the
identity of persons who are authorized to operate any account, or transact
business for the customer. Personal interview is important for the prospective
customer to safeguard against opening of fictitious account. The best
identification documents possible should be obtained from the prospective
customer i.e. those that are the most difficult to obtain illicitly. No single piece
of identification can be fully guaranteed as genuine, or as being sufficient to
establish identity so verification will generally be a cumulative process. The
overriding principle is that every FI must know who their customers are, and
have the necessary documentary evidence to verify this. Collection of
document is not enough for KYC; identification is very important.347
347
188
5.2.2.3 Customer Acceptance Policy
The banks or FIs needs to develop a clear customer acceptance policy and
procedures, laying down explicit criteria for acceptance of customers including a
description of the types of customer that are likely to pose a higher than average
risk to a financial institution. In preparing such policies, factors such as
customers’ background, country of origin, public or high profile position, linked
accounts, business activities or other risk indicators should be considered. It is
important that the customer acceptance policy is not so restrictive, that it results
in a denial of access by the general public to financial services, especially for
people who are financially or socially disadvantaged. On the other hand, quite
extensive due diligence would be essential for an individual with a high net
worth whose source of funds is unclear. Decisions to enter into business
relationships with higher risk customers, such as public figures or politically
exposed persons should be taken exclusively at senior management level. The
customer acceptance policy has to ensure that explicit guidelines are in place on
the following aspects of customer relationship in the financial institution: 348
i) No account should be opened in anonymous or fictitious name.
ii) Parameters of risk perception should be clearly defined in terms of the
source of fund, the nature of business activity, location of customer and
348
189
his clients, mode of payments, volume of turnover, service offered,
social and financial status etc. to categorize customers into different
risk grades.
iii) It is important to collect documents and other information in respect of
different categories of customers depending on perceived risk.
iv) Not to open an account or close an account where the financial institution
is unable to apply appropriate customer due diligence measures i.e.
financial institution is unable to verify the identity and/or obtain
documents required as per the risk categorization due to non cooperation
of the customer or non reliability of the data/information furnished to the
financial institution. Decision by a financial institution to close an account
should be taken at a reasonably high level after giving due notice to the
customer explaining the reasons for such a decision.
v) Circumstances are important when a customer gets permission to act on
behalf of another person/entity or operate by a mandate holder or where
an account is opened by an intermediary in fiduciary capacity. There
should be clearly spelt out in conformity with the established law and
practices of financial service.
vi) Necessary checks before opening a new account to ensure that the
identity of the customer does not match with any person with known
criminal background or with banned entities such as individual terrorists
or terrorist organisations etc.

190
vii) The status of a customer may change as relation with a customer
progresses. The transaction pattern, volume of a customer’s account
may also change. With times an ordinary customer can turn into a
risky one. To address this issue, customer acceptance policy should
include measures to monitor customer’s activities throughout the
business relation.
5.2.2.4 Appropriateness of Documents
Appropriate documentation is necessary for verifying the identity of a
customer. Generally identity means a set of attributes which uniquely define a
natural or legal person (an individual, corporate body, and partnership etc).To
identify or to verify a person one or more information or document is required
from the following criteria or documents: 349
i) Correct name and/or names,
ii) Parent’s names,
iii) Spouse name,
iv) Date of birth,
v) Current and permanent addresses,
vi) Details of occupation/employment and sources of wealth or income,
vii) Contact information, such as–mobile/telephone number,
viii) Birth Certificate,
349
Anti Money Laundering (AML) Circular No.02 and 03 dated 17 July 2002 and 10 December 2002
respectively (BB, Head Office, Dhaka).
191
ix) TIN/VAT Registration,
x) Current valid passport,
xi) Valid driving license,
xii) National ID Card,
xiii) Employer provided ID Card, bearing the photograph and signature
of the applicant,
xiv) Provision of a recent utility bill, tax assessment or bank statement
containing details of the address (to guard against forged copies, it
is strongly recommended that original documents are examined);
xv) Checking the voter lists,
xvi) Checking the telephone directory,
xvii) Visiting home/office, and
xviii) Sending thanks letter.
The above information or documents are necessary to demonstrate that a
person of that name exists at the address given, and that the applicant is that
person. There is obviously a wide range of documents which might be provided
as evidence of identity. It is important for banks or FIs to decide the
appropriateness of any document in the light of other procedures adopted.
However, particular care should be taken in accepting documents which are
easily forged or which can be easily obtained using false identities.

192
5.2.2.5 Introducer
An introducer plays an important role to identify the customer and to verify
his/her identity. An introduction from a respected customer, personally known
to the management, or from a trusted member of staff, may assist the
verification procedure but does not replace the need for verification of address
as set out above. Details of the introduction need to be kept as a record on the
customer’s file. However, personal introductions without full verification
should not become the norm, and directors/senior managers must not require or
request staff to breach account opening procedures as a favor to an applicant.350
5.2.3 Employee Identification

Employee identification is a primary duty of a bank or FI to prevent ML
activities. Institutions and businesses learn at great expense that an insider can
pose the same ML threat as a customer. It has become clear in the field that
having co-equal programmes to know your customer and to know your
employee is essential. In an effort to identify and anticipate trouble before it
costs time, money and reputational damage, banks or FIs should develop
programme to look closely at the people inside their own organisations.351
5.2.3.1 Appointment of Employee
One of the major purposes of preventing ML activities is to protect the banks or
FIs from risks arising out of ML. To meet this objective, banks or FIs shall
350
351
Ibid.
193
have to undertake proper screening mechanism in their different appointment
procedures so that they do not face ML risks from any of their staff. To ensure
proper compliance of ML activities each bank or FI shall arrange suitable
training for their officials. Banks/ FIs shall respond to customers on different
matters including KYC. Financial Institutions shall from time to time distribute
leaflets among customers to make them aware about ML and also arrange to
stick posters in every branch at a visible place.
5.2.3.2 Know Your Employee (KYE)
The good will of a bank/FI depends on its employee, services, transparency and
integrity. A good employee selection is an important task of a bank or FI. Know
Your Employee (KYE) programme helps to select an employee. KYE
programme means that the institution has a programme in place that allows it to
understand an employee’s background, conflicts of interest and susceptibility to
ML complicity. Policies, procedures, internal controls, job description, code of
conduct/ethics, levels of authority, compliance with personnel laws and
regulations, accountability, dual control, and other deterrents should be firmly in
place. Background screening of prospective and current employees, especially
for criminal history, is essential to keep out unwanted employees and identifying
those to be removed. It can be an effective risk management tool, providing
management with some assurance that the information provided by the applicant
is true and that the potential employee has no criminal record. Used effectively,
the pre-employment background checks may reduce turnover by verifying that

194
the potential employee has the requisite skills, certification, license or degree for
the position; deter theft and embezzlement; and prevent litigation over hiring
practices. An institution should verify that contractors are subject to screening
procedures similar to its own. The sensitivity of the position or the access level
of an individual employee may warrant additional background screening, which
should include verification of references, experience, education and professional
qualifications. The extent of the screening depends on the circumstances.352
5.2.3.3 Responsibilities of Employee
The employees of a bank/FI are responsible in different functions of the
institute. The responsibilities of an employee are discussed below: 353
 Account officer is responsible to perform due diligence on prospective
clients prior to opening an account, to be diligent regarding the
identification (s) of account holder and the transactions relating to the
account, to ensure all required documentation is completed
satisfactorily, to complete the KYC profile for the new customer,
ongoing monitoring of customers KYC profile and transaction activity,
and to escalate of any suspicion to the Branch Manager or BAMLCO.
 Customer service officer is responsible to support the account officer in any
of the above roles and perform the account officer roles in his absence.
352
353
Ibid, pp. 29-31.
195
 Operations staff is responsible to ensure that all control points are completed
prior to transaction monitoring; to be diligence on transaction trends for
clients; and to update customer transaction profiles in the ledger/system.
 Branch Manager (Unit Head) is responsible to ensure that the
programme is effective within the branch/unit, and first point of contact
for any issues.
 Risk Management or Credit Officer or Internal Control Officer is
responsible to perform risk assessment for the business, to perform
periodic quality assurance on the programme in the unit, and to
communicate updates in laws and internal policies.
 Operations and Technology Manager is responsible to ensure that the
required reports and systems are in place to maintain an effective
programme.
 Branch Manager or Controller of branches is overall responsible to
ensure that the branches have a programme in place and that it is
working effectively, and
 Chief Executive Officer (CEO) is overall responsible to ensure that the
Business has an AML programme in place and it is working effectively.
5.2.4 Compliance Programme
Compliance programme is also important for a bank/FI to administer and
maintain its own AML policy including record keeping and reporting
196
requirements. Banks/FIs need to establish and to maintain an effective AML
programme that includes at least the followings: 354
i) Development of internal policies, procedures and controls,
ii) Appointment of an AML Compliance Officer,
iii) Ongoing employee training programme and
iv) Independent audit function including internal and external audit function to
test the compliance programme.
The compliance programme should be documented, approved by the
Board of Directors and communicated to all levels of the organisation. In
developing an AML compliance programme, attention should be paid to the
size and range of activities, complexity of operations, and the nature and degree
of ML risks associated with banks/FIs. The statement of compliance policy
should at a minimum include: 355
 A statement that all employees are required to comply with applicable
laws and regulations and corporate ethical standards.
 A statement that all activities carried out by the financial institution must
comply with applicable governing laws and regulations.
 A statement that compliance with rules and regulations is the responsibility
of each individual in the financial institution in the normal course of their

354
355
Ibid, p. 27.
197
assignments. It is the responsibility of the individual to become familiar
with the rules and regulations that relate to his or her assignment. Ignorance
of the rules and regulations cannot be an excuse for non-compliance.
 A statement that should direct to a compliance officer or other
knowledgeable individuals when there is a question regarding
compliance matters.
 A statement that employees will be held accountable for carrying out
their compliance responsibilities.
5.2.5 Record Keeping

Record keeping is an important duty for an employee of a bank/FI. All
documents collected or gathered for establishing relationship needs to fill with
supporting evidence. Where this is not possible, the relevant details should be
recorded on the applicant’s file. Institutions which regularly conduct curiosity
transactions, should record the details in a manner which allows cross reference
to transaction records. To retain correct and full records of customers’
identification and transactions while operating an account of a customer, and to
retain the records of customers’ identification and transactions at least for five
years after closing of relationships with the customers of any financial
institute.356 The records prepared and maintained by any bank/FI on its
customer relationship and transactions should be such that:
 requirements of legislation and the BB directives are fully met,
356
198
 to competent third parties will be able to assess the institution’s
observance of ML policies and procedures,
 to any transactions effected via the institution can be reconstructed,
 to any customer can be properly identified and located,
 to all suspicious reports received internally and those made to
Bangladesh Bank can be identified, and
 the institution can satisfy within a reasonable time any enquiries or
court orders from the appropriate authorities as to disclosure of
information.
5.2.5.1 Retrieval of Records
To satisfy the requirements of law and to meet the purpose of record keeping, it
is important that records are capable of retrieval without undue delay. It is not
necessary to retain all the documents relating to customer identity and
transaction physically at the premises of the branch of a financial institution,
provided that they have reliable procedures for keeping the hard copy at a
central archive, holding records in electronic form, and that can be reproduced
and recollected without undue delay. It is not always necessary to retain
documents in their original hard copy form, provided that the firm has reliable
procedures for holding records in microchips or electronic form, as appropriate,
and that these can be reproduced without undue delay.

199
5.2.5.2 STR and Investigation
Where a bank or FI has submitted a report of suspicious transaction to BFIU or
where it is known that a customer or any transaction is under investigation, it
should not destroy any records related to the customer or transaction without the
consent of the BFIU or conclusion of the case even though the five-year limit may
be elapsed. To ensure the preservation of such records the financial institutions
should maintain a register or tabular records of all investigations and inspection
made by the investigating authority or BB and all disclosures to the BFIU.357 The
register should be kept separate from other records and contain as a minimum
the following details:
i) the date of submission and reference of the STR/SAR;

ii) the date and nature of the enquiry;
iii) the authority who made the enquiry, investigation and reference; and
iv) details of the account(s) involved.
5.2.5.3 Training Records
Training is necessary for an employee of a bank/FI. At the same time, it is
necessary to keep record of that traing programme. Banks/FIs comply with the
regulations concerning staff training, and they also maintain training records
which include: details of the content of the training programmes provided, the
names of staff who have received the training, the date/duration of training, the
results of any testing carried out to measure staffs understanding of the
requirements, and an on-going training plan.

357
200
5.2.5.4 Branch Level Record Keeping
Branch level record keeping is necessary to ensure the effective monitoring and
demonstrate their compliance with the concerned regulations. Banks or FIs
have to keep the following records at the branch level either in hard form or
electronic form to ensure the preventing measures of ML:
i) Information regarding Identification of the customer,
ii) KYC information of a customer,
iii) Transaction report,
iv) Suspicious Transaction/Activity Report generated from the branch,
v) Exception report,
vi) Training record,
vii) Return submitted or information provided to the Head Office or

competent authority.
5.2.5.5 Sharing of Records
Account related information is necessary from banks/FIs to investigate the said
account related cases. Banks/FIs shall not share account related information to the
investigating authority, the ACC or person authorised by the ACC, to investigate
the said cases without having court order or prior approval from the BB.358
5.2.6 Control Mechanism

The compliance programme also relies on the variety of internal controls,
including management report, built-in safeguards and exception report that

358
201
keep the programme working. The following elements need to be included for
operational controls of any policy: 359
 statement of responsibility for compliance with policy,
 customer due diligence,
 customer identification/verification,
 additional know your customer information,
 high risk customers,
 non face to face business (if applicable),
 handling of politically exposed persons,
 monitoring for suspicious transaction/activity,
 cooperation with the authorities,
 record keeping,
 screening of transactions and customers,
 training and awareness, and
 adoption of risk management practices and use of a risk-based
approach.
5.2.7 Training and Awareness Programme

The importance of a successful training and awareness programme cannot be
overstated. Employees in different business functions need to understand how
the financial institution’s policy, procedures, and controls affect them in their
day to day activities. According to AML circulars, each bank/FIs shall arrange
359
202
suitable training for their officials to ensure proper compliance of ML prevention
activities. A general training programme should include the following:360
 general information on the risks of ML scheme, methodologies, and

typologies,
 legal framework, how AML related laws apply to banks/FIs and their
employees,
 institution’s policies and systems with regard to customer identification and

verification, due diligence and monitoring,
 how to react when faced with a suspicious client or transaction,
 how to respond to customers who want to circumvent reporting

requirements,
 stressing the importance of not tipping off clients,
 suspicious transaction reporting requirements and processes, and
 duties and accountabilities of employees.
The person responsible for designing the training needs to identify which, if any,
of these topics relate to the target audience. Effective training should present real
life ML schemes, preferably cases that have occurred at the institution or at
similar institutions, including, where applicable, how the pattern of activity was
first detected and its ultimate impact on the institution. Staff of a bank/FI must be
aware of their own personal statutory obligations and that they can be personally
360
203
liable for failure to report information in accordance with internal procedures.
All staff must be trained to co-operate fully and to provide a prompt report of
any suspicious transactions/activities. It is, therefore, important that financial
institutions introduce comprehensive measures to ensure that all staff and
contractually appointed agents are fully aware of their responsibilities.
5.3 Anti Money Laundering Instruments

ML is a fairly new concept in Bangladesh. The AML instruments are playing
an effective role to prevent ML activities and related crimes since 2002, after
passing the AML laws in Bangladesh. The AML instruments may be discussed
on the basis of their functions. These are stated below:
i) Administrative Mechanism and
ii) Judicial Mechanism
5.3.1 Administrative Mechanisms

The government of Bangladesh has taken various steps to prevent ML activities
and associated crimes in Bangladesh. The following institutes and organs are
working together in preventing ML activities in Bangladesh:
i) Bangladesh Bank,
ii) Anti-Corruption Commission (ACC),
iii) Ministry of Finance (MoF) and
iv) Ministry of Home Affairs and
v) Attorney General Office

