BANGLADESH
Summary
Summary

Sanctions

None

FAFT AML Deficient

No

Higher Risk Areas

 

Not on EU White list equivalent jurisdictions

Corruption Index (Transparency International & W.G.I.)

World Governance Indicators (Average Score)

Failed States Index (Political Issues)(Average Score)

Medium Risk Areas

Non - Compliance with FATF 40 + 9 Recommendations

US Dept of State Money Laundering Assessment

 

 

ANTI-MONEY LAUNDERING

 

FATF Status

Bangladesh is no longer on the FATF List of Countries that have been identified as having strategic AML deficiencies

 

Latest FATF Statement: 14 February 2014

The FATF welcomes Bangladesh’s significant progress in improving its AML/CFT regime and notes that Bangladesh has established the legal and regulatory framework to meet its commitments in its action plan regarding the strategic deficiencies that the FATF had identified in October 2010. Bangladesh is therefore no longer subject to FATF’s monitoring process under its on-going global AML/CFT compliance process. Bangladesh will work with APG as it continues to address the full range of AML/CFT issues identified in its mutual evaluation report.

 

Compliance with FATF Recommendations

The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Bangladesh was undertaken by the Financial Action Task Force (FATF) in 2016. According to that Evaluation, Bangladesh was deemed Compliant for 6 and Largely Compliant for 22 of the FATF 40 Recommendations.

Key Findings

Bangladesh has made significant progress since the last Mutual Evaluation Report (MER) in 2009, reflecting political commitment and leadership on AML/CFT.

Bangladesh faces significant money laundering (ML) and terrorism financing (TF) risks and competent authorities have a reasonable understanding of those risks. The National Risk Assessments (NRA) and sectoral risk assessments add to effectiveness and guide national strategies, however they do not comprehensively cover threats and TF. Inter-agency work to assess TF risks shows strengths, but more work is needed to assess foreign TF threats, to further assess ML threats and to share information on TF risks with the private sector.

Bangladesh has a range of high-level coordination committees to set policy and coordinate AML/CFT priorities. The high-level National Coordination Committee (NCC) is well structured and draws on technical expertise from relevant agencies and has been instrument in driving key AML/CFT reforms. There were well functioning policy coordination structures for countering the financing of terrorism (CFT) and for implementing United Nations Security Council Resolutions (UNSCRs) against terrorism and proliferation of weapons of mass destructions (WMD). At operational levels, coordination and cooperation occur to a varying degree although recent reforms have sought to address identified issues particularly between law enforcement agencies (LEAs).

The 2015-17 National AML/CFT Strategy and CT strategies are, in part, driven by findings of risk assessments. AML/CFT strategies complement other strategies including CT priorities, but corruption-related ML remains the biggest unmitigated risk area.

Bangladesh Financial Intelligence Unit (BFIU) demonstrated strengths in capacity and outputs. The quality of BFIU disseminations was generally good; however improvement is needed with the quality and quantity of reporting to the BFIU and LEAs’ systematic use of financial intelligence for predicate offences and ML beyond corruption cases.

The ACC had done a significant number of ML investigations related to corruption, but not other offences and until late 2015 Bangladesh had not sufficiently prioritised ML investigations and prosecutions consistent with the risk profile (ie predicates beyond corruption). At the time of the onsite visit only ML five trials had been completed and four convictions obtained, with 214 ML prosecutions pending due to lengthy delays with the courts. The October 2015 legislative amendments allow ML investigations by all relevant LEAs.

Provisional measures and confiscation outputs by LEA were low and most often related to instruments of crime. LEAs need to prioritise tracing, restraint and confiscation of proceeds. The BFIU’s powers to trace and freeze funds held on account adds to effectiveness. Seizures and confiscations by the Bangladesh National Board of Revenue (NBR - Customs and Tax) added effectiveness in some high risk areas.

Lengthy delays and capacity challenges in the justice system undermine effectiveness. The courts and the Attorney-General’s Office (AGO) are seriously under-resourced. ML and predicate trials are often delayed over many years and issues with judicial independence of the lower courts add to capacity challenges. Special Courts give the greatest priority to CT and terrorism trials and the TF trials have not been delayed.

Bangladesh has conducted preliminary investigations (enquiries) into a large number of TF cases and a full investigation of 23 cases. A small number of TF prosecutions have been successful and a number are pending. Bangladesh’s focus on terrorism prevention and de-radicalisation adds to effectiveness. While Bangladesh has managed to combat TF threats related to ISIL, financing of foreign fighters is an emerging issue.

