ZCZC
BSS-25
MONEY-LAUNDERING-PANDEMIC
Experts for remedial steps against financial crimes, money laundering
DHAKA, Sept 29, 2020 (BSS) – The economic downturn, triggered by the
ongoing COVID-19 pandemic, has created a hole through which money launderers
and fraudsters seek to amass huge sums of cash by resorting to illicit trade,
including financial crime and security experts warn.
In many cases, criminals and terrorists are attempting to profit by
posing as genuine businesses, an ominous symptom that signals the ongoing
pandemic might lead to an increase in organised crime.
In view of the whole situation, financial security experts recommend
collective efforts are required, including across law-enforcement agencies,
to combat illicit trade in order to generate national revenue and accelerate
the country’s economic recovery and development activities.
Furthermore, regulatory bodies must consider whether current internal
control and compliance frameworks can identify COVID-19 related fraud and
illegal activities. Firms must be able to satisfy regulators by demonstrating
updated risk procedure and internal control mechanisms to reduce risks of any
possible financial crime, they added.
“Trade-based money laundering is mostly committed in Bangladesh. The
government is firmly committed to tackling this serious issue to save its
economy,” said Abu Hena Mohd Razee Hassan, Head of the Bangladesh Financial
Intelligence Unit (BFIU) of the Bangladesh Bank.
“At the beginning of the pandemic, we instructed banks and other
financial institutions to take strict measures so that none can take
advantage of the new circumstance,” he added.
Referring to a recent study, he informed, around 80 percent of illegal
capital flight globally takes place through illicit trade, or around 60
percent in Bangladesh.
“Developing nations are mostly vulnerable to such risks as it has become
a major threat to their growth and sustainable development. Taking these into
consideration, Bangladesh is fully committed to remain at the forefront of
global efforts to fight Trade Based Money Laundering and Terrorist Financing
(TBML/TF) risks,” he added.
Against this backdrop, considering the fact that international trade
transactions are mainly