204
5.3.1.1 Bangladesh Bank
Bangladesh Bank (BB) was established as an independent organization
according to the Bangladesh Bank Order, 1972 (P.O. No. 127 of 1972) in
Dhaka and was effective from 16 December 1971. It is the central bank and
main regulatory body for the financial and monetary system of Bangladesh. It
has nine offices located at different divisions of the country among which two
at Motijheel and Sadarghat of the capital city Dhaka, two in Rajshahi division
namely Bogra and Rajshahi and one in each of the rest five divisions namely
Chittagong, Khulna, Sylhet, Barisal and Rangpur. The BB is basically
responsible for all the core functions that are done by all the monetary and
financial sector regulators. The BB is also responsible for some other
supporting functions.361 These are stated below:
 To formulate and implement monetary and credit policies.
 To regulate, supervise and monitor financial intermediaries like banks
and non-bank financial institutions.
 To issuance of currency and circulation across the country.
 To regulate, monitor and manage the payment system.
 To hold and manage the Foreign Exchange (FX) reserve of the country.
 To create committed Bankers to the Government.
 To prevent ML activities and resultant crimes.
 To implement Foreign Exchange Regulation Act 1947.
 To preserve all credit information.
361
Mohammad Jahid Iqbal, ‘Banking Sector’s Performance in Bangladesh-An Application of Selected
Camels Ratio’ Asian Institute of Technology School of Management, Thailand (May 2012). Available
at <www.pmbf.ait.asia/sites/default/files/report/report_jahidiqbal.pdf.> Accessed on 25 March 2014.
205
Besides these functions, the BB is also responsible for asset classification,
loan concentration, setting up single borrower exposure limit, licensing to the
new bank and branch, impose penalty for non-compliances, intervention in the
management for assistance if any bank face difficulties, prepare guidelines and
issuance directives regarding banking operation, guidelines for core risk
management, publication of different economic review etc. Needless to say,
banking sector plays an important role in the economic development of a
country. Especially for Bangladesh, a sound and efficient banking system is one
of the most important preconditions to achieve economic development.362
The BB is responsible for the banking supervision in Bangladesh. The
Bank’s affairs and business is controlled by a Board of Directors, made up of nine
members, including the Governor, Deputy Governor, three government officials
and four persons with advanced banking, commerce and finance experience. The
Bank and Financial Institutions Division of Ministry of Finance exercises control
over the state controlled banks through appointment/ nomination of the Board of
Directors, although they are under the supervisory purview of the BB. The BB
supervises all the commercial banks as per instructions given in the Bank
Company Act 1991 in conjunction with the Bangladesh Bank Order 1972.363
362
Camels Ratio’ Asian Institute of Technology School of Management, Thailand (May 2012). Website:
<www.pmbf.ait.asia/sites/default/files/report/report_jahidiqbal.pdf.> Accessed on 25 March 2014.
363
The Bangladesh Bank Order, 1972 (President Order No.20, 1972). Art-7A (f), and the Bank
Company Act (BCA), 1991 (Act No. XIV of 1991). Sec- 44.
206
Currently there are 47 banks operating in Bangladesh. Of them 4 are State
Controlled Banks, 4 are Development Financial Institutions, 30 Private
Commercial Banks and 9 Foreign Commercial Banks. The BB, being the central
bank is the main supervisory authority of banking sector. 364
The following seven banks and one financial institute in Bangladesh
have been fined in 2013 by the BB for not keeping client affidavits and also for
not informing authorities of suspicious transaction in time.365
i) Islami Bank Bangladesh Limited (IBBL) BDT Tk.20,00,000/-
ii) Premier Bank Limited BDT Tk.20,00,000/-
iii) BRAC Bank Limited BDT Tk.5,00,000/-
iv) Mercantile Bank Limited BDT Tk.4,00,000/-
v) Dutch Bangla Bank Limited (DBBL) BDT Tk.2,00,000/-
vi) South East Bank Limited BDT Tk.2,00,000/-
vii) Janata Bank Limited BDT Tk.2,00,000/-and
viii) Bangladesh Investment Finance Corporation (BIFC) BDT Tk.1,00,000/-
5.3.1.2 Anti-Corruption Commission (ACC)
The Anti Corruption Commission (ACC) was formed on 23 February 2004
through the enactment of the Anti Corruption Commission Act 2004 and came
into force on 9 May 2004. Although initially, it could not make the desired
impact, but immediately following its reconstitution in February 2007, the

364
Camels Ratio’ Asian Institute of Technology School of Management, Thailand (May 2012). Website:
<www.pmbf.ait.asia/sites/default/files/report/report_jahidiqbal.pdf.> Accessed on 25 March 2014.
365
Website: <bdnews24.com published on 02 December 2014> Accessed on 15 December 2014.
207
ACC began working with renewed vigor and impetus duly acceding to the
United Nations Convention against Corruption. The ACC is mandated as
independent, self-governed and neutral entity. It consists of three
commissioners; of them one as the chairman and all appointed by the President
for a tenure of four years from the date of their appointment. While the
commissioners function on full-time basis loses eligibility for reappointment on
expiry of the term in their office. ML offences investigating authority is only
ACC or the authorized persons on behalf of the ACC.366
5.3.1.3 Ministry of Finance (MoF)
The Finance Division coordinates with the Ministry of Law, Justice and
Parliamentary Affairs concerning Anti Money Laundering Laws (AML)/
Counter Financing and Terrorism (CFT) laws including drafting regulations to
the Money Laundering Prevention Order 2008 and the Money Laundering
Prevention Act 2012.
5.3.1.4 Ministry of Home Affairs
To facilitate exchange of information and intelligence among FIUs, Bangladesh
FIU has already signed 16 (Sixteen) MoUs with other FIUs. The MoUs with
other FIUs are conducted by the Ministry of Home Affairs and Attorney General
Office. To provide guidance for effective implementation of regime, a National
Coordination Committee headed by the Honorable Finance Minister and a
Working Committee headed by the secretary of Bank and Financial Institutions
Division of Finance Ministry were formed consisting of representatives from all

366
208
regulatory authorities, namely, Home Ministry, National Board of Revenue
(NBR), Anti-Corruption Commission (ACC), Bangladesh Bank (BB) and
Bangladesh Securities and Exchange Commission etc.
5.3.1.5 Attorney General Office
The Attorney General’s Office, may confiscate or return any property situated
in Bangladesh in order to comply with an order made by a court of a foreign
State under a contract; similarly the Attorney General’s Office may make a
request to a foreign State for the purpose of complying with an order passed by
a court in Bangladesh for confiscation or return of property under a contract or
memorandum of understanding. Notwithstanding anything contained in any
other law, any documents received from the appropriate authorities of any
foreign State under the scope of mutual legal assistance, shall be admissible as
evidence before the relevant court.367
5.3.2 Judicial Mechanisms

Judicial mechanism is an important part to prevent proliferation of money
laundering in Bangladesh. Judicial mechanism may be discussed in two ways:
i) Judicial Procedure and
ii) Law Enforcement Agency
5.3.2.1 Judicial Procedure
The effective judicial procedure may play a vital role in preventing ML. The
following procedures are being maintained to prevent ML in Bangladesh:
367
The Money Laundering Prevention Act, 2012 (Act No. 05 of 2012). Sec-26(4)(5).
209
i) ML activities and related offences are cognizable, non-compoundable

and non-bailable.368 At the same time, the terrorism activities are also
cognizable and non-bailable.369
ii) Predicate offences considered as ML offences under the Money

Laundering Prevention Act 2012. Any individual may provide
information to file First Information Report (FIR) about ML and
related occurrence to the police station.370
iii) The investigating authority of such offences is only the ACC or the
authorized persons of the ACC. 371
Money Laundering Court
The Special Judge presides over the court to settle the ML cases.372 To fulfill
the objectives of the Money Laundering Prevention Act (MLPA) 2012, all
courts of sessions are regarded as ML court and all Session Judges are to be the
justice of money laundering court. Session Judge may settle all cases under the
MLPA, 2012 himself or he may send the case to any additional Session Judge
under him for settlement.373
Tribunal
The Session Judge or Additional Session Judge will preside over the Tribunal
and follow the procedure prescribed in chapter 23 of the CrPC if within the
territorial jurisdiction which declared during the composition of the Tribunal.374
368
369
The Anti Terrorism (Amendment) Act, 2012 (Act No. 06 of 2012). Sec-39(1)(2).
370
The Code of Criminal Procedure 1898(CrPC) (Act No. V of 1898). Sec-154.
371
372
The Money Laundering Prevention Act, 2012 (Act No. 05 of 2012), Sec(10).
373
The Criminal Law Amendment Act, 1958 (Act No. XL of 1958).Sec-3.
374
The Anti Terrorism (Amendment) Act, 2012 (Act No. 06 of 2012). Sec-27(1).
210
Special Tribunal
The Special Tribunal may be established for special purpose (where the territory
will be fixed) with the consultation of the Supreme Court, and the Session judge
will preside over the court.375 In case of death sentence taking an approval is
needed from High Court Division of the Supreme Court of Bangladesh.376
Supreme Court of Bangladesh
The Supreme Court of Bangladesh is the highest court of law in Bangladesh. It is
composed of the High Court Division and the Appellate Division, and was
created by Part VI Chapter I of the Constitution of Bangladesh adopted in 1972.
The High Court Division hears appeals from lower courts and tribunals. It has
also original jurisdiction in certain limited cases, such as writ applications under
article 102 of the Constitution of Bangladesh, and company and admiralty
matters. The Appellate Division has jurisdiction to hear appeals from the High
Court Division. The Supreme Court is independent of the executive branch, and
is able to rule against the government in politically controversial cases. Appeal
will be allowed to High Court Division of the Supreme Court of Bangladesh
against the judgment of the Tribunal in ML and related cases within 30 days.377
5.3.2.2 Law Enforcing Agency
The following organs or institutes are acting as law enforcement authority in
preventing ML activities in Bangladesh:
i) Bangladesh Financial Intelligence Unit (BFIU) of Bangladesh Bank
375
The Anti Terrorism (Amendment) Act, 2012 (Act No. 06 of 2012). Sec-28(1)(2).
376
Ibid.,Sec-31(2).
377
The Anti Terrorism (Amendment) Act, 2012 (Act No. 06 of 2012), Sec-31(1).
211
ii) Anti Corruption Commission (ACC)
iii) National Board of Revenue (NBR)
iv) Police Department
v) Border Guard Bangladesh (BGB)
vi) Taxation and Custom Department
i) Bangladesh Financial Intelligence Unit (BFIU) of Bangladesh Bank
The FIU undertakes the role in supervising AML preventative measures.
Financial Intelligent Unit (FIU) was established in Bangladesh Bank (BB) on 16
May 2007 for receiving, analyzing and disseminating Suspicious Transaction
Reports (STRs) related to Money Laundering (ML), Terrorist Financing (TF)
and Cash Transaction Reports (CTRs). Anti Money Laundering Division
(AMLD) is now working as a separate unit in the BB as Financial Intelligence
Unit (BFIU).378 The BFIU has arranged a number of training programs,
workshops, seminars and road-shows to create awareness among the staff of
reporting organizations, regulatory authorities about ML and related issues.
ii) Anti Corruption Commission (ACC)
Anti-Corruption Commission (ACC) is an investigating organization. The Anti
Corruption Commission (ACC) or the authorized persons on behalf of the ACC
is the only ML offences investigating authority in Bangladesh.379 The ACC as a
team, formed in the year 2009, has frequently uncovered operations of ML
activities and related crimes. A Singapore court on 26 February 2013 directed a
378
379
Ibid, Sec- 9(1).
212
consulting firm of the country to return to Bangladesh Tk 8 crore (US $ 9.32
million) siphoned off by BNP chairperson Khaleda Zia’s younger son Arafat
Rahman Koko. Attorney General Mahbubey Alam appeared for the Bangladesh
government at the Court No 10 of Singapore which ordered the laundered money
back. The court order came following a case filed with it by Bangladesh’s Anti-
Corruption Commission (ACC) in 17 March 2009. Koko laundered the money to
Singapore in 2004-2006 and deposited it with Fairhill Consulting Limited, a firm
set up in the Southeast Asian country by Koko when the BNP-led four-party
alliance was in power in 2001-2006. This is the second money laundering case in
which the Bangladesh government has got the verdict in its favour. In November
2012, the ACC brought back around 20.41 lakh Singapore dollars (BDT Tk 13
crore) laundered by Koko and his associate. Then the money was transferred to
Sonali Bank’s Ramna corporate branch from Singapore on 23 November 2012.
It is mentionable here that the ACC opened an account titled, ‘Stolen Asset
Recovery Account’ with Sonali Bank to receive the amount in 2011.380
iii) National Board of Revenue (NBR)
The National Board of Revenue (NBR) is the taxation and customs authority of
Bangladesh formed under the National Board of Revenue Order, 1972-
President’s Order No.76 of 1972. The NBR is the central authority for tax
administration in Bangladesh. Administratively, it is under the Internal
Resources Division (IRD) of the Ministry of Finance (MoF). MoF has 4
380
Available at <news.priyo.com/2012/11/22/politics-63203.html> Accessed on 20 December 2014.
213
Divisions, namely, the Finance Division (FD), the Internal Resources Division
(IRD), the Banking Division (BD) and the Economic Relations Division
(ERD). Each division is headed by a Secretary to the Government. Secretary,
IRD is the ex-officer chairman of the NBR. The NBR is responsible for
formulation and continuous re-appraisal of tax-policies and tax-laws in
Bangladesh. The NBR is also responsible for negotiating tax treaties with
foreign governments and participating in inter-ministerial deliberations on
economic issues having a bearing on fiscal policies and tax administration.
The main responsibility of NBR is to mobilize domestic resources
through collection of import duties and taxes, VAT and income tax for the
government. Side by side with collection of taxes, facilitation of international
trade through quick clearance of import and export cargoes has also emerged as
a key role of NBR. Other responsibilities include administration of matters
related to taxes, duties and other revenue related fees/charges and prevention of
smuggling. Under the overall control of IRD, NBR administers the excise,
VAT, customs and income-tax services consisting of 3434 officers of various
grades and 10195 supporting staff positions. 381 The NBR also tries to track
black money and illegal transaction through taxation and custom intelligence
unit. Bulk cash smuggling cases are being prosecuted under section 16 of The
Customs Act, 1969 and section 8(1) and 8(2) of The Foreign Exchange
Regulation Act, 1947.
381
The National Board of Revenue (NBR). Website: < www.nbr-bd.org> Accessed on 24 August 2014.
214
iv) Police Department
Police Department is administrated by Home Ministry. The Police, Railway
Range, Metropolitan Police, Highway Police and Industrial Police provide
services to all citizens and make Bangladesh a better and safer place to live and
work to uphold the rule of law, to ensure safety and security of citizens, to
prevent and investigate ML and other crimes, to bring offenders to justice, to
maintain peace and public order. However, Bangladesh Army, Border Guard
Bangladesh (BGB), Director General Forces Intelligence (DGFI) National
Security Intelligence (NSI), Rapid Action Battalion (RAB), Coast Guard, Ansar
and Village Defence Party (VDP) are also provided their service to prevent ML
activities and related crimes in addition to their assigned duty to keep peace and
security of Bangladesh.382 However, major units within the police include the
Criminal Investigation Department (CID) consisting of approximately over 1500
staff, Special Branch (Intelligence), Detective Branch (DB), training institutes
and a number of metropolitan and regional police forces. The police officers are
empowered to investigate ML and related crimes under sec 154 of Criminal
Procedure Code (CrPC) of Bangladesh but not below the rank Sub Inspector.383
v) Border Guard Bangladesh (BGB)
The Border Guard Bangladesh (BGB) formerly known as the Bangladesh
Rifles (BDR) is the oldest uniformed force in Bangladesh.384 It is a paramilitary
force under the Ministry of Home Affairs. The BGB is primarily responsible
382
Abdus Sobhan Sikder, Secretary, Ministry of Public Administration Government of Bangladesh,
“Law and Order Maintenance system and Countering Terrorism in Bangladesh,” presented in a
seminar at Civil Service College, Bangladesh on 12 December 2011.
383
The Anti Terrorism (Amendment) Act, 2012 (Act No. 06 of 2012). Sec-29(1).
384
The paramilitary force East Pakistan Rifles (EPR) was renamed Bangladesh Rifles (BDR) after
liberation in 1971. The paramilitary force was further christened Border Guard Bangladesh (BGB)
on 20 December 2010.
215
for the border security of the country, in Bangladesh the force is known as ‘The
Vigilant Sentinels of the National Frontier.’ The BGB as a paramilitary force is
entrusted with the responsibility to defend the 4,427 km border of the country.
It is the first line of defence for the nation. The BGB boasts an illustrious past
with rich traditions and a remarkable military history spanning over two
centuries. During peacetime this force is also responsible for anti-smuggling
operations, investigating cross border crime and extending governmental
authority to remote and isolated areas. From time to time the BGB has also
been called upon to assist the administration in the maintenance of internal law
and order, relief and rehabilitation work after any kind of natural disaster.
During wartime the BGB comes under the control of the Ministry of Defence
as an auxiliary force to Bangladesh Army.385
5.4 Challenges Faced by Governmental Institutions Engaged for

Limitation of Money Laundering Activities in Bangladesh
The government of Bangladesh enacted AML laws and the international
community have taken various steps to prevent ML activities in Bangladesh.
Besides, the launderers are seeking new ways to launder money, and to protect
themselves from national and international AML laws and from their
regulatory system. The launderers are taking benefit of technological
development to conceal their earnings from illegal sources. The governmental
institutions are facing the following challenges to limit ML activities and
related crimes in Bangladesh:
385
Website: <en.wikipedia.org/wiki/Border_Guards_Bangladesh> Accessed on 28 August 2014.
216
5.4.1 Lack of Formal Banking System

The conventional and formal banking systems are not available everywhere in the
world including Bangladesh. The formal banking system is also weak and unsafe
in rural areas of Bangladesh. The procedural complicacy and delays in payment of
remittances is also another lacking in formal banking system. The launderers are
taking advantages of delay service in payment of money of the formal banking in
Bangladesh. They are using alternative way i.e. the underground hundi or hawala
system, to transfer money and valuables outside of the formal banking system.
The greatest use of the hundi or hawala system is to repatriate wages from
expatriate Bangladeshi workers. Although banks have recently increased their
speed and efficiency in making remittances, hundi remains a thriving system due
to its ability to avoid taxes, customs duties and currency controls.386
5.4.2 Lack of Proper Identification

Banks and other FIs is the formal route of money transactions in Bangladesh. It is
a challenging task to detect, and to prevent ML laundering activities in the banking
and other financial sectors. The different fund transfer methods such as credit card,
electronic cash transfer etc. are used by the launderers. It is difficult for the
financial institutions to detect the launderer in such transactions. To detect the ML
activities in the integration process, banks and other FIs are applying KYC policy.
However, launderers look for loopholes in the KYC procedure in order to perform
the integration process. From the regulatory viewpoint success of the KYC
procedure is an important challenge to prevent ML activities. Weak legal system
and political dishonesty remains an important issue to prevent ML activities in

386
Mahfuzur Rahman, Money Laundering Protirodh (3rd ed.; Borna Binnash, Dhaka, 2010). pp. 151-155.
217
Bangladesh. By using laundered money launderers try to convince the weak
regulatory administration of a country. It is not always easy for banks and other
FIs to check and take action against all the fictitious transactions. There is a need
to support from the regulatory authorities like the BB, ACC, and from government
administrations. Therefore, even though enough rules and laws exist, challenges
remain to implement those rules in practice by the banks and other financial and
non-financial institutions of Bangladesh.
5.4.3 Lack of Fund

The cost is an important challenge to adopt global AML policy. Most of the banks
and other FIs are less interested to provide training and awareness programme in
preventing proliferation of ML due to their main involvement in business and to
earn profit. During the era of financial globalization, the FIs are more interested to
invest in emerging economics in searching for profits. The launderers are taking
opportunity of the free flow of fund around the globe to transfer funds from one
region to another. In most cases they use shell companies to perform their
intentions. Although it is possible for developed economies and large institutions
to check such activities, however it is very costly for the developing economies
and smaller banking firms. Therefore, it is an important challenge for the
developing economies to adopt global AML polices. In a sense, it is also a
challenge to the success of the global AML mechanism.
5.4.4 Lack of Regulatory Mechanisms

The existing loopholes in AML laws and their regulatory mechanisms would
hamper Bangladesh’s international trade. The launderers are taking advantages

218
of the inadequate measures of AML regulatory bodies in Bangladesh. The
deficiencies of the regulatory mechanisms are discussed below:
 Inadequate measures to establish ML activities as criminal acts;
 Lack of adequate procedures to identify and freeze terrorist assets;
 Lack of provision for confiscation of funds laundered; and
 Absence of a fully operational and effectively functioning of BFIU of
the BB.387
The government of Bangladesh should take proper initiative to amend
the existing AML laws and to ensure proper implementing measure in
preventing ML activities in Bangladesh.
5.4.5 Improper Awareness

Proper training and awareness may play an effective role in preventing ML
activities in Bangladesh. Unawareness about the problem of ML among the
common people is an impediment in having proper AML regime. People of
Bangladesh, especially among the poor and illiterate, do not trust banks and prefer
to avoid the lengthy paperwork required to complete a money transfer through
banks or other FIs. The hundi or hawala system provides them same remittance
service as a bank with little or no documentation and at lower rates and provides
anonymity and security. Though the remittance through hundi or hawala system is
a crime, many people do not treat it as a crime. Most of them are not aware about
the harmful effects of the transactions through hundi or hawala.
387
Nazmul Ahsan, The Financial Express, Dhaka, Bangladesh (16 August 2012).
219
5.4.6 Weak Institutional Framework

A weak institutional framework is a threat to the process of preventing ML
activities and related crimes. The following weaknesses are found in FIs:
 Financial Institutes (FIs) are yet to develop sufficient capacity to verify
the identity and source of funds of their clients;
 The human resources are not adequate, skilled and trained enough to
trace ML activities and related crimes;
 None of the banks or other FIs has AML software to monitor and report
transactions of a suspicious nature to the BFIU of the BB; and
 The common form of corruption in the FIs such as bribery, negligence
of duties, nepotism, embezzlement, deception and extortion.
The government of Bangladesh as well as the concerned authority of the
respective banks or other FIs should take effective steps to overcome the above
mentioned deficiencies.
5.4.7 Lack of Effective Administration

A skilled and powerful controlling body is required to govern a country. The
launderers are taking advantages in absence of effective administration.
Smuggling is a rampant activity in Bangladesh. ML functions are running
smoothly through smuggling. Bangladesh has illegal black market channels for
selling goods. Smuggled goods such as food items, computer parts, cellular
phones, gold, and a wide range of imported consumer goods are routinely sold
220
through the black market. By dealing in cash transactions and avoiding customs
duties and taxes, black market merchants offer better prices than those offered
by regulated merchants. This problem has lessened due to liberalization policy
of the government.
5.4.8 Misuse of Charitable Funds

A large number merely sixty thousands registered non-profit organizations in
different names such as societies, associations, clubs, and companies are active in
Bangladesh.388 At the same time, non registered non-profit organizations are also
actively functioning in Bangladesh. The non-profit organizations are working for
the poor, neglected, indigenous and disable people of Bangladesh. The
organsations are collecting money for charitable purpose and often distributed
funds to terrorist groups, for instance, Jamaat-ul-Mujahideen Bangladesh (JMB),
thereby both enhancing the capability of disadvantaged people and boosting
specific terrorist groups. However, there is no overall strategy to identify and
address ML and the risks of terror financing through these organisations.
5.4.9 Gaming Activities

The launderers are using a number of games such as lottery, casinos, internet
gambling and multi level marketing business etc. to launder money. The
gaming activities are used to obscure the source of funds–e.g. buying, winning
tickets from legitimate players; using casino chips as currency for criminal
transactions; using online gambling to obscure the source of criminal proceeds;
388
Rezaul Karim Byron, “Law loopholes plugged.” The Daily Star, Dhaka (24 January 2012).
221
and earnings of abnormal profit in a short span of time by multi level marketing
company. There is a need to add provisions in the existing AML laws to
prevent such type of gaming activities.
5.4.10 Deployment of Experts

Deployment of experts in ML activities is a big concern in Bangladesh. The
launderers deploy a team of experts like chartered accountant, attorney, banker,
and businessman to disguise their illicit money and masquerade it as legitimate
income with the charge or fee between 10-15% of the sum concerned. The
launderers need the connivance of a banker to launder money. The proper and
effective supervision of the concerned authority may control the deployment of
experts in ML activities and related crimes.
5.5 Conclusion
The AML laws and its enforcement mechanisms do not seem sufficient in
preventing ML activities and related offences in Bangladesh. There are
certain problems faced by the respective enforcement authority in preventing
ML activities namely-cooperative and non-inquisitive correspondent banks in
under-regulated jurisdictions; false documentation (trade-based ML); offshore
secrecy jurisdictions and tax havens; related-party and sham transactions
(e.g. non-market pricing, over-billing and under-billing); shell and holding
corporations; taking advantage of legal loopholes; and technological change
(e.g. on-line banking, cell phones, etc.) combined with increasing volume of
money/value transfers.
222
In order to solve these problems:
* The money transfer process should be simplified.
* Proper steps should be taken for mass awareness and education of people
which include workshops, motivation rallies, awareness campaign,
producing and disseminating posters, leaflets, and television and radio spots.
* Proper steps should also be taken by the BFIU of BB for comprehensive
training programs, updating the guidelines issued from time to time,
training of trainers manual, other manuals and strengthening the ML
preventing paraphernalia and implementing mechanism.
* The government of Bangladesh should ensure transparency and
accountability in administration, and enlarge the scope and opportunity for
social justice and security to encourage the people to pay taxes willingly
and refrain from illegal activities.
* The BB should make an effective plan to transfer banking surveillance or
supervision responsibilities and functions to a separate and independent
agency to ensure transparency and uphold public confidence, keeping the
monetary policy responsibility in the BB itself.

Chapter Six
General Conclusion
6.1 Introduction
Money laundering is presently a burning issue in Bangladesh. ML and related
offences are increasing with the increase of illegal earnings of money or assets
through crimes and corruptions. It hampers the economic growth and
sometimes hinders the overall economic development of Bangladesh. The
honesty, sincerity and keeping aloof from illegal activities are important to save
Bangladesh from complex and dangerous effects of ML. The government of
Bangladesh has some strategic deficiencies in preventing ML. These are:
i) Lack of taking adequate measures by the government in identifying

the areas, sources and modes of ML and related offences.
ii) Lack of introducing update version of technology and techniques in

detecting suspicious transactions of money or funds through banks
and capital markets by the BFIU of BB.
iii) Lack of improving co-operation and coordination between the AML

institutions at national and international levels.
iv) Lack of ensuring transparency and accountability in financial

transactions through banks and capital market.
v) Insufficient measures in ensuring transparency and accountability of

any persons, institutions, organizations and the government, in
receiving and using foreign aid and
vi) Absence of adequate measures to stop taking percentage as a bribe in

all national and international development works.
The government should improve the above deficiencies to limit the

proliferation of money laundering in Bangladesh.
224
6.2 Findings of the Study

Money laundering is increasing day by day in Bangladesh. Now it is a big
concern to the government of Bangladesh as well as the international
community. The following discussion summarises the flaws, limitations and
difficulties and puts a number of suggestions to prevent proliferation of money
laundering in Bangladesh.
6.2.1 Preventing Proliferation of Money Laundering in Bangladesh

The following factors are to be taken into consideration to prevent proliferation
of money laundering in Bangladesh.
 Money laundering is a barrier to economic development of Bangladesh.
It hampers the national and international integrity and is also harmful to
social and political culture. It also inspires the drug dealers, smugglers,
terrorists, illegal arms dealers, corrupt public officials and others to
operate and expand their criminal networks.
 It increases government’s cost for law enforcement and health care expenditure.
 ML makes difficult to collect government tax which in turn reduces revenue.
 ML misleads asset and commodity prices and leads to a misallocation of
resources through placement, layering and integration.
 ML impacts asset structure adversely and thus creates the risk of
monetary instability for banks or other financial institutes.

225
 The micro economic effect of ML is usually evident in the private sectors.
The launderers often use front or shell companies, for co-mingling their
illicit proceeds with legitimate funds, and to hide the illegally achieved gains.
Besides, the front or shell companies often subsidize their products and
services below the market rates. Thus, the legitimate business falls in
difficulties to compete against front or shell companies.
 ML makes a negative impact on the socio-economy which leads to
transfer money from the market, government and citizens to criminals.
 It impacts on the moral strength of the people of a society and weakens
collective ethical standards.
 ML impacts on the reputation of financial, non-financial and other
institutions of a country. It is also a challenge to limit ML for the weak
corporate governance.
6.2.2 Effectiveness of Anti Money Laundering Laws in Bangladesh

The existing AML laws, rules, regulations and guidelines do not seem adequate
in preventing proliferation of money laundering in Bangladesh. The loopholes
of existing AML laws and deficiencies in enforcement mechanisms makes
difficult to ensure proper measures in preventing or controlling ML for the
AML administration and regulatory bodies of Bangladesh. The launderers are
taking advantage of the situation and involved in predicate offences such as
malpractices, fraud, manipulation and acts of violence.

226
6.2.3 Governmental Interference

A proper and effective preventing measure of ML depends on the comprehensive
AML laws and good governance, which may prevent the abuse of the legal
process. The BB and ACC are the main organs to prevent or control ML in
Bangladesh. The government control their activities by giving appointment in
the post Governor and Deputy Governor of the BB and the Chairman and
Members of the ACC and also by limiting their power and functions. If the
government remains unconcerned in appointment of the said post and about their
powers, functions and activities, the AML process will be rendered useless or
futile or will bear no result. It is necessary to make the AML laws more effective
to control both the launderers and administrative mechanism as well as ensure
the sincere efforts of the government.
6.2.4 Insufficient Fund

It is very difficult tasks to control or prevent ML due to its volatile nature and
connection at national and international levels. At the same time, costs are also
an important factor to maintain and improving the AML mechanisms with the
existing, new and emerging technology and policy. During the era of financial
globalization, the financial institutions are more interested to invest in
emerging economics in searching for profits. Due to high cost, the financial
institutions are less interested to provide sufficient training, create awareness
and preventing measures against ML and predicate offences.

227
6.2.5 Political Influence

Political influence is important for allowing or disallowing of whitening the
black money in Bangladesh. The government of Bangladesh allowing
legalising the undisclosed sums of money from many years, which is off the
books, fixes a payment of a flat penalty at the rate of 10%. However, there is a
multi-layered tax slabs under the tax laws of Bangladesh. This facility of
making black money white is likely to take effect in the coming fiscal years,
despite strong reservations of the various bodies representing the business
community. Furthermore, it is a serious question how exactly does the
government intend to legalise illegally earned money as a signatory to
international AML statutes. The undisclosed sums are usually associated with
corruption, crime or other illegal activities.
6.2.6 Lack of Awareness

A large number of people in Bangladesh are involved with the business of
Multi Level Marketing (MLM) companies to earn abnormal profits in a short
span of time. The people usually invest a huge amount of money or fund or
capital in these sectors due to lack of awareness. They do not have clear idea or
concept about MLM business. The BB has warned the people against investing
in MLM companies. The ACC has filed cases against several companies and
the BB, central bank of Bangladesh has stopped their operations. However,
they are continuing their business under different names.

228
6.2.7 Procedural Weakness

People are moving from one place to another and one country to another for
work, business or profession, medical treatment, tourism, and for other
necessities. During the time of traveling, it is usual for some people to carry
excess money without the consent of proper authority and thereby violating the
rules of customs to avoid lengthy procedural complicacy and to save time.
6.2.8 Money Laundering as a Crime

A strong relationship prevails between ML and criminal activities. Dirty money
is acquired by crime and invested in criminal activities to earn more. ML is a
foundation of criminal activities organ and white collar crimes. Massive
influxes of dirty money–primarily create false demand and then ruin the
reputation and credibility of financial institutions and other related industries.
6.2.9 Weakness in Implementation

A good business practice is to know customers and their business patterns. It
reduces the attempt of ML to some extent. In the developed and developing
countries FIs is the most widely used route for ML. Therefore, in detecting ML
in the integration process ‘know your customer’ policy is important. However,
launderers look for loopholes in the KYC procedure in order to perform ML
activities by using front or shell companies, false instruments and accounts. The
success of KYC procedure is a vital challenge in limiting ML in Bangladesh.
The implementation of existing AML laws is a big challenge for
financial and non-financial institutions as well as other regulatory administrations

229
due to procedural lacking and political influences. In many cases, launderer
tries to convince weak regulatory administration by using their laundered
money. So, it is not always easy for a developing country like Bangladesh to
check ML and to take action against all the fictitious transactions. There is a
need to support by the proper authorities like the BB, ACC, the government
police administration and the judiciary of Bangladesh to prevent ML activities
and related crimes.
6.2.10 Technological Development

Money launderers continuously look for an innovative process–using financial,
non-financial and other channel with the use of modern technology. For instant,
mobile phones have opened up a new opportunity by creating several online
identities. One can pay bills and wire digital money via cell phone these days,
operate as a typical money service business like ‘BIKASH’. A person first goes
to a phone centre and can transfer money into a digital format, then can wire
transfer anywhere. In turn the person can redeem digital money in cash by
secret pin number provided by any ‘BIKASH’ centre within a short span of
time. Thus the related banks or company cannot manage nor do not keep
sufficient information of money sender and receiver, and the launderers take
advantage of this system of money transfer. The government of Bangladesh
should take proper initiatives from time to time to amend the existing AML
laws parallel with the development of technology in order to control ML
activities and related crimes effectively.

230
6.2.11 Money Laundering as a Dirty Game

ML is a dirty game. The money launderers very consciously play a dirty game
with the economy and society of a country. For instance, in the two periods of
share market scandal in Bangladesh common people invested their money in the
share market and became great losers. Giving them hope and aspiration from
behind the curtain the ML extracted more money from them which showed a
virtual healthy economy. When enough money was accumulated the launderers
withdrew the money from the market thus leaving the people at a poor stage at
both social and economic levels. Sometimes, as in the case of Share Market
Scandal in Bangladesh, the government could have taken initiative to punish the
money launderer thereby taking support of the common people and help regain a
standard economy. However, the failure on the part of the government only
poses the question as to whether it sides with the ML for its own gain or not.
6.3 Suggestions for the Better Management to Prevent Money

Laundering in Bangladesh.
In the light of the above mentioned problems and findings, a set of suggestions
have been mentioned in the research for better management to prevent ML
activities and related offences in Bangladesh, which are enumerated below:
6.3.1 Policy Measures of Bangladesh Bank

Bangladesh Bank, the central bank of Bangladesh is working to prevent ML. The
government of Bangladesh should take the following measures to ensure the
performance of the BB more effective in preventing or controlling ML activities:

231
 The functions of the BB are needed to be strengthened, impartial and
transparent by following the proper system of appointment of the
Governor and Deputy Governor on the basis of impartiality;
 The independence of the BB may be ensured by giving it powers to recruit
its own personnel and to exercise administrative control over its staff;
 The power of the BB should be increased and more effective to monitor
the cases of violation of the code of conduct, the provision of the AML
laws and irregularities;
 There should be a central database system following the existing and
modern technology that will contain necessary information about
suspected customers that will facilitate the identification of ML attempts;
 Application of law and procedure should be ensured and strengthened to
stop political influence and dishonesty;
 The BB should have a separate budget or fund as per their requirement
for AML activities especially for training and awareness;
 The BB should discuss with all financial entities before issuing any
circular or making any change in the AML Acts;
 The BB should ensure more frequent supervision. Working process of
the BB should be automated and it should have more effective way of
communication like E-mail, internet etc;
 The BB should include required reporting agencies in order to supervise
the effectiveness of the AML policy;

232
 The BB should prepare/amend separate guidance notes for the reporting
organizations. It should issue separate AML guidance notes to regulate
new and emerging technology based payment system;
 The BB should enhance legal tools to support investigation of cases that
involve in cross border elements;
 The BB should ensure sufficient logistics support and issue separate
guidance notes to improve quality and quantity of CTRs and STRs for
banks and capital market;
 The BB should propose Institute of Chartered Accountants of
Bangladesh (ICAB) to incorporate AML issues on it; and
 A mechanism for the BFIU of BB should be established to use and share
financial database and intelligence reports of other government agencies
namely Bangladesh police, National Board of Revenue (NBR),
Emigration Authority, Election Commission (EC) etc.
 The BFIU of BB should be introduced new and modern systems and
update version of technology to maintain a specific standard operating
procedures in line with contemporary technologies and techniques used
in ML and their methods of operation.
6.3.2 Policy Measures for Strengthening Financial Sector

The following policy measures may be considered as a part of reform processes
of strengthening the financial sector:

233
i) The existing tax collection procedure should be made very simple for
general people. Tax holiday in investment declared by the government
should be curtailed. The rate of income tax and VAT should be reduced.
ii) The civil servant related to tax collection should be honest with high
moral integrity.
iii) A provision of heavy penalties, including jail sentence should be

included for those large entrepreneurs, industries and corporations who
are involve with tax evasion.
iv) The functions of ongoing financial sectors should be made transparent,

the statement of wealth and assets of the chairman, member of the board
of directors, employees and other related persons of those sectors should
be made public, at the time of appointment and on the expiry of their
assignment.
v) The transaction of foreign currency through banking and other channels
should be brought under active surveillance of BB, the central bank
Bangladesh. Bank loan defaulters should not be allowed to participate in
the elections and issued passport to go outside the country. Bank loan
defaulters should be given and ensured 10-15 years of rigorous
imprisonment through summary trial. The competent authority should
publish the list of the loan defaulters on a periodic basis in the local and
national dailies.
vi) The hidden wealth earned by the corruption is uncovered and invested in
the industrial sectors both in private and public; the effective measures
should be taken in this regard.

234
vii) Proper national policy should be adopted to stop smuggling and trafficking.
viii) Practical steps should be taken to make a standard interest rate, reduce
large fiscal deficit, and adjust exchange rate of the currency following at
least to the neighboring country’s level for reversing capital flight from
the country. For ensuring a stable macroeconomic environment in the
country, policies should be adopted to make exchange rate stable, keep
the fiscal deficit at a tolerable limit, and allow the interest rate to be
determined by market forces.
ix) The government should pursue austere measures at all levels of current
purchase and consumption to avoid unnecessary expenditure.
x) The financial and capital market should be developed to make avoidable
risk free instruments which will induce domestic as well as foreign
investors to invest their capital through diversifying their portfolio
investment in the country.
xi) The overall action of the law enforcing agencies should be properly
monitored. Strict maintenance of law and order situation should be ensured.
6.3.3 Policy Measures of Capital Flight
The capital flight is a part of hidden economy. Proper policy formulation and
its strict application might check illegal movement of capital from Bangladesh.
If the financial system is developed, capital account is liberalized, tax evasion
and hidden economic activities are reduced considerably, and then the growth
rate of GDP may be increased up to an optimum level. The government will
also be able to mobilize more resources from local sources and reduce its
235
dependence on foreign aid. In view of the above, the following policies may be
considered in order to prevent illegal movement of the capital flight.
 The Anti-Money Laundering Department (AMLD) was established in

the BB in 2002 to prevent ML activities through financial channel. The
adopted AML measures should be strengthened to make this department
fully active and operative in line with other countries’ experiences in
restraining the capital flight. Co-ordination among the BB, commercial
banks, non-bank financial institutions, the ACC and law enforcement
agencies is very much necessary. A central data warehouse may also be
set up in the BB with all information regarding ML activities and illegal
movement of capital flight.
 Sound financial sector is an essential precondition in addition to strong

macroeconomic fundamentals for liberalization of capital account
transactions. Bangladesh may embark upon gradual shifting to capital
account convertibility, which may have a positive impact to control
illegal capital flight to some extent.
 An indirect instrument requires a formal payment system and

transmission of interest rate for maintaining a sound monetary policy.
 Adequate regulations and supervisions are necessary for guiding the
banking system to work in a more efficient way. In this regard, the BB
may consider transferring banking surveillance or supervision
responsibilities and functions to a separate and independent agency to
ensure transparency and uphold public confidence, keeping the core
monetary policy responsibility in the central bank itself.

236
 The BB may actively consider embarking upon a gradual shifting to
capital account convertibility, which may help efforts to detain illegal
movement of capital flight to some extent.
 The BB may also actively consider influencing the illegal foreign exchange
transactions by purchasing huge amount of foreign exchange, thereby
downsizing the transactions in the illegal foreign exchange transactions.
 Lastly, government should improve the services sectors, ensure the
transparency and accountability in administration, and enlarge the scope
and opportunity for social justice and security, so that the people can pay
taxes willingly and refrain from illegal activities.
6.3.4 Guidelines for Foreign Exchange Transactions

The foreign exchange transaction guideline is very important to ease the
present capital control measures, to raise the long run economic efficiency, and
to attract the domestic as well as foreign direct investment. Government may
actively consider gradual movement toward capital account convertibility. In
this regard, a timetable for convertibility may be fixed on suitability basis and
necessary institutional and financial reforms may be resumed.
6.3.5 International and Regional Cooperation

The government of Bangladesh has started to cooperate with other countries on
the basis of bi-lateral treaties with regard to extradition of offenders. The list of
‘extraditable offences’ mentioned in the Extradition Act, 1974 be reviewed to
include the United Nations Convention Against Corruption (UNCAC)
articulation. With regard to mutual legal assistance Bangladesh has not

237
included adequate legal provisions to ensure widest mutual legal assistance
with other UNCAC signatory states. A few provisions for seeking assistance
include those for evidence through setting up commissions in order to examine
witnesses abroad, entering into agreements with foreign countries to control
ML. However, there are limited options for seeking cooperate and responding
to requests of mutual legal assistance. As such domestic legislation in these
areas still requires a number of amendments and improvements in order to
compatible with the provisions of UNCAC.
6.3.5.1 International Cooperation
The international organization such as the WB, IMF and FATF may assist by
identifying the strategic deficiencies of AML measures, and providing
technical and capacity building assistance in institutionalizing strengthening
and sustaining the AML measures. The civil servant of Bangladesh may work
with the international cooperation and review group and other relevant
international bodies to address the gaps and deficiencies in preventing or
controlling ML. The government should improve the relation of mutual legal
assistance and other form of cooperation with the international community.
6.3.5.2 Regional Cooperation
The government should improve the regional relation and cooperation by
taking membership of regional AML organization. At the same time, dialogue
and collaboration between national and regional organization may provide
technical and legal assistance in preventing ML. The formal cooperation and
collaboration between the BFIU of BB and the FIUs of other countries may
238
strengthen information and intelligence sharing and legal assistance in
preventing or controlling ML. The technical and application of practical
knowledge of AML mechanisms should be improved.
6.3.6 Strengthening the Prevention and Detection Policy of Money

Laundering
The earning/acquiring property through illegal ways and the proceeds of crimes
are considered as ML in Bangladesh under the Money Laundering Prevention
Act, 2012(MLPA). The offences like theft, robbery, dacoity, cheating, forgery
etc. which are well defined in the Penal Code, can also qualify as an act of ML.
The MLPA, 2012 focuses on banks and financial institutions, and as such it does
not address other trade based ML i.e. other business establishments like property
developers, high value dealers of jewelry and car dealers. The BFIU is entrusted
with receiving, analysing and disseminating information to detect suspicious
transactions as well as to trace, and refer cases for prosecution to the ACC. The
BB should take steps to upgrade the current data base and intelligence analysis
system to prevent ML. Finally, the reform regime and its implementation
framework must be entrenched in the will of the stakeholders, both public and
private, including participation of general people.
6.3.7 National Strategy and Corresponding Policies

The government of Bangladesh has introduced a set of organs against ML and
related offences, which include both regulatory and operational measures. The
government needs to conduct a comprehensive national ML and related crimes
vulnerability and threat assessments via incorporation of standard tools. AML

239
strategic policy requires a culminate assessment of social vulnerabilities, threats
and risks posed by ML and related crimes; existing AML capacity and
capability; and other features of the current environment. AML strategy ought to
address existing and emerging threats and techniques of ML should be reviewed
regularly. AML policy and strategy may serve as an excellent tool for building
shared values and common understanding among all actors of the AML
initiative. There should be a national strategic policy compliant with the revised
FATF recommendations and other popular guidelines.
6.3.7.1 Legislation
The AML laws require to be amended from time to time to develop and
improve the effectiveness of the existing regulations, directives, and working
systems that support the application of law in the line of international standards
and requirements.
6.3.7.2 Comprehensive Reporting
The BFIU of the BB works towards comprehensive reporting mechanism that
enables all entities and regularly provides reports under AML laws. Such a
mechanism may engage and raise awareness among reporting entities and other
stakeholders and facilitate basic reporting infrastructures. It may provide technical
training on identifying and reporting suspicious transactions, also allows for
compliance inspections and supervision by the BFIU of BB and ACC along with
encourage a sense of vigilance towards ML and their operating methods.

240
6.3.7.3 Capacity Building
The capacity of the government is very important in preventing proliferation of
money laundering. The government and the regional and global community
may take effective initiative to build up capacity of the AML authority to
prevent ML. The government should continue and fortify capacity building for
all relevant authorities e.g. law enforcers and investigators and strengthen
awareness-raising schemes both general and specialized, for the private sector,
nonprofit organizations, media, and the general public, about the nature,
modes, and impacts of ML and related offences. It should optimize AML
information technology structure by developing a system meeting
international standards.389 A regular specialized training curriculum should be
designed and used. The curriculum should be streamlined based on to law
enforcement and investigation. There is a need to introduce awareness and
training programme on ML in existing professionals training institutions.390
6.3.7.4 Cooperation and Coordination

The cooperation and coordination between Bangladesh and other countries
including regional and international organisations are necessary to prevent ML
and related offences. The authority should take effective initiatives to establish
information and intelligence sharing platforms for each relevant authority. Also
establish a formal forum to set up of permanent national AML task force for
389
For instance, the United Nations Office on Drugs and Crime’s (UNODC’s) goAML software.
390
For instance, The Police Training Academy, Public Administration Training Centre (PATC),
Judicial Administration Training Institute (JATI), Bangladesh Bar Council, Law Commission of
Bangladesh.
241
risks identification and domestic co-ordination is required to improve the AML
policies. Moreover, Bangladesh is also a member of some regional and
international AML organizations such as APGML and Egmont Group. There is
a need to get membership of other regional and international organizations
where Bangladesh is not a party, for instance, FATF.
6.3.7.5 Supervision of Regulatory Bodies
Bangladesh Bank and the ACC are the main regulatory and supervisory body in
preventing or controlling ML in Bangladesh. The BFIU of BB should work in
collaboration with the ACC, consistently conduct inspections and ensure
compliance under the AML laws by observation of international standards,
including balancing control and facilitation and maintaining privacy standards,
transparency, and accountability.
6.3.7.6 Negotiation
Negotiation could play an important role to solve the dispute related to ML
activities. India generally solves their ML disputes, outside the court or by
following other than the judicial procedure or by negotiation with the
respective government authority on case to case basis with charging penalties
to avoid any kind of social, cultural, political, and economic impacts. The
government of Bangladesh may include a provision of Alternative Dispute
Resolution (ADR) in the Money Laundering Prevention Act 2012 to get a
better result in preventing proliferation of money laundering in Bangladesh.

242
6.4 Conclusion
Money laundering is considered as a criminal and punishable offence in
Bangladesh. The government of Bangladesh needs to establish strong control
over different financial, non-financial and other related organs in order to
prevent ML activities and related crimes. However, it is difficult to ensure
any financial control in an overpopulated country like Bangladesh. The social
demands, economic situation, political culture, and the gap of AML laws,
inadequate supervising and preventing measures of financial and nonfinancial
institutions as well as government preventing mechanism are considered as
important factors for proliferation of money laundering in Bangladesh. The
general publics of Bangladesh have become familiar with the ML issue–after
passing the Anti Money Laundering Act 2002. ML restrains the stability of
economic growth, enhances crime and corruption and destroys the social
peace and security. However, it is very difficult to assess the consequences of
proliferation of money laundering in an over populated and developing
country. The maintenance of low inflation and prudent financial sector
management, including institutional reforms by the government, are
necessary to limit ML activities. At many times political influence generates
huge illegal income, whether from the willful default of bank loans, or from
corruption in tax administration, leakage in public development expenditures
and illegal financial deals in the running of state-owned enterprises.
The powers of the BB and ACC of Bangladesh regarding all aspects
of preventing measures to ML should be increased and strictly exercised.

243
The independence, transparency and accountability of these organs should
be ensured first to exercise their powers without any political pressures.
Providing training to concerned persons and to the ML preventing
authorities may develop the situation. The existing AML laws should be
amended from time to time. In this regard, the members of the civil society
and the media can play an important role to seek public opinion from the
conscious people of the society to improve existing ML preventive
mechanisms. Besides, for creating an effective and transparent system in
preventing ML, the environment of tolerance and respect for the values of
socio-economic and national stability should be maintained through
awareness programme arranged by government. Public awareness in general
is necessary to understand the scope and effects of ML. A course on ML
activities and related crimes should be included in the syllabi/syllabuses of
school, college and university education of Bangladesh to build up
awareness about the consequences of ML and related crimes, so that the
future generation does not get involved in this malpractice. The effective
role of national and international organizations in monitoring the
implementation of AML laws as well as other measures may bring better
results in preventing ML in Bangladesh. Above all, there is a need to
introduce strong vigilant mechanism in judiciary to pronounce harsh and
exemplary punishment to the criminals connected to ML, so that judiciary
would properly adjudicate suits concerning ML, and administrative
authority would create awareness and encourage people to refrain from
involving in activities related to ML.

Bibliography
Books
Alldridge, Peter (2003): Money Laundering Law: Forfeiture, Confiscation,

Civil Recovery, Criminal Laundering and Taxation of the Proceeds of
Crime, Hart Publishing, Oxford, UK.
Baker, Raymond (2005): Capitalism’s Achilles Heel, Cambridge University

Press, UK.
Bangladesh Bank (December 1996): Guidelines for Foreign Exchange

Transactions, Vol. 1 & 2, Foreign Exchange Policy Department,
Bangladesh Bank, Head Office, Dhaka.
Bill Gilmore (2011): Dirty Money: The Evolution of International Measures to

Counter Money Laundering and the Financing of Terrorism, (4th Ed.),
Council of Europe Publishing, Strasbourg, France.
Bowden, Stephen (1997): Money Laundering: Key Issues and Possible Action,
Commonwealth Secretariat, UK.
Brett, F. Woods (1998): The Art and Science of Money Laundering, Paladin
Press, USA.
Davi, M. D’Agostino (2003): Money Laundering: Extent of Money Laundering

Through Credit Cards Is Unknown, Diance Publishing Co. Alibris, UK.
Danny, R. Burton (1996): Money Laundering: A Framework for Understanding

U. S. Efforts Overseas, Diance Publishing Co. Alibris, UK.
Danny, R. Burton (1998): Money Laundering: Fincen Needs to Better

Communicate Regulatory Priorities and Time Lines, Diance Publishing
Co. Alibris, UK.
245
Gilmore, William C. (1999): Dirty Money: The Evolution of Money

Laundering Counter-measures, (2nd Ed.) Council of Europe Press,
Strasbourg, France.
Goredema, Charles (2006): Money Laundering: Experiences, Institute for

Security Studies, Pretoria, South Africa.
Guy, Stessens (2000): Money Laundering: A New International Law

Enforcement Model, Cambridge University Press: London.
Graham, T. (2003): Butterworths International Guide to Money Laundering:

Law and Practice, (2nd Ed.) Butterworths Lexis Nexis, London.
Karsten, K and Berkeley, A. (2003): Arbitration: Money Laundering, Corruption

and Fraud, International Chamber of Commerce Publishing, French.
Madinger, John (2011): Money Laundering: A Guide for Criminal

Investigators, CRC Press, Florida, USA.
Madinger, J and Zalopany, S.A. (1999): Money Laundering: A Guide for

Criminal Investigators, CRC Press, Florida, USA.
Milnes, Alfred (1919): The Economic Foundations of Reconstruction,

Macdonald and Evans, UK.
Muller, W.H, Kälin, C.H. and Goldsworth, J.G. (2007): Anti-Money

Laundering: International Law and Practice, (1st Ed.) John Wiley and
Sons Publishing, London.
Paolo, Bernasconi (1995): Money Laundering and Banking Secrecy, Kluwer

Law International, Netherlands.
Paul, Allan Schott (2006): Reference guide to anti-money laundering and

combating the financing of terrorism, (2nd Ed.)World Bank Publications,
Washington, DC.
246
Peter Reuter and Edwin M. Truman (2004): Chasing Dirty Money: The Fight
Against Money Laundering, Peterson Institute Press, NW. Washington DC.
Rahman, A. and A. Razzaq (1998): Informal Border Trade between

Bangladesh and India: An Empirical Study in Selected Areas, BIDS,
Dhaka, Bangladesh.
Rahman, Mahfuzur (2010): Money Laundering Protirodh, (3rd Ed.) Barna

Binnash, Dhaka, Bangladesh.
Robin, Booth; Simon, Farrell; Guy, Bastable; and Nicholas, Yeo (2011):
Money Laundering Law and Regulation: A Practical Guide, Oxford
University Press, UK.
Shah, Tushar V. (2006): Law and Practice of Prevention of Money Laundering,

Bharat Law House, New Delhi.
Stuart, Bazley and Caroline, Foster (2004): Money laundering: Business

Compliance, Elsevier, Amsterdam, Netherlands.
Susanne, Rösner (2010): Money Laundering: Effects and Measures, Grin

Verlag, Munich, Germany.
Temple, Peter (1998): Essential Elements of the Prevention of Money

Laundering: A Study, Securities Institute Ltd., UK.
Truman; Edwin M.; and Reuter, Peter (2004): Chasing Dirty Money: Progress
on Anti-Money Laundering, Peterson Institute, New York.
Wouter H. Muller, Christian H. Kalin, John G. Goldsworth (2007): Anti-

Money Laundering: International Law and Practice, John Wiley and
Sons Ltd., England.
Williams, J. W. (2012): Policing the Markets: Inside the Black Box of

Securities Enforcement, Routledge, New York.
247
Journal Articles
Alam, Muhammad Imam; Asif Dowla; and Salim Rashid (March-June 1995):
‘Capital Flight from Bangladesh’, The Bangladesh Development
Studies, Vol. XXIII, No.. 1 & 2, Dhaka.
Ali, Abed (1993): ‘Economics of Smuggling and Capital Flight’, Bank Parikrama,
Bangladesh Institute of Bank Management (BIBM), Vol. XVIII, Dhaka.
Asaduzzaman, M. (1998): ‘The Unrecorded Economy of Bangladesh: Some

Preliminary Estimates’, Bangladesh Journal of Political Economy, Vol.
XIV, Dhaka.
Barakat, Abul (June-December 1991): ‘Black economy and Black Money–

Conditions of Emergence, Expansion, Experience in Measurements and
Estimation in Bangladesh’, Bangladesh Journal of Political Economy,
Vol. 1, Dhaka.
De Boyre, Maria; Pak, Simon; and Zdanowicz, John (February 2005):‘The

Impact of Switzerland’s Money Laundering Law on Capital Flows
Through Abnormal Pricing in International Trade’, Applied Financial
Economics, Vol.15, Issue: 4, Sydney, Australia.
Fernandez, Armando (September 2012): ‘Financial Channels of Money Laundering

in Spain’, The British Journal of Criminology (BJC), Vol.52 No.5, UK.
Hasan, M. Kabir (September-December1997): ‘The Estimation and Policy

Implications of the Underground Economy: The Case of Bangladesh’,
The Bangladesh Development Studies, Vol. XXV, Dhaka.
Hossain, Akhtar (1999): ‘Professor Amartya Sen and the 1974 Bangladesh
Famine: Additional Insights and Policy Implications’, Journal of
Bangladesh Studies. Vol. 1 No. 1, Dhaka.
Kutubi S. Shawgat (May 2011):‘Combating Money Laundering by the

Financial Institutions: An Analysis of Challenges and Efforts in
Bangladesh.’ World Journal of Social Science, Vol.1, No. 2, Australia.
248
Takats, Elod (2009): ‘A Theory of “Crying Wolf”: The Economics of Money

Laundering’, Journal of Law, Economics and Organization, Vol. 27
No.1, UK.
Muller, Wouter H. (2007): ‘The Role of Foundations in International Anti-

Money Laundering’, Trusts & Trustees, Vol.13 No.5. UK.
Peter J. Kacarba, (1991): ‘An In depth Analysis of the New Money Laundering
Statute’, Akron Tax Journal, Vol.8, No.2, United States.
Quirk, Peter J. (March 1997): ‘Money Laundering: Muddying the Macro

Economy’, Finance and Development, International Monetary Fund,
Vol.34, No.1.
Rahim, A.M.A (1973): ‘Some Aspects of Inflation Theories in the Context of

Bangladesh’, Bangladesh Bank Bulletin (September 1973).
Reza, Sadrul (1989): ‘The Black economy in Bangladesh: Some Preliminary

Observations’, Savings and Development, Vol. 13, No. 1, Milan, Italy.
Satish, M. Kini (2006): ‘Recent Anti-money Laundering Enforcement Actions:

Lessons to be Learned at Others’ Expense’, Journal of Investment
Compliance, Emerald Group Publishing Limited, Vol.7, No.3.
Sarker, Abdul Awwal (2003): ‘Bangladesh’s Trade Relations with the SAARC
countries–A Trend Analysis’, Thoughts on Economics, Vol. XII, No. 1
& 2, World Bank.
Sarker, Abdul Awwal (2013): ‘Capital Flight from Bangladesh: Policy Suggestions
for Central Bank’, Thoughts on Economics Vol. 18, No. 04, World Bank.
World Bank (2009): ‘Combating Money Laundering and the Financing of

Terrorism: A Comprehensive Training Guide’, World Bank
Publications, Vol. 3, Part 1.
249
Other Publications
Alim, Abdul (2002): ‘Hundi: Elusive Golden Eggs?’, The Daily Star, Dhaka (3
September 2002).
Ahmed, Ali (2004): ‘Anti-money Laundering Measures Still Ineffective’, The

Daily Star, Dhaka (29 May 2004).
Bangladesh Financial Intelligence Unit (2012): ‘Guidance Notes on Prevention

of Money Laundering and Terrorist Financing’, Bangladesh Bank,
Dhaka (16 September 2012).
Editorial (2007): ‘Dhaka Needs to Strengthen Anti-money Laundering Law,

Criminalise Terrorist Finance’, The Daily Star, Dhaka (3March 2007).
Gandhi, K. Mohandas (1869–1948): ‘Indian Political and Spiritual Leader’,

Harijan, Indian news paper (28 July 1940). Online: <https://www.learnthat.
org/dictionary/67035_Harijan.html.>
Hearns, Michael (2010): ‘Terror Financing Loopholes in Existing Laws Need

to be Plugged’, The Daily Star, Dhaka (25 September 2010).
Islam, A.K.M. Shirajul (2012): ‘Asset Recovery (UNCAC) Chapter V: And

The Position of Bangladesh’, this paper was presented in the Fourth
IAACA Seminar on 25-28 June 2012 in Dalian, P.R China.
International Finance Investment And Commerce Bank Ltd. (June 2006):

‘Guidelines on Prevention of Money Laundering’, Dhaka. Online:
<http://www.ificbank.com.bd/GUIDELINES%20ON%20PREVENTIO
N%20OF%20MONEY%20LAUNDERING.pdf >
Janata Bank Limited (2011): ‘Anti Money Laundering Policy’, Anti Money
Laundering Section, Janata Bank Limited, Dhaka (October 2011).
Mahalingam,Sudha(1998): ‘Economic Offences: Dealing with dirty money’,

Frontline (the Indian’s National Magazine) The Hindu, Vol.15, No. 07
(4 - 17 April 1998).
Siddiqui, M.S(2009): ‘Need for Reviewing Anti-money Laundering Law to

Serve Its Real Purpose’, The Financial Express, Dhaka (27 July 2009).
250
Enactments
1. Anti-Corruption Commission Act, 2004 (Act No.05 of 2004)
2. Anti-Corruption Commission Rules, 2007
3. Administrative Tribunal Act, 1980 (Act No.vii of 1981)
4. Anti-Terrorism Act, 2009 (Act No.16 of 2009)
5. Anti Terrorism (Amendment) Act, 2012(Act No.06 of 2012)
6. Bangladesh Bank Order, 1972 (P.O. No. 127 of 1972)
7. Banking Companies Act, 1991 (Act No. XIV of 1991)
8. The Companies Act, 1994 (Act No. XVIII of 1994)
9. Bank Deposit Insurance Act, 2000 (Act No.18 of 2000)
10. Criminal Law (Amendment) Act, 1958 (Act No. XL of 1958)
11. The Negotiable Instruments Act, 1881(Act No. XXVI of 1881)
12. The Bankers’ Book Evidence Act, 1891(Act No. XVIII of 1991)
13. Foreign Exchange Regulations Act, 1947 (Act No. VII of 1947)
14. Financial Institution Act, 1993 (Act No.27 of 1993)
15. Money Loan Court Act, 2003 (Act No. 8 of 2003)
16. Micro Credit Regulatory Authority Act, 2006 (Act No. 32 of 2006)
17. Money Laundering Prevention Act,2012 (Act No.05 of 2012)
18. The Customs Act, 1969 (Act No. IV of 1969)
19. The Evidence Act, 1872 (Act No. I of 1872)
20. The Extradition Act ,1974 (Act No LVIII of 1974)
21. The Code of Civil Procedure, 1908 (Act No. V of 1908)

251
22. The Government Servants (Special Provisions) Ordinance, 1979 (Ordinance

No. XI of 1979)
23. Registration Act, 1860 (Act No. XXI of 1860)
24. Voluntary Social Welfare Agencies (Registration and Control) Ordinance,

1961(Ordinance No. XLVI of 1961)
25. Foreign Donations (Voluntary Activities) Regulation Ordinance, 1978

(Ordinance No. XLVI of 1978)
26. Foreign Contributions (Regulation) Ordinance, 1982 (Ordinance No.

XXXI of 1982)
27. The Code of Criminal Procedure, 1898 (Act No. V of 1898)
28. Microcredit Regulatory Authority Act,2006 (Act No.32 of 2006)
29. Penal Code, 1860 (Act No. XLV of 1860)

Appendices
Appendix One
Money Laundering Prevention Act, 2012

Bangladesh Gazette Extraordinary Published by the authority
Monday, 20 February, 2012
Bangladesh Parliament Dhaka, 20 February, 2012 /08 Falgun, 1418
The following Act of Parliament received the assent of the President on 20 February,
2012 (08 Falgun, 1418) and is hereby published for general information:- Act No. 5
of 2012
An Act to repeal the existing Act and Ordinance regarding the prevention of
money laundering and to reenact a law relating thereto
Whereas it is expedient and necessary to reenact a law regarding the prevention of
money laundering and other offences connected therewith including punishment
thereof and the matters ancillary thereto by repealing the existing Act and Ordinance
relating thereto;
Therefore, it is hereby enacted as follows:-
1. Short title and commencement.– (1) This Act may be called the Money
Laundering Prevention Act, 2012. (2) It shall be deemed to have come into force on 3
Magh, 1418 BE/16 January, 2012 AD.
2. Definitions.– Unless there is anything repugnant in the subject or context, in this

Act –
(a) “smuggling of money or property” means-
(i) transfer or holding money or property outside the country in breach of the existing
laws in the country; or
(ii) refrain from repatriating money or property from abroad in which Bangladesh has
an interest and was due to be repatriated; or
(iii) not bringing into the country the actual dues from a foreign country, or paying to
a foreign country in excess of the actual dues;
(b) “money or value transfer service” means a financial service in which the service
provider receives currency, cheques, other financial instruments (electronic or
otherwise) in one location, and provides the beneficiary with the equal value in
currency or financial instruments or any other means in a different location;
(c) “proceeds of crime” means any property obtained or derived, directly or indirectly,
from a predicate offence or any such property retained or controlled by anybody;
(d) “freeze” means any action taken by the competent authorities pursuant to this Act
by which any property is brought within the control of the relevant authorities or the
court on a temporary basis and the property shall be disposed of by taking a final
decision by the court regarding confiscation of the property;
(e) “non-profit organization/institution” means any institution registered under section
28 of the Company Act, 1994 (Act XVIII of 1994);
253
(f) “financial instrument” means all papers or electronic documents which have a
financial value;
(g) “financial institution” means a financial institution defined under section 2(b) of
the Financial Institutions Act, 1993 (Act No. XXVII of 1993);
(h) “court” means the court of a special judge;
(i) “attachment” means any action taken by the court pursuant to this Act by which
any property is restrained or held by the relevant authorities or the court on a
temporary basis and the property shall be disposed of by taking a final decision by the
court;
(j) “customer” means any person or persons or entity or entities that may be defined
by Bangladesh Bank from time to time;
(k) “trust and company service providers” means any persons or business institution
that is not defined in any other laws and provides with any of the following services to
any third party:-
(1) to act as an agent of establishing any legal entity, (2) to act as or appoint someone
to act as a director, secretary of any legal entity or act as a partner in a partnership
business, or perform other responsibilities in an equivalent position, (3) to act as a
registered agent for any legal entity, (4) to act as or appoint someone to act as a
trustee of an express trust, (5) to act as or appoint someone to act as a director instead
of a nominee shareholder or any other person;
(l) “investigation agency” means the Anti Corruption Commission established under
the Anti Corruption Commission Act, 2004 (Act No. V of 2004); and any officer of
the Commission authorized in this behalf by it to investigate or notwithstanding
anything contained in any other law, it shall also include any officer of any other
investigation agency;undering Prevention Act
(m) “cash” means any currency recognized by a country as being the authorized
currency for that country, including coins, paper currency, travelers‟ cheques, postal
notes, money orders, cheques, bank drafts, bearer bonds, letters of credit, bills of
exchange, credit card, debit card or promissory notes;
(n) “disposal” means the sale of property which is degradable, perishable or
unsuitable for use after a certain time, or the destruction of property which falls within
properties suitable for destruction under any other law or it shall also include any
legal transfer of property by means of an open auction;
(o) “confiscation” means the permanent transfer of the title of any property in favour
of the State pursuant to a court order made under section 17 ;
(p) “Bangladesh Bank” means Bangladesh Bank established under the Bangladesh
Bank Order, 1972 (P.O. No. 127 of 1972);
(q) “insurer” means an insurer defined under section 2(25) of the Insurance Act, 2010
(Act No. XIII of 2010);
(r) “non government organization” means the institutions authorized or registered
under the Societies Registration Act, 1860 (Act No. XXI of 1860), the Voluntary
Social Welfare Agencies (Registration and Control) Ordinance, 1961 (Ordinance No.
XLVI of 1961), the Foreign Donations (Voluntary Activities) Regulation Ordinance,
1978 (Ordinance No. XLVI of 1978), the Foreign Contributions Regulation
Ordinance, 1982 (Ordinance No. XXXI of 1982), and the Microcredit Regulatory
Authority Act, 2006 (Act No. XXXII of 2006) which-
(i) receive fund (loan, grant, deposit) from local sources or provides with fund to
others; and/or
254
(ii) receive any kind of foreign donation or loan or grant;

(s) “foreign currency” means any foreign exchange defined under section 2(d) of the
Foreign Exchange Regulation Act, 1947 (Act No. VII of 1947);
(t) “bank” means a bank company defined under section 5(o) of the Bank Companies
Act, 1991 (Act No. XIV of 1991) and it shall also include any other institution
designated as a bank under any other law;
(u) “money changer” means any person or institution approved by Bangladesh Bank
under section 3 of the Foreign Exchange Regulation Act, 1947 (Act No. VII of 1947)
for dealing in foreign exchange transactions;
(v) “money laundering” means –
(i) knowingly moving, converting, or transferring proceeds of crime or property
involved in an offence for the following purposes:-
(1) concealing or disguising the illicit nature, source, location, ownership or control of
the proceeds of crime; or
(2) assisting any person involved in the commission of the predicate offence to evade
the legal consequences of such offence;
(ii) smuggling money or property earned through legal or illegal means to a foreign
country; (iii) knowingly transferring or remitting the proceeds of crime to a foreign
country or remitting or bringing them into Bangladesh from a foreign country with the
intention of hiding or disguising its illegal source; or (iv) concluding or attempting to
conclude financial transactions in such a manner so as to reporting requirement under
this Act may be avoided; (v) converting or moving or transferring property with the
intention to instigate or assist for committing a predicate offence; (vi) acquiring,
possessing or using any property, knowing that such property is the proceeds of a
predicate offence; (vii) performing such activities so as to the illegal source of the
proceeds of crime may be concealed or disguised; (viii) participating in, associating
with, conspiring, attempting, abetting, instigate or counsel to commit any offences
mentioned above;
(w) “reporting organization” means –
(i) bank;
(ii) financial institution;
(iii)insurer;
(iv) money changer;
(v) any company or institution which remits or transfers money or money value;
(vi) any other institution carrying out its business with the approval of Bangladesh
Bank;
(vii) (1) stock dealer and stock broker,
(2) portfolio manager and merchant banker, (3) securities custodian, (4) asset
manager;
(viii) (1) non-profit organization,
(2) non government organization, (3) cooperative society;
(ix) real estate developer;
(x) dealer in precious metals or stones;
(xi) trust and company service provider;
(xii) lawyer, notary, other legal professional and accountant; (xiii) any other
institution which Bangladesh Bank may, from time to time, notify with the approval
of the Government;
(x) “real estate developer” means any real estate developer or its officers or
employees or agents defined under section 2(15) of Real Estate Development and
255
Management Act, 2010 (Act No. 48 of 2010) who are engaged in constructing and
buying and selling of land, house, commercial building and flat etc.;
(y) “entity” means any kind of legal entity, statutory body, commercial or non
commercial organization, partnership firm, cooperative society or any organization
comprising one or more than one person;
(z) “suspicious transaction” means such transactions –
(i) which deviates from usual transactions;
(ii) of which there is ground to suspect that,
(1) the property is the proceeds of an offence, (2) it is financing to any terrorist
activity, a terrorist group or an individual terrorist;
(iii) which is, for the purposes of this Act, any other transaction or attempt of
transaction delineated in the instructions issued by Bangladesh bank from time to
time;
(aa) “cooperative society” means an institution established under section 2(20) of the
Cooperative Societies Act, 2001 (Act No. XLVII of 2001) which is involved in
receiving deposits and providing loans;
(bb) “property” means –
(i) any type of tangible, intangible, moveable, immoveable property; or
(ii) cash, any deed or legal instrument of any form including electronic or digital form
giving evidence of title or evidence of interest related to title in the property which is
located within or outside the country;
(cc) “predicate offence” means the offences mentioned below, by committing which
within or outside the country, the money or property derived from is laundered or
attempt to be laundered, namely:-
(1) corruption and bribery;
(2) counterfeiting currency;
(3) counterfeiting deeds and documents;
(4) extortion;
(5) fraud;
(6) forgery;
(7) illegal trade of firearms;
(8) illegal trade in narcotic drugs, psychotropic substances and substances causing
intoxication;
(9) illegal trade in stolen and other goods;
(10) kidnapping, illegal restrain and hostage taking;
(11) murder, grievous physical injury;
(12) trafficking of women and children;
(13) black marketing;
(14) smuggling of domestic and foreign currency;
(15) theft or robbery or dacoity or piracy or hijacking of aircraft;
(16) human trafficking;
(17) dowry;
(18) smuggling and offences related to customs and excise duties;
(19) tax related offences;
(20) infringement of intellectual property rights;
(21) terrorism or financing in terrorist activities;
(22) adulteration or the manufacture of goods through infringement of title;
(23) offences relating to the environment;
(24) sexual exploitation;
256
(25) insider trading and market manipulation using price sensitive information
relating to the capital market in share transactions before it is published for general
information to take advantage of the market and attempting to manipulate the market
for personal or institutional gain;
(26) organized crime, and participation in organized criminal groups;
(27) racketeering; and
(28) any other offence declared as predicate offence by Bangladesh Bank, with the
approval of the Government, by notification in the official Gazette, for the purpose of
this Act.
(dd) “special judge” means a special judge appointed under section 3 of the Criminal
Law Amendment Act, 1958 (Act No. XL of 1958);
(ee) (1) “stock dealer and stock broker” means an institution defined under rule 2(i)
and (j) of the Securities and Exchange Commission (Stock Dealer, Stock Broker and
Authorized Representative) Rules, 2000; (2) “portfolio manager and merchant
banker” means an institution defined under rule 2(f) and 2(j) of the Securities and
Exchange Commission (Merchant Banker and Portfolio Manager) Rules, 1996; (3)
“securities custodian” means an institution defined under rule 2(j) of the Securities
and Exchange Commission (Security Custodial Service) Rules, 2003; (4) “asset
managers” means an institution defined under rule 2(s) of the Securities and Exchange
Commission (Mutual Fund) Rules, 2001; (ff) “High Court Division” means the High
Court Division of the Bangladesh Supreme Court.
3. Act to override other laws. - Notwithstanding anything contained in any other law
for the time being in force, the provisions of this Act shall, subject to the provisions of
section 9, have effect.
4. Offence of money laundering and punishment.–(1) For the purposes of this Act,
money laundering shall be deemed to be an offence. (2) Any person who commits or
abets or conspires to commit the offence of money laundering, shall be punished with
imprisonment for a term of at least 4(four) years but not exceeding 12(twelve) years
and, in addition to that, a fine equivalent to the twice of the value of the property
involved in the offence or taka 10(ten) lacks, whichever is greater. (3) In addition to
any fine or punishment, the court may pass an order to forfeit the property of the
convicted person in favour of the State which directly or indirectly involved in or
related with money laundering or any predicate offence. (4) Any entity which
commits an offence under this section shall be punished with a fine of not less than
twice of the value of the property or taka 20(twenty) lacks, whichever is greater and in
addition to this the registration of the said entity shall be liable to be cancelled. (5) It
shall not be a prerequisite to charge or punish for money laundering to be convicted or
sentenced for any predicate offence.
5. Punishment for violation of an order for freezing or attachment.–Any person

who violates a freezing or attachment order issued under this Act shall be punished
with imprisonment for a term not exceeding 3 (three) years or with a fine equivalent
to the value of the property subject to freeze or attachment, or with both.
6. Punishment for divulging information.– (1) No person shall, with an ill motive,
divulge any information relating to the investigation or any other related information
to any person, organization or news media. (2) Any person, institution or agent
257
empowered under this Act shall refrain from using or divulging any information
collected, received, retrieved or known by the person, institution or agent during the
course of employment or appointment, or after the expiry of any contract of service or
appointment for any purpose other than the purposes of this Act. (3) Any person who
contravenes the provisions of sub-sections (1) and (2) shall be punished with
imprisonment for a term not exceeding 2 (two) years or a fine not exceeding taka 50
(fifty) thousand or with both.
7. Punishment for obstruction or non-cooperation in investigation, failure to

submit report or obstruction in the supply of information.- (1) Any person who,
under this Act –
(a) obstructs or declines to cooperate with any investigation officer for carrying out
the investigation; or
(b) declines to supply information or submit a report being requested without any
reasonable ground; shall be deemed to have committed an offence under this Act.
(2) Any person who is convicted under sub-section (1) shall be punished with
imprisonment for a term not exceeding 1 (one) year or with a fine not exceeding taka
25 (twenty five) thousand or with both.
8. Punishment for providing false information.– (1) No person shall knowingly

provide false information in any manner regarding the source of fund or self identity
or the identity of an account holder or the beneficiary or nominee of an account. (2)
Any person who violates the provision of sub-section (1) shall be punished with
imprisonment for a term not exceeding 3 (three) years or a fine not exceeding taka 50
(fifty) thousand or with both.
9. Investigation and trial of an offence.- (1) Notwithstanding anything contained in

any other law, the offences under this Act shall be considered as the scheduled
offences under the Anti Corruption Commission Act, 2004 (Act No. V of 2004) and
shall be investigated by the Anti Corruption Commission or any officer of the
Commission empowered by it in this behalf or any officer of any other investigating
agency authorized by the Anti Corruption Commission. (2) The offences under this
Act shall be tried by a special judge appointed under section 3 of the Criminal Law
Amendment Act, 1958 (Act No. XL of 1958). (3) For the purpose of the investigation
and identification of property of an accused person, the Anti Corruption Commission
may, besides this Act, also exercise the powers vested in it under the Anti Corruption
Commission Act, 2004 (Act N0. V of 2004) and an officer of any other investigating
agency authorized by the Anti Corruption Commission may, besides this Act, also
exercise the powers vested in it under any other law.
10. Extraordinary jurisdiction of the special judge.- (1) The special judge may
impose such punishments as are specified for the offences under this Act, and where
appropriate, may pass any other necessary order including orders for further
investigation, freezing, attachment and confiscation of property. (2) If the special
judge passes an order for further investigation of any case filed under this Act, he
shall, in the said order, specify a time-limit which shall not exceed 6 (six) months
directing the investigation officer to submit his investigation report.
258
11. Cognizancy, non-compoundability and non-bailability of offences.–Offences

under this Act shall be cognizable, non-compoundable and non-bailable.
12. Inevitability of the approval of the Anti Corruption commissions- (1)

Notwithstanding anything contained in the Code of Criminal Procedure or any other
law for the time being in force, no court shall take cognizance of any offence under
this Act, except with the approval of the Anti Corruption Commission. (2) After
concluding the investigation under this Act, the investigation officer shall take prior
approval of the Anti-Corruption Commission before submitting his report and shall
submit a copy of the approval before the court along with the report.
13. Provisions relating to bail.- Any person accused under this Act shall be released
on bail, if –
(a) the complainant is given an opportunity of being heard on the application for bail;
and
(b) the court is not satisfied that there are reasonable grounds to believe that the
accused shall be found guilty of the charges brought against him; or
(c) the accused is a woman, child or physically disabled person and the court is
satisfied that justice may not be hindered by reason of releasing him on bail.
14. Orders to freeze or attach property.– (1) The court may, on the basis of a
written application by the Anti Corruption Commission or any person or organization
authorized by it, issue an order to freeze or attach the property, within or outside the
country, involved in money laundering or any other offence. (2) At the time of
making a written application before the court under sub-section (1) for an order to
freeze or attach any property, the Anti Corruption Commission or any person or
organization authorized by it shall mention the following information in the
application, namely:-
(a) full description of the property for which an order for freezing or attachment is sought;
(b) grounds and primary evidence in support of the property for being attachable due
to its involvement in money laundering or any other offence;
(c) the apprehension that the property may be transferred or taken beyond possession
before the disposal of the complaint, if an order is not passed by the court according
to the application.
(3) If an order for freezing or attachment is passed under sub-section (1), the court
shall, by notification in the official Gazette, publish the matter with details of the
property for general information and at least in 2 (two) widely circulated national
dailies [1(one) Bengali and 1(one) English] in the form of a notice. (4) In an order
passed under this section to freeze or attach any property, the name of the accused, the
names of his parents, the name of spouse, nationality, designation (if any),
occupation, tax identification number (TIN), present and permanent addresses and any
other identification of the accused shall, in so far as possible, be mentioned, but the
enforcement of the provisions of this Act shall not be impeded by any trifling errors
and omissions of these information. (5) Subject to the provisions of sub-section (6), if
259
the court passes an order for freezing or attachment of any property of a person under
this section, the property may, unless the court directs otherwise, not be in any way
transferred elsewhere and no transactions may be carried out with respect to the
property nor may any encumbrances be attached to the property while the order is in
force. (6) While an order for freezing with respect to any person’s bank account is in
force, all money receivable by that person may be deposited into the frozen bank
account, unless otherwise mentioned in the order.
15. Return of frozen or attached property.– (1) If any court makes an order to
freeze or attach any property under section 14 and any person or entity other than the
accused person or entity has an interest in that property, the person or the entity may
make an application before the court for the return of the property within 30 (thirty)
days of the publication of the notice on the order to freeze or attach the property. (2) If
any person or entity makes an application before the court under sub-section (1), the
following information shall be mentioned in the application:-
(a) the property is not involved directly or indirectly in money laundering or any
predicate offence;
(b) the applicant is not involved directly or indirectly in the alleged money laundering
or any other predicate offence;
(c) the applicant is not acting as a nominee of, or on behalf of, the accused person;
(d) the accused person or entity has no proprietary right, interest or ownership with
regard to the frozen or attached property; and
(e) the applicant has a proprietary right, interest and ownership in the frozen or
attached property.
(3) Notwithstanding anything contained in sub-section (5) of section 14, if the court
receives any application for return of any property under this section, it shall give the
applicant, the investigation agency and the accused person or entity an opportunity of
being heard and at the end of the hearing, after reviewing the necessary documents, if
the court is satisfied with the application of the applicant brought under sub-section (1)
and finds that the Government has not presented a reasonable suspicion that the
property is involved directly or indirectly in money laundering or a predicate offence, it
shall set aside the order to freeze or attach the property, and pass an order for transfer of
the property in favour of the applicant within the time specified in the order.
16. Appeal against the order to freeze or attach property.– (1) Any person or
entity aggrieved by an order for freezing or attachment of any property, passed by a
court under this Act, may prefer an appeal against such order before the High Court
Division within 30 (thirty) days. (2) If an appeal is preferred under sub-section (1) the
appellate court shall give the parties reasonable time for being heard, and at the end of
hearing, may pass such order as it deems fit. (3) If any person or entity aggrieved by
an order to freeze or attach any property passed by any court under section 14 prefers
an appeal against such order, the said order shall have effect pending the appeal to be
disposal of, unless the appellate court directs otherwise.
17. Confiscation of property.– (1) If any person or entity is convicted of the offence
of money laundering under this Act, the court may pass an order for confiscation of
any property, within or outside the country, involved directly or indirectly in money
laundering or predicate offence in favour of the State. (2) Notwithstanding anything
contained in sub-section (1), during an inquiry and investigation or prosecution under
260
this Act relating to an offence of money laundering, the respective court may, where
necessary, pass an order for the confiscation of any property situated within or outside
the country in favour of the State. (3) If any person convicted of the offence of money
laundering under this Act absconds or dies after submitting the charge sheet, the court
may pass an order for confiscation of that person’s property which was involved in
the money laundering or predicate offence in favour of the State.
Explanation.– A person shall be deemed to have absconded for the purposes of this
section where the person, despite adequate measures being taken, fails to surrender
before the court within 6 (six) months of issuance of the warrant of arrest, or it is not
possible to arrest the person within the period.
(4) If any person or entity purchases any property applied for confiscation in good
faith and for proper value before an order for confiscation of the property is passed by
the court under the provisions of this section or before a case is filed or a complaint is
lodged, and the person or the entity is able to satisfy the court that he or it was not
aware of the matter that the said property was involved in money laundering, and
purchased the property in good faith, then the court may, instead of ordering for
confiscation of the property, order the convicted person or entity to deposit the
proceeds of the sale of the property to the treasury of the State within the time
specified by it. (5) If the court finds that the property involved directly or indirectly in
money laundering or any predicate offence cannot be located or confiscated or has
been dissipated for being used otherwise, the court may- (a) pass an order for
confiscation of such property of an equivalent value of the accused as is not related
with the offence; (b) impose a fine on the accused equivalent to the value of the
unrecovered property. (6) If any property is confiscated under this section, the notice
of the order of confiscation shall be sent by registered post to the last known address
of the person or entity having control of the confiscated property and such notice,
along with the schedule and full details of the property, shall be published in the
official Gazette and at least 2 (two) widely circulated national dailies [1(one) Bengali
and 1(one) English]. (7) If any courts pass an order for confiscation of any property
under this section, the ownership of the property shall be vested in the State and the
person or entity who is the owner or custodian of the property shall hand over the
possession of the property to the State as early as possible. (8) If the proceeds of
crime have been mingled with property acquired from legitimate sources, such
property shall be liable to confiscation up to the assessed value of the mingled
proceeds by the court or where the value of the proceeds of crime cannot be
determined, the court may pass a confiscation order on the full value of the mingled
money or property in favour of the State.
18. Return of confiscated property. –(1) If a court pass an order of confiscation of

any property under section 17 and any person or entity other than the convicted
person has any title, interest or right in the property, the person or the entity may
make an application before the court for the return of the property within 30 (thirty)
days of the publication of the notice of confiscation of the property in newspaper. (2)
If any application is received under sub-section (1), the court shall give a reasonable
time to the person who filed the case, the convicted person or entity and the applicant
to be heard and after hearing, the court may pass necessary order considering the
following matters, namely:-
261
(a) whether the applicant or the confiscated property or any part thereof had any
involvement in the commission of the offence;
(b) whether the applicant has a valid right to acquire the confiscated property;
(c) the duration of the commission of the offence and the duration of alleged
ownership of the confiscated property by the applicant; and
(d) any other information deemed to be relevant by the court.
19. Appeal against any order for confiscation.–(1) If any court pass an order for
confiscation of any property under this Act, the party aggrieved by such an order may
prefer an appeal against the order before the High Court Division within 30 (thirty)
days. (2) If an appeal is preferred under sub-section (1), the appellate court shall give
both the parties reasonable opportunity of being heard and may, on conclusion of such
hearing, pass such orders as it deems fit.
20. Procedure for disposal of confiscated property.– (1) If any property is

confiscated under this Act, the Government may, subject to the permission of the
court, sell or, in any other way, dispose of such property other than the property which
is required to be destroyed under any other law, by means of an open auction or by
any other commercially profitable and lawful means. (2) The proceeds of the sale or
disposal of the property in any other legal manner under sub-section (1) shall be
deposited into the treasury of the State.
21. Appointment of a manager or caretaker for taking care of the frozen,

attached or confiscated property.– If any property is frozen, attached or confiscated
under this Act, the court may, upon an application of the investigation agency or any
person authorized by it in this behalf, appoint any law enforcement agency as a
manager or caretaker of the property to take control, manage, look after or, in any
other manner, deal with the total property or any part thereof under such terms and
conditions as the court may deem fit.
22. Appeal.– Notwithstanding anything contained in any other law for the time being
in force, any party aggrieved by an order, judgment, decree or sentence passed by a
court under this Act may prefer an appeal before the High Court Division within 30
(thirty) days from the date of such order, judgment, decree or sentence.
23. Powers and responsibilities of Bangladesh Bank in restraining and

preventing the offence of money laundering.– (1) For the purposes of this Act,
Bangladesh Bank shall have the following powers and responsibilities, namely:-
(a) to analyze or review information related to cash transactions and suspicious
transactions received from any reporting organization and to collect additional
information relating thereto for the purpose of analyzing or reviewing from the
reporting organizations and maintain data on the same and, as the case may be,
provide with the said information to the relevant law enforcement agencies for taking
necessary actions;
(b) ask for any information or obtain a report from reporting organizations with regard
to any transaction in which there are reasonable grounds to believe that the transaction
involves in money laundering or a predicate offence;
(c) issue an order to any reporting organization to suspend or freeze transactions of
any account for a period not exceeding 30 (thirty) days if there are reasonable grounds
to suspect that any money or property has been deposited into the account by
committing any offence:
262
Provided that such order may be extended for additional period of a maximum of 6
(six) months by 30 (thirty) days, if it appears necessary to find out correct information
relating to transactions of the account;
(d) issue, from time to time, any directions necessary for the prevention of money
laundering to the reporting organizations;
(e) monitor whether the reporting organizations have properly submitted information
and reports requested by Bangladesh Bank and whether they have duly complied with
the directions issued by it, and where necessary, carry out on-site inspections of the
reporting organizations to ascertain the same;
(f) arrange meetings and seminars including training for the officers and staff of any
organization or institution, including the reporting organizations, considered
necessary for the purpose of ensuring proper implementation of this Act by
Bangladesh Bank;
(g) carry out any other functions necessary for the purposes of this Act.
(2) If any investigation agency makes a request to provide it with any information in
any investigation relating to money laundering or suspicious transaction, then
Bangladesh Bank shall provide with such information where there is no obligation for it
under any existing law or for any other reason. (3) If any reporting organization fails to
provide with the requested information timely under this section, Bangladesh Bank may
impose a fine on such organization which may extend to a maximum of taka 5 (five)
lacs at the rate of taka 10 (ten) thousand per day and if any organization is fined more
than 3(three) times in 1(one) financial year, Bangladesh Bank may suspend the
registration or licence of the organization or any of its branches, service centers, booths
or agents for the purpose of closing its operation within Bangladesh or, as the case may
be, shall inform the registration or licensing authority about the fact so as to the relevant
authority may take appropriate measures against the organization.
(4) If any reporting organization provides with false information or statement requested
under this section, Bangladesh Bank may impose a fine on such organization not less
than taka 20 (twenty) thousand but not exceeding taka 5 (five) lacs and if any
organization is fined more than 3(three) times in 1(one) financial year, Bangladesh
Bank may suspend the registration or license of the organization or any of its branches,
service centers, booths or agents for the purpose of closing its operation within
Bangladesh or, as the case may be, shall inform the registration or licensing authority
about the fact so as to the relevant authority may take appropriate measures against the
said organization. (5) If any reporting organization fails to comply with any instruction
given by Bangladesh Bank under this Act, Bangladesh Bank may impose a fine on such
organization which may extend to a maximum of taka 5 (five) lacs at the rate of taka 10
(ten) thousand per day for each of such non compliance and if any organization is fined
more than 3(three) times in 1(one) financial year, Bangladesh Bank may suspend the
registration or license of the organization or any of its branches, service centers, booths
or agents for the purpose of closing its operation within Bangladesh or, as the case may
263
be, shall inform the registration or licensing authority about the fact so as to the relevant
authority may take appropriate measures against the said organization. (6) If any
reporting organization fails to comply with any order for freezing or suspension of
transaction issued by Bangladesh Bank under clause (c) of sub-section (1), Bangladesh
Bank may impose a fine on such organization not less than the balance held on that
account but not more than twice of the balance held at the time of issuing the order. (7)
If any person or entity or reporting organization fails to pay any fine imposed by
Bangladesh Bank under sections 23 and 25 of this Act, Bangladesh Bank may recover
the fine from accounts maintained in the name of the relevant person, entity or reporting
organization in any bank or financial institution or Bangladesh Bank, and in this regard
if any amount of the fine remains unrealized, Bangladesh Bank may, if necessary, make
an application before the court for recovery and the court may pass such order as it
deems fit. (8) If any reporting organization is imposed fine under sub-sections (3), (4),
(5) and (6), Bangladesh Bank may also impose a fine not less than taka 10 (ten)
thousand but not exceeding taka 5 (five) lacs on the responsible owner, directors,
officers and staff or persons employed on contractual basis of that reporting
organization and, where necessary, may direct the relevant organization to take
necessary administrative actions.
24. Establishment of the Bangladesh Financial Intelligence Unit (BFIU).–(1) In

order to exercise the power and perform the duties vested in Bangladesh Bank under
section 23 of this Act, there shall be a separate unit to be called the Bangladesh
Financial Intelligence Unit (BFIU) within Bangladesh Bank. (2) For the purposes of
this Act, the governmental, semi-governmental, autonomous organizations or any
other relevant institutions or organizations shall, upon any request or spontaneously,
provide the Bangladesh Financial Intelligence Unit with the information preserved or
gathered by them.
(3) The Bangladesh Financial Intelligence Unit may, if necessary, spontaneously
provide other law enforcement agencies with the information relating to money
laundering and terrorist financing. (4) The Bangladesh Financial Intelligence Unit
shall provide with information relating to money laundering or terrorist financing or
any suspicious transactions to the Financial Intelligence Unit of another country on
the basis of any contract or agreement entered into with that country under the
provisions of this Act and may ask for any such information from any other country.
(5) The Bangladesh Financial Intelligence Unit may also provide with such
information to the Financial Intelligence Units of other countries spontaneously where
there is no such contract or agreement under sub-section (4).
25. Responsibilities of the reporting organizations in prevention of money
laundering.– (1) The reporting organizations shall have the following responsibilities
in the prevention of money laundering, namely:-
(a) to maintain complete and correct information with regard to the identity of its
customers during the operation of their accounts;
264
(b) if any account of a customer is closed, to preserve previous records of transactions

of such account for at least 5(five) years from the date of such closure;
(c) to provide with the information maintained under clauses (a) and (b) to
Bangladesh Bank from time to time, on its demand;
(d) if any doubtful transaction or attempt of such transaction as defined under clause
(n) of section 2 is observed, to report the matter as “suspicious transaction report” to
the Bangladesh Bank immediately on its own accord.
(2) If any reporting organization violates the provisions of sub-section (1),
Bangladesh Bank may- (a) impose a fine of at least taka 50 (fifty) thousand but not
exceeding taka 25 (twenty-five) lacs on the reporting organization; and (b) in addition
to the fine mentioned in clause (a), cancel the license or the authorization for carrying
out commercial activities of the said organization or any of its branches, service
centers, booths or agents, or as the case may be, shall inform the registration or
licensing authority about the fact so as to the relevant authority may take appropriate
measures against the organization.
(3) Bangladesh Bank shall collect the sum of fine imposed under sub-section (2) in
such manner as it may determine and the sum collected shall be deposited into
treasury of the State.
26. Contract with foreign countries.– (1) For the purposes of this Act, the
Government may enter into a contract with any foreign State under bilateral or
multilateral agreements, conventions or any other means recognized by international
law. (2) If the Government enters into any contract with any foreign State under this
section, the Government may, for the purpose of prevention of money laundering:-
(a) ask for necessary information from the foreign State or organization; and
(b) provide with information asked for by the foreign State or organization if it is not
a threat to national security.
(3) For the purposes of this Act, the Bangladesh Financial Intelligence Unit (BFIU)
may sign any memorandum of understanding with any foreign financial intelligence
unit or other organization and under the memorandum of understanding BFIU may -
(a) ask for necessary information from the foreign financial intelligence unit or
organization; and
(b) provide information sought by the foreign financial intelligence unit or organization
if it is not a threat to national security. (4) Any court may, upon the application of
Attorney General's Office, pass such orders as it deems fit where, for the purpose of this
Act, it is necessary to confiscate or return any property situated in Bangladesh in order
to comply with an order made by a court of a foreign State under a contract; similarly
the Attorney General's Office may make a request to a foreign State for the purpose of
complying with an order passed by a court in Bangladesh for confiscation or return of
property under a contract or memorandum of understanding. (5) Notwithstanding
anything contained in any other law, any documents received from the appropriate
authorities of any foreign State under the scope of mutual legal assistance, shall, for the
purposes of this Act, be admissible as evidence before the relevant court.
265
27. Offences committed by an entity.– If any offence under this Act is committed by
an entity, every proprietor, director, manager, secretary or any other officer, staff or
representative of the said entity who is directly involved in the offence shall be
deemed to be guilty of the offence, unless he is able to prove that the offence has been
committed without his knowledge or he tried his best to prevent it.
Explanation.– In this section “director” includes any member of the partnership
entity or any of the Board of Directors of the entity, by whatever name called.
28. Protection of actions taken in good faith.– No suit or prosecution or
administrative measures or any other legal proceedings shall lie against the
Government or any officer or staff of the Government or Bangladesh Bank or any
officer or staff of Bangladesh Bank or the Anti-Corruption Commission or any officer
or staff of the Commission or any reporting organization or its Board of Directors or
any of its officers or staff for anything which is done in good faith under this Act or
rules made thereunder for which any person is or likely to be affected.
29. Power to make rules.–
For the purposes of this Act, the Government may, by notification in the official
Gazette, make rules.
30. Publication of an English Text of the Act.– (1) After the commencement of this
Act, the Government shall, as soon as possible, by notification in the official Gazette,
publish an Authentic English Text of this Act. (2) In case of any conflict between the
Bangla Text and the English Text, the Bangla Text shall prevail.
31. Repeal and savings.–(1) The Money Laundering Prevention Act, 2009 (Act
No.VIII of 2009) and the Money Laundering Prevention Ordinance, 2012 (Ordinance
No. II of 2012), hereinafter referred to as the Act and Ordinance, are hereby repealed.
(2) Notwithstanding such repeal, any action taken or any case filed or any proceeding
taken under the Act and Ordinance which are pending shall be disposed of in such a
manner as if it had been filed and taken under this Act. (3) Notwithstanding such
repeal, if any offence committed or remains under investigation or trial under the
Foreign Exchange Regulation Act, 1947 (Act No. VII of 1947) and the Act and
Ordinance, such offences shall be disposed of in such a manner as if it had been filed
and taken under this Act.
Md. Mahfuzur Rahman

Acting Secretary
266
Appendix Two
Anti Terrorism Act 2009

(Act XVI of 2009)
[24 February, 2009]
An Act to prevent and effectively punish certain terrorist activities and to make
provisions connected therewith
WHEREAS it is expedient and necessary to prevent certain terrorist activities and to
make provisions connected therewith as well as punishing those activities therewith;
It is hereby enacted as follows:-
CHAPTER ONE
Preliminary Short Title, Extent and Commencement
1. (1) This Act may be called the Anti Terrorism Act 2009.
(2) It shall extent to the whole of Bangladesh.
(3) It shall come into effect from 11th June 2008.
Definitions
2. In this Act, unless there is anything repugnant in the subject or context, -
(1) “Offence” means any offence punishable under this Act;
(2) “Firearms” means any kind of pistol, revolver, rifle, gun or canon, and includes
any other kind of firearms;
(3)“Court” means the Court of Session Judge or, in applicable cases, the Court
of Additional Judge;
(4) “Imprisonment” means imprisonment of any description as stated in section 53 of
the Penal Code;
(5) “Code of Criminal Procedure” or “Procedure” means the Code of Criminal
Procedure, 1898 (Act V of 1898)
(6) “Schedule” means the Schedule of this Act;
(7) “Penal Code” means the Penal Code, 1860 (Act XLV of 1860);
(8) “Ignitable substance” means any material which has normally the highest tendency
of setting out or increasing or spreading fire, for example-octane, petrol, diesel,
compressed natural gas(CNG), gun powder, and includes any other ignitable substance;
(9) “Bangladesh Bank” means Bangladesh Bank constituted under Bangladesh
Bank Order, 1972 (P.O. No. 127 of 1972);
(10) “Bank” means any bank constituted under the Bank Companies Act, 1991 ( Act
XIV of 1991) and also includes any other financial or commercial organization having
the authority under any other law to receive loan, share out or exchange money;
(11) “Judge” means Session Judge, Additional Session Judge or, where applicable, the
Judge of the Anti Terrorism Special Tribunal;
(12) “Special Tribunal” means any Tribunal constituted under section 28 of this
Ordinance for the purpose of countering terrorism;
(13) “Explosive Substance” means-(a) gunpowder, nitroglycerine, dynamite,
gun-cotton, blasting powders, fulminate of mercury or of other metals, coloured fires
and every other substance, whether similar to those above-mentioned or not, used or
manufactured with a view to produce a practical effect by explosion, or a
pyrotechnic effect; and
267
(b) any materials for making any explosive substance; also any apparatus, machine
implement or material used, or intended to be used, or adapted for causing, or aiding
in causing, any explosion in or with any explosive substance; also any part of any
such apparatus, machine or implement and includes fuses, rockets, percussion-caps,
detonators, cartridges, ammunition of all descriptions;
(14) “Property” means property of any description, material or immaterial, movable
or immovable, tangible or intangible and any profit arising out there from; and also
includes any money or negotiable instrument;(15) “Evidence Act” means the
Evidence Act 1872 (Act I of 1872)
3. Applicability of other Words and Expressions:-

(1) The words or expressions which are used in this Act but have not been defined in this
Act shall be taken in the sense as defined in the Code of Criminal Procedure or where
applicable, in the Penal Code.(2) The general principles of the crimes and criminal
responsibility as enunciated in the Penal Code shall, to the extent possible, be applicable to
the offences under this Act unless they are contradictory to the other provisions of this Act.
4. Supremacy of the Law: --

The provisions of this Act shall have effect not withstanding anything to the contrary
contained in the Code of Criminal Procedure or any other law for the time being in force.
5. Extra-territorial Application
(1) If any person commits any offence against any Bangladeshi national or property
outside Bangladesh, which if committed in Bangladesh would have been punishable
under this Act, shall be deemed to have committed the offence in Bangladesh and
the provisions of this Act shall be applicable to that person and the offence.(2) If any
person commits any offence inside Bangladesh from outside the territory
of Bangladesh, it shall be deemed that total process of the commission of offence has
been performed in the territory of Bangladesh and the provisions of this Act shall be
applicable to that person and the offence.
(3)If any person commits any offence outside Bangladesh from the territory of
Bangladesh, it shall be deemed that total process of the commission of offence has
been performed in the territory of Bangladesh and the provisions of this Act shall be
applicable to that person and the offence
CHAPTER TWO
Offence and Punishment
6. Terrorist Activities
(1) If any person by creating horror amongst the public or segment of the public
to jeopardize the territorial integrity, solidarity, security or sovereignty of Bangladesh,
for the purpose of compelling the government or any other person to do or not to do
an act– (a) causes death, inflicts grievous hurt, confines or abducts any person or
causes damage to any property of a person; or (b) uses or keeps any explosive,
ignitable substance, firearms or any other chemical substance with a view to effect the
purposes enumerated in clause (a);shall commit the offence of “terrorist activities.”(2)
Any person committing terrorist activities shall be sentenced with death or convicted
with rigorous imprisonment of not more than 20 years but not less than 3 years and
shall also be liable to fines.
268
7. Offences for supply of money to terrorist activities

(1) If any person supplies or incites to supply money, service or any other property to
other person and intends to use it for any terrorist activities or if there is reasonable
cause to believe that those would be or might be used for terrorist activities, he would
commit the offence for supply of money to terrorist activities.(2) If any person
receives money, service or any other property and intends to use it for any terrorist
activities or if there is reasonable cause to believe that those would be or might be
used for terrorist activities, he would commit the offence for supply of money to
terrorist activities.(3) If any person manages money, service or any other property to
other person and intends to use it for any terrorist activities or if there is reasonable
cause to believe that those would be or might be used for terrorist activities, he would
commit the offence for supply of money to terrorist activities.(4) Any person found
guilty of offences under sub-clause (1) to (3), shall be convicted of not more than
twenty years and not less than three years imprisonment of any description, and in
excess to that may also be liable to fine.
8. Membership of prohibited organizations

If any person becomes or claims to be a member of any prohibited organization, he
would commit offence and committing such offence and would be punished with not
more than six months imprisonment or fine or with both.
9. Supporting of prohibited organization

(1)If any person requests or urges any other person to support any prohibited
organization under section 18,or arranges, administers or aids to administer or gives
speeches for the purpose of supporting any prohibited organization or boosting up
or encouraging its activities, he would commit offence.(2) If any person addresses any
meeting or circulates any information for begging support in favour of any prohibited
organization or for activating its activities, through radio, television or any other print
or electronic media, he would commit offence.(3) Any person found guilty of
offences under sub-clause (1) or (2), shall be convicted of not more than seven years
and not less than two years imprisonment of any description, and in excess to that
may also be liable to fine.
10. Punishment for criminal conspiracy

If any person involves in criminal conspiracy to commit any offence under this Act,
he shall be punished for such a term of any description which is two-thirds of the
maximum punishment provided for that offence or with fine or both and if the fixed
punishment is death sentence, the punishment shall be for life imprisonment or not
more than fourteen years but shall not be less than 5 years.
11. Punishment for attempt to commit offence

If any person attempts to commit any offence under this Act, he shall be punished
for such a term of any description which is two-thirds of the maximum punishment
provided for that offence or with fine or both and if the fixed punishment is death
sentence, the punishment for the offence shall be for life imprisonment or not more
than fourteen years but shall not be less than 5 years.
269
12. Punishment for abetment to offence

Whoever abets to any offence punishable under this Act shall be punished with the
conviction fixed for that offence.
13. Instigation to terrorist activities

If any person through his voluntary activities or participation prepares or distributes
any document or by broadcasting any information through print or electronic media or
aids to any person or organization by providing any apparatus, service or technology
or training with knowledge that such document, apparatus, service or technology
or training would be used to perpetrate any offence under this Act or such person or
organization would use those to perpetrate like offences, it shall be taken that such
person has instigated the terrorist activities and for such type of offence he shall be
punished for such a term of any description which is two-thirds of the maximum
punishment provided for that offence or with fine or both and if the specified
punishment is death sentence, the punishment for the offence shall be for life
imprisonment or not more than fourteen years but shall not be less than 5 years.
14. Sheltering offenders

(1) If any person irrespective of having knowledge that a person has committed
offence under this Act or irrespective of having reasonable cause to believe that the
impugned person is an offender, shelters or hides any person, he shall be-(a)
convicted of five years, if the punishment for the offence is a death sentence, and in
excess to it shall also be liable with fine.(b) convicted of three years, if the offence is
punishable with life imprisonment or for any other term and in excess to that shall
also be liable with fine.
(2). If the offence of sheltering or hiding under sub-clause (1) is accorded by husband,
wife, son, daughter, father or mother of the offender, the provisions of this section
shall not be applicable.
CHAPTER THREE
Powers of Bangladesh Bank
15. The Powers of Bangladesh Bank

(1) Bangladesh Bank shall have the power to prevent and identify any transaction
through banking channel designed to committing any offence under this Act and for
this purpose shall have the following powers and authority-(a)to ask for any statement
relating to any doubtful transaction and if not permitted by law to disclose, to keep
it secret;(b)to collect and preserve all statistics and record; (c) to create and preserve
data-base relating to any doubtful transaction; (d) to analyze statement relating
to doubtful transaction (e) to give written order to the concerned bank to close
transaction for thirty days, if there is reasonable cause to doubt that a transaction is
associated with terrorist activities and to extend the time for further thirty days;(f)to
scrutinize and supervise the activities of the bank/s; (g) to give direction to the banks
for taking preventive measures to debar supply of money to terrorist activities;
(h)inspect the banks to find out the transaction associated with doubtful transaction
for terrorist activities; and(i)to train up the officers and staffs to identify and prevent
the doubtful transaction associated with supply of money to terrorist activities.(2)
Bangladesh Bank, after identifying any bank or its recipient of doubtful transaction
270
associated with supply of money to terrorist activities, shall instantly inform the proper law
enforcing authority and shall provide all necessary cooperation to that law enforcing
agency in investigation and inquiry task. (3) No law enforcing authority shall have the
access to any document or record of any bank, save in accordance with permission of
Bangladesh Bank or Chief Executive Officer of the concerned bank.
16. Duty of the Bank

(1) Every bank, for the purpose of preventing and identifying any offence under this
Act through any banking channel, shall take necessary measures with due weight and
responsibility.
(2) Board of Directors of every bank shall endorse and execute directories relating to
the responsibilities of the officers of the bank, shall ensure the compliance of the
directions, whichever is applicable, rendered by the Bangladesh Bank.
(3) If any bank fails to comply with the direction from the Bangladesh Bank
under section 15, it shall be obliged to pay not more than ten lakh taka determined and
directed by the Bangladesh Bank.
CHAPTER FOUR
Terrorist Organization
17. Organization involved with terrorist activities
For the purpose of furthering the objectives of this Act, any organization shall be held
to be involved in terrorist activities, if it-(a)operates terrorist activities or participates
in it; (b)take preparation for terrorist activities; (c)abets or incites terrorist activities;
(d)supports and cooperates organizations involved in terrorist activities;(e)otherwise
involves in terrorist activities.
18. Prohibiting organization

For the purpose of this Act the Government shall have the power to prohibit by order
or incorporating in schedule, any organization on reasonable basis of involvement in
terrorist activities.
19. Review
(1) Organization aggrieved by the order of the government under section 18 shall,
within30 days of the giving the order, apply to government in writing, presenting
arguments, for review and the government providing with an opportunity of being
heard, settle the review application within ninety days from the date of receiving such
application.
(2) If the review application is not granted under sub-clause (1), the aggrieved
organization shall have the right to make an appeal to the High Court Division within
thirty days of not-granting of the order.(3) The government through gazette
notification shall constitute a three member Review Committee to dispose of the
review applications under sub-clause (1).
20. Actions against prohibited organization

(1) If any organization is declared prohibited, the government, in addition to taking
steps under this Act, is empowered to take the following measures:(a)would close its
office, if any; (b)would freeze its bank account and confiscate other transaction;
271
(c)would abandon all types of prospectus, poster, banner, or other printed, electronic
and digital materials; and(d)shall prohibit the publication of any press release, printing
or publication, press conference or giving speech before public;(2) The prohibited
organization shall submit the accounts of its earnings and expenses and disclose all
sources of income to proper authority appointed by the government.(3) If it appears
that fund and assets of the prohibited organization have been earned unlawfully or
have been used to commit any offence under this Act, such fund and assets shall be
forfeited in favour of the state.
CHAPTER FIVE
Investigation of offences
21. Special provision for examining the witness by the police

(1) If any police officer while investigation of any offence under this Act, thinks it fit
that a person acquainted with the incident needs to be interrogated and if the police
officer knows or has reason to believe that person is capable of providing the minutes
of the incident in writing, then that police officer, with the consent of that person,
shall have the power to take the narratives of the incidents from that person in
writing.(2) That person shall reduce his statement or narratives of the incident into
writing in his own hand by pen and sign.
22. Special provision relating to recording of statement of the witness by the

Magistrate
If any Metropolitan Magistrate, Magistrate of the first class or Magistrate of the
second class specially assigned for this purpose knows or has reasonable cause to
believe that person is capable enough to provide the minutes of the incident in
writing, he shall have the power to take the narratives of the incidents from that
person in writing.
23. Special provision relating to record of confessional statement of the accused

While recording of any confessional statement of the accused is going on by any
Metropolitan Magistrate, Magistrate of the first class or Magistrate of the second class
specially assigned for this purpose, if the accused is capable and desirous to provide
the minutes of the incident in writing, he may allow the accused to give his
confessional statement in his own writing by pen.
24. Time frame of investigation

(1) Any police officer shall complete the investigation of any case under this Act
within thirty days from the date of receiving information or record under section 154
of the procedure.(2) If the police officer fails to complete the investigation by thirty
days as stated under sub-clause (1), he shall extend the time for a further 15 days with
reasons recorded in the case diary.(3) If the police officer fails to complete
the investigation within time as stated under sub-clause (2), he shall extend the time
further which shall not exceed 30 days with the written approval of the
Superintendent of Police of the concerned district or in applicable cases, of the
Deputy Police Commissioner of the metropolitan area.(4) If the police officer fails to
complete the investigation within time as stated under sub-clause (3), he shall
forthwith communicate about the incidents with reasons recorded therein to the
Superintendent of Police of the concerned district or in applicable cases, to the Deputy
Police Commissioner of the metropolitan area, and if the reasons are not justified he
shall be subject to departmental penal action.
272
25. Time extension of investigation in certain cases

(1) Any failure on the part of the police officer to complete investigation within the
extended time as sated under section 24 (3) because of non-identification of the
offender named in the First Information Report (FIR) and non-capability of
identifying the offender, would not debar him in submitting police report or new
police report or additional police report any time after the elapse of the extended time.
2. If any police officer for the purpose of obtaining any testimony or report fails to
complete investigation within the extended time as sated under section 24 (3) because
of the reasons not within his control and without which no effective report can be
made, such as, medical report, forensic report, thumb impression, chemical report or
expert opinion, such failure would not debar him in submitting police report any time
after the elapse of the extended time.
26. Remand
(1) In any case when a person is arrested and detained for the purpose of conducting
investigation, the investigating officer can apply to magistrate of competent
jurisdiction for remanding the person to police custody.(2) The magistrate shall have
the power after considering the application under sub-section (1) to grant remand of
the accused and the term of such remand shall not extend ten days in its totality or
continuity; provided that If the investigating officer can satisfactorily prove before the
magistrate that if granted remand for an extended period, additional evidence may be
obtained, the magistrate shall have the power to extend the period of such remand not
more than five days.
CHAPTER SIX
Trial by Session Judge
27. Provisions relating to trial by Session Judge or Additional Judge

(1) Notwithstanding anything contained in the Criminal Procedure Code or any other
law for the time being in force, unless Special Tribunal is constituted for the purpose,
the offences under this Act shall be tried by the Session Judge or in the event of
transfer of a case by the Session Judge to the Additional Session Judge, by the
Additional Session Judge.(2) The Session Judge or the Additional Session Judge
while trying the offences under this Act shall follow the procedure applicable for the
session courts as envisaged in chapter 23 of the Code of Criminal Procedure.(3) For
the purpose of this Chapter, offences under this Act shall be deemed to be triable by
the Session Courts, and the complaints shall have to be lodged to the Session Judge
under whose territorial jurisdiction the offence or part of the offence have been
committed.
CHAPTER SEVEN
Trial by Special Tribunal
28. Formation of Special Tribunal for Anti-terrorism

(1) The Government, through Government Notification, shall constitute one or more
Anti-terrorism Special Tribunal for the purpose of speedy and effective disposal of
cases under this Act.
(2) The Special Tribunal so constituted under Sub-section (1), shall be composed of a
Session Judge or Additional Session Judge appointed by the Government in
consultation with the Supreme Court; and the Judge so appointed shall be designated
273
as ‘Judge, Anti-terrorism Special Tribunal’.(3) Tribunal constituted under this Section

may be attributed the whole territorial area of Bangladesh or one or more territorial
area of session division; and the tribunal shall try only those offences lodged or
transferred to it.(4) The jurisdiction of a Session Judge or Additional Session Judge to
try the offences under this Act shall not be affected by the conferment of territorial
jurisdiction of the whole of Bangladesh or one or more territorial area of session
division to a Special Tribunal ,and the cases under this Act pending in a session court,
unless otherwise ordered by government notification, shall not be transferred to the
Special Tribunal having special territorial jurisdiction.(5)Any Special Tribunal, unless
otherwise decides, shall not be bound to retake the testimony of any witness already
taken or arrange hearing again or to restart proceedings under sub-section (4) but shall
have the power to work on the testimony already recorded or presented and to
continue the case from the stage as it was.(6) The Tribunal shall sit and administer its
functions in the place and at the time as the Government fixes by Order.
29. The procedure of the Special Tribunal

(1) The Special Tribunal shall not take cognizance of any offence for the purpose of
trial except in pursuance of a written report by a police officer not below the rank of
Sub-Inspector.(2) The Special Tribunal while trying the offences under this Act shall
follow the procedure laid down in chapter 23 of the Code of Criminal Procedure
unless it is inconsistent with the special provisions of this Ordinance.(3) No Special
Tribunal, unless required for natural justice and save reasons recorded in writing, shall
postpone the proceedings of a case.(4) Where the Special Tribunal has reasons to
believe that, the accused is absconding or has hidden himself and as such it is not
possible to produce him for trial after arrest and there is no scope of arresting him
immediately, in that case the Tribunal, by Order, shall have the power to direct the
accused through at least two Bangla Daily Newspaper to surrender within time
stipulated in the order the failure of which would entail trial in absentia.
(5) If the accused absconds or fails to be present, after his presence before the
Tribunal or after bail being granted, the procedure stated in sub-section (4) shall not
be applicable, and the Tribunal with reasons recorded in writing shall proceed with
the trial in absentia.(6) Any Special Tribunal, on the basis of any application made to
it or in its own motion, shall have the power to direct any police officer to
reinvestigate the case and to report within the stipulated time determined by it.
30. Application of the Procedure in the Proceedings of the Tribunal

(1) The provisions of the Code of the Criminal Procedure, to the extent possible,
unless it becomes repugnant with the provisions of this Act, shall be applicable in the
proceedings of the Special Tribunal and such Tribunal shall have the powers of a
Session Court having original jurisdiction. (2) The person appearing before the
Special Tribunal on behalf of the government shall be deemed to be the public
prosecutor.
31. Appeal and Confirmation of Death Sentence

(1) Appeal shall lie to the High Court Division against any order, judgment or
Conviction of the Special Tribunal within 30 days of rendering its decision.(2) If any
Tribunal awards a death sentence under this Act, the death Reference should be sent
to the High Court Division for confirmation, and until such confirmation is given, the
death sentence cannot be executed.
274
32. Provisions for bail

The Magistrate or the Judge shall not grant bail to the person accused of any
offense punishable under this Act, unless-(a) the state party is given an opportunity of
being heard; and (b) the judge is satisfied that there is reasonable cause to believe that
the accused may not be guilty of offences alleged in the trial and he reduces the
reasons of such satisfaction in writing.
33. The time framework of disposal of cases by the Special Tribunal

(1) The Judge of the Special Tribunal shall complete the trial within six months from
the date of framing of charges.(2) If the Judge fails to the complete the trial within the
time fixed under sub-section (1),he may extend the time with reasons recorded in
writing for not more than three months
(3) If the Judge fails to the complete the trial within the time mentioned under sub-
section(1), he may again extend the time with reasons recorded in writing for not
more than three months keeping the High Court Division and the government
informed about such extension.
CHAPTER EIGHT
Assets accumulated from terrorist activities
34. The possession of assets earned from terrorist activities
(1) No person can enjoy or possess the assets earned from terrorist activities.(2)
Assets earned through terrorist activities under the possession of any
terroristor person any whether accused or convicted under this Act
or not, shall be liable to forfeiture in favour of the government. Explanation: Assets
earned through terrorist activities means money, property or assets gained by resorting
to offences under this Act.
35. Forfeiture of assets earned through terrorist activities

If a judge is satisfied to the effect that any property was confiscated or seized because
of being earned through terrorist activities, the property of the person from whose
custody such property was confiscated or seized shall be liable to forfeited.
36. Issuance of show cause notice before forfeiting any asset earned through
terrorist activities
(1) No Order of forfeiture of the assets earned through terrorist activities shall be given
unless the person in whose control or possession the asset is situated, is issued a written
notice describing the reasons of forfeiture and provided with an opportunity of giving
reply in written and hearing within a reasonable time.(2) The Order of forfeiture shall
not be given, if such person can establish that he did not know that the asset was earned
through terrorist activities and he had purchased it in exchange of proper value.
37. Appeal
(1) Any aggrieved person may prefer an appeal to the High Court Division against the
forfeiture order under section 35(1) within one month of receiving the Order.
(2) If any Order under section 35 is altered or annulled by the High Court division or
if any case is filed in violation with the provisions of this Ordinance, the forfeited
property of the person against whom the Order under section 35 was made, shall be
returned to him after his release and in case if it becomes impossible to return the
275
property to that person, it shall be deemed that the forfeited property was sold out to
the government and the person should be repaid interest from the date of forfeiture
after proper account and the reasonable value of the property after its fair
determination.
CHAPTER NINE
Mutual Legal Assistance
38. Mutual Legal Assistance

(1) When an offence is committed in such a manner or is abetted, attempted,
conspired, financed in its commission in such a way that the territory of a foreign
country is associated with it, or running of terrorist activities or abetment, attempt,
conspiracy or finance to its running, are committed from the territory of a foreign
sovereign country or from the territory of Bangladesh to the territory of another
sovereign country, then at the request of such foreign country the government of
Bangladesh, if satisfied, subject to the provisions of this section, shall extend legal
assistance to that foreign country in all necessary matters relating to criminal
investigation, trial and extradition.
(2) The terms and conditions of the legal assistance between the requesting and
requested state shall be determined by agreement or exchange of notes reached
through mutual negotiation.
(3) No citizen of Bangladesh committing offence under this Ordinance shall be liable
to be extradited to any foreign country.
(4) For the purpose of mutual legal assistance under this section, a citizen of
Bangladesh, subject to his consent, can be handed over to other country to assist in
criminal case or investigation as a witness.
(5) If there is strong reasons to believe on the part of the government that mutual legal
assistance has been sought to try or punish a person simply for his caste, religion,
nationality or political opinion, then as a requested state Bangladesh preserves the
authority to refuse the request of extradition or mutual legal assistance in such cases.
CHAPTER TEN
General Provisions
39. Cognizance and Non-bailability
(1) All offences under this Act shall be cognizable.
(2) All offences under this Act are non-bailable.
40. Prior approval of investigation and trial

(1) No police officer can investigate under this Act without the prior approval of the
District Magistrate.
(2) No Court shall take cognizance of any offence under this Act save in accordance
with prior sanction of the government.
41. Transfer of cases from or to Special Tribunal

The Government, before the conclusion of obtaining testimony, at any stage of the
trial, on reasonable cause, may transfer a case or cases relating to offences under this
Act, from a Session Court to Special Tribunal or from a Tribunal to Session Court.
276
42. Power to amend Schedule

The Government, through Government Gazette Notification, may amend the schedule
of the Act.
43. Power to make rules

The Government, through Government Gazette Notification, may frame rules, for
the purpose of this Act.
44. Original and English text

The original text of this Act shall be in Bangla and there shall be an authentic text of
anauthorized translation in English; provided that in the event of conflict between the
Bangla and the English text, the Bangla text shall prevail.
45. Repeal & Saving there of

(1) The Anti Terrorism Ordinance 2008 (Ordinance no.28of 2008) is here repealed.
(2) Notwithstanding the repeal, any act taken or done under the repeal ordinance shall
be considered to have done under this act.
------------x------------

Proliferation of Money Laundering: Law and Practice in Bangladesh

Uploaded by

Copyright:

Available Formats

Proliferation of Money Laundering: Law and Practice in Bangladesh

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Proliferation of Money Laundering: Law and Practice in Bangladesh

Uploaded by

Copyright:

Available Formats

University of Rajshahi Rajshahi-6205 Bangladesh.

RUCL Institutional Repository http://rulrepository.ru.ac.bd

Proliferation of Money Laundering:

Islam, Md. Rafiqul

Md. Rafiqul Islam

Md. Rafiqul Islam

Dr. Md. Hashibul Alam Prodhan Dr. Md. Anisur Rahman

I declare that this dissertation entitled Proliferation of Money Laundering:

Law and Practice in Bangladesh prepared for submission to the Department

of Law, University of Rajshahi, for the Degree of Doctor of Philosophy in Law,

is completely a personal work of mine. No part of this dissertation in any form

Md. Rafiqul Islam

This is to certify that the dissertation entitled Proliferation of Money

Laundering: Law and Practice in Bangladesh is an original work done by

degree of Doctor of Philosophy in Law under our supervision.

dissertation and approved it for submission.

Dr. Md. Hashibul Alam Prodhan Dr. Md. Anisur Rahman

It is a great opportunity for me to have undertaken the Ph.D. programme in the

Department of Law, University of Rajshahi, Rajshahi, Bangladesh. To begin

I would like to express my sincere gratitude to my Principal Supervisor,

Dr. Md. Anisur Rahman, Professor, Department of Law, University of Rajshahi

and Co-Supervisor Dr. Md. Hashibul Alam Prodhan, Professor, Department of

been possible for me to carry out this research.

I am grateful to Professor Dr. Md. Ahsan Kabir, Chairman, Department

of Law, University of Rajshahi and Mr. Biswajit Chanda, Dean, Faculty of

Law, University of Rajshahi, for their cooperation in smoothing the process of

submission of the thesis. I acknowledge my gratitude to all my honourable

teachers, particularly to Professor Dr. M. Badar Uddin, Professor Dr. M.

Waliul Hasanat, LLD as well as to other colleagues of the Department of Law,

University of Rajshahi, for their continuous encouragement towards my

Anti Corruption Commission (ACC) of Bangladesh, Central Library of

Rajshahi University, Central Library of Dhaka University, Central Library of

offer my cordial thanks to my friends, relatives and well wishers, who

encouraged and supported me in various ways in the preparation of this

I would like to thank my family members, who have accompanied me

with their untiring patience, tremendous sacrifice during this study. I am

Md. Rafiqul Islam

ACC Anti-Corruption Commission

Money Laundering (ML) is an issue much-discussed all over the world

including Bangladesh. States and number of transnational organisations are

controlling activities associated with it at both national and international levels.

Bangladesh in preventing ML.

The study has been conducted on an elaborate pattern of 06 (six)

statement of the problem, literature review, methodological aspect and

following chapter discusses the conceptual issues covering the definition,

historical background, and analyses the classification, stages, and different

relevant provisions of domestic AML laws and transnational initiatives to

prevent ML and also examines the drawbacks of existing AML laws of

governmental institutions engaged in implementing the provisions of AML

laws with a view to preventing ML in Bangladesh. The chapter examines both

of their operational and functional frameworks at national and international

authority or institutions engaged in preventing ML in Bangladesh.

The concluding chapter puts forward some suggestions on the basis of

the summaries of findings and identifies specific challenges addressed in the

the thesis and suggests a few ways of preventing ML by amending existing

AML laws; cumulatively, critically synthesises all of the above mentioned

issues and constitutes the outcome of the study.

situation, social culture, political integrity and the national stability of a

country. ML may provide advantages to drug dealers, smugglers, terrorists