Bangladesh has a comprehensive regulatory framework for targeted financial sanctions (TFS) against terrorism. Bangladesh has designated six (6) domestic groups under UNSCR 1373. Outreach and implementation by reporting organisations (ROs) has not led to ROs spontaneously identifying matches with persons acting on behalf of designated entities to freeze assets. Freezing has predominantly occurred in cases where LEAs arrest members of a proscribed group and take TFS freezing actions pursuant to the designations.

AML controls on the not-for profit (NPO) sector go significantly beyond the obligations in the FATF standards, but are not in keeping with TF risks. Stringent requirements on NPOs receiving foreign funding place onerous obligations on that part of the sector, but may not address domestic TF risks. Oversight and supervision does not adequately target TF risk. The recent NPO sector review considers some TF risk elements.

Bangladesh has a comprehensive legal and regulatory framework for TFS against WMD proliferation. Supervision of PF-related obligations by banks was undertaken, however this needs to be extended to other sectors. A number of case studies demonstrate levels of effectiveness of TFS systems and vigilance measures by authorities.

Bangladesh has made important progress with preventive measures for the financial sector and DNFBPs and has applied significant resources to raise ROs’ awareness of their AML/CFT obligations. ROs have made some progress in moving to a risk-based approach (RBA) implementation of preventive measures and rules-based implementation has deepened. Further implementation of key preventive measures is needed within and beyond the banking sector, in particular customer due diligence (CDD), domestic politically exposed persons (PEPs) and suspicious transaction reports (STR) reporting and wire transfers.

Bangladesh has controls in place to prevent criminals and their associates from entering the market, albeit with some gaps. Whilst improvements were being made, significant fit and proper risks with the board and management of state-owned commercial banks were not being sufficiently mitigated. Bangladesh Bank (BB) needs to prioritise the RBA to supervision consistent with the risk profile. The frequency, scope and intensity of on-site inspections of commercial banks and non-bank financial institutions (NBFIs) were generally sufficient however there were inadequate resources available to undertake comprehensive supervision across all sectors, particularly DNFBPs. Available fines and sanctions were generally low and rarely applied.

Measures to ensure transparency and prevent misuse of legal persons and arrangements were not well established or implemented. Registration requirements for basic ownership were not well implemented. Beneficial ownership information was not required to be collected by legal persons or parties to legal arrangements. ROs’ obligations to understand the beneficial ownership of customers do not sufficiently mitigate risks of misuse of legal persons and arrangements.

Bangladesh demonstrated its strong commitment to international cooperation and its open and responsive approach to fulfil requests received from foreign partners. While the BFIU actively requests international cooperation and there have been some important successful mutual legal assistance (MLA) requests by Bangladesh, the overall level and focus of requests for international cooperation by LEAs, Customs and prosecutors (MLA) was not in keeping with the risk profile.

 

Risks and General Situation

Bangladesh faces ML and TF risks from both domestic and trans-national sources. The underlying proceeds-generating crime levels are relatively high, with corruption, bribery and related offences of fraud generating the most significant proceeds of crime. Corruption remains a significant risk for Bangladesh, with corruption connected to a range of other predicate offences and its consequences undermining governance and development.

Bangladesh is a destination and trans-shipment point for illegal drugs and smuggling of goods and gold smuggling remains a key risk along with human trafficking and people smuggling. Bangladesh has notable insider trading and market manipulation risks even with recent reforms to the sector. Bangladesh has identified a range of ML techniques, including use of formal banking channels, trade-based ML, informal transfer for laundering outside of Bangladesh, and real estate investment.

Bangladesh is exposed to TF threats chiefly from domestic terrorist groups with an increase in attacks in the recent past and a significant number of terrorism arrests and prosecutions. Authorities indicate these domestic groups operate with relatively small-scale funding and Bangladesh has not, in general, been a source of TF for foreign terrorist groups. Whilst trans- national terror groups have publicly pronounced links to Bangladesh, authorities had not identified any concrete association between domestic and trans-national terror groups nor the financing of such groups at the time of the on-site visit. Relatively few Bangladeshi nationals have been recruited as foreign terrorist fighters.

 

US Department of State Money Laundering assessment (INCSR)

Bangladesh was deemed a Jurisdiction of Concern by the US Department of State 2016 International Narcotics Control Strategy Report (INCSR).

Key Findings from the report are as follows: -

Perceived Risks:

While Bangladesh is not a regional financial center, its geographic location, seaports, and long porous borders with India and Burma make it a transshipment point for drugs produced in both the “golden triangle” of Southeast Asia and the “golden crescent” of Central Asia. Drug trafficking, corruption, fraud, counterfeit money, gold smuggling, and trafficking in persons are the principal sources of illicit proceeds. Bangladesh is also vulnerable to terrorism financing, including funding that flows through the hawala/hundi system and by cash courier. The Bangladesh-based terrorist organization Jamaat ul-Mujahideen Bangladesh has publicly claimed to receive funding from Saudi Arabia.

