Banker's Academy AML Training by Country

Anti Money Laundering (AML) By Country: Bangladesh

Anti Money Laundering (AML) in Bangladesh

Although Bangladesh has taken many steps to prevent money laundering, it continues to be a large problem within the country. On January 11, 2007, a caretaker government came to power after declaring a state of emergency. Under the new government, there has been an increase in the amount of funds laundered through the official banking system. As a response to this, fighting corruption is now one of the main goals of the caretaker government in power.

The main vulnerability for money laundering remains the use of the underground hawala or “hundi” system, used to transfer money and valuables outside of the formal banking system. The greatest use of the hundi system is to repatriate wages from expatriate Bangladeshi workers. Although banks have recently increased there speed and efficiency in making remittances, hundi remains a thriving system due to its ability to avoid taxes, customs duties and currency controls.

To battle the problems of money laundering, the government enacted the Money Laundering Prevention Act in 2002. Then, in 2007, the government enacted the UN Convention against Corruption (UNCAC). Also in 2007, the government recognized the Central Bank’s Anti-Money Laundering Department (AMLD) as the country’s official Financial Intelligence Unit (FIU). In 2008, the government promulgated the Money Laundering Prevention Ordinance (MLPO 2008) and the Anti-Terrorism Ordinance (ATO 2008). Both ordinances facilitate international cooperation in battling money laundering, including working to recover funds illegally transferred to or from foreign countries.

The Economy of Bangladesh

Bangladesh has an expanding economy, having grown 5 to 6% every year since 1996. Economic growth is partially fueled by garment exports and remittances from Bangladeshis working overseas, mainly in the Middle East and East Asia.

However, there are many factors hindering the Bangladesh economy as well, 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.

Banking in Bangladesh

Bangladesh Bank is the Central Bank of Bangladesh, established in 1971. The direction of 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 Bangladesh Bank has numerous broad objectives, including regulating the issuing of currency and reserve maintenance, managing the Bangladesh monetary and credit system, stabilizing domestic monetary value, preserving the par value of the Bangladesh Taka and promoting and maintaining an increased level of employment, production and real income in Bangladesh (including fostering and growing the country’s productive resources).

Bangladesh's Currency

The Taka is the official currency of Bangladesh, having replaced the Pakistani rupee at par in 1972. The word “taka” is formed from the Sanskrit word “tanka,” an ancient type of silver coin. The Taka is made up of 100 poisha. Both banknotes and coins are issued by Bangladesh’s Central Bank, the Bangladesh Bank.

Taka banknotes are available in 1, 2, 5, 10, 20, 50, 100, 500 and 1000 taka. The 1000 taka note was recently issued in 2009. Coins currently in circulation include 1, 5, 10, 25 and 50 poisha coins, and 1 and 5 taka coins. However, only the 1 and 5 taka coins are found widely in circulation.