The Bangladeshi economy relies heavily on remittances, with remittances through official channels reaching over $15.3 billion in calendar year 2015. According to the central bank, the share of remittances transmitted through the formal sector is increasing although there remains widespread use of the underground and illegal hawala/hundi alternative remittance system.

Black market money exchanges remain popular because of the limited convertibility of the local currency, cash-based economy, and scrutiny of foreign currency transactions made through official channels. Alternative remittance and value transfer systems also are used to avoid taxes and customs duties. Additional terrorism financing vulnerabilities exist, especially the use of non-governmental organizations (NGOs), charities, counterfeiting, and loosely-regulated private banks.

 

____________________________________________________________________________________

 

SANCTIONS

There are no international sanctions currently in force against this country.

 

____________________________________________________________________________________

 

BRIBERY & CORRUPTION

 

Index

Rating (100-Good / 0-Bad)

Transparency International Corruption Index

26

World Governance Indicator – Control of Corruption

18

 

____________________________________________________________________________________

 

INVESTMENT CLIMATE - Executive Summary (US State Department)

With 6% annual growth sustained over the past two decades, a large, young and hard-working workforce, and vibrant private sector, Bangladesh, the world’s seventh largest country by population, offers opportunities for investment, especially in the energy, power, pharmaceutical, information technology, telecommunications, and infrastructure sectors as well as in labor-intensive industries such as readymade garments, household textiles, and leather processing. There is also significant demand in major cities for U.S. consumer products and franchises.

The Government of Bangladesh actively seeks foreign investment, particularly in energy, power, and infrastructure projects. It offers a range of investment incentives under its industrial policy and export-oriented growth strategy, with few formal distinctions between foreign and domestic private investors. According to the 2013 World Investment Report, Bangladesh received $990 million in foreign direct investment (FDI) in FY13, down from $1.13 billion in the previous year. This is a nominal amount of investment compared to $38.9 billion in foreign investment that the entire South Asia region attracted, as India continues to dominate FDI inflows for the region.

Bangladesh has made gradual progress in reducing some constraints on investment, but inadequate infrastructure, financial constraints, bureaucratic delays, and corruption continue to hinder foreign investment. The lack of effective alternative dispute resolution mechanisms and slow judicial processes impede the enforcement of contracts and the resolution of business disputes. National elections in January 2014 were preceded by a year of unprecedented political violence and uncertainty, which adversely affected the business and investment climate. The political turbulence subsided after the election, and the return to stability has helped restore business confidence to some extent.

On November 25, 2013, the U.S.-Bangladesh Trade and Investment Cooperation Forum Agreement (TICFA) was signed in Washington, D.C. The agreement provides a mechanism for both countries to meet regularly and identify obstacles to increasing bilateral trade and investment and how to overcome those obstacles. The successful inaugural TICFA Council meeting was held in Dhaka on April 28, 2014.

On June 27, 2013, President Obama announced his decision to suspend Bangladesh’s trade benefits under the Generalized System of Preferences (GSP) in view of insufficient progress by the Government of Bangladesh in affording Bangladeshi workers internationally recognized worker rights. At the time of the announcement, the Administration provided the Government of Bangladesh with a 16-point action plan outlining next steps in a longstanding effort to address in a meaningful way worker rights and safety problems in Bangladesh. If implemented, the plan would provide a basis for the President to consider reinstating GSP trade benefits; it would also drive transformation of the Bangladeshi apparel sector by bringing it to international standards in terms of fire safety, factory structural soundness, and respect for labor rights.

 

____________________________________________________________________________________

 

FURTHER REPORTS

Other Report

13 March 2013  -  IMF Report: Bangladesh: First Review Under the Three-Year Arrangement Under the Extended Credit Facility and Request for Waiver of Nonobservance of a Performance Criterion: -

" In order to address the strategic AML/CFT deficiencies identified by the Financial Action Task Force, the Bangladesh Financial Intelligence Unit issued instructions on compliance with sanctions under Chapter VII of the United Nations Charter (October 2012) and on compliance with domestic AML/CFT laws by capital market intermediaries and institutions carrying out wire transfers of funds (December 2012)."

Read Full Report (pdf file)


24 September 2012  -  Tackling corruption in Bangladesh -  a report from Transparency International

Read More

 

 

This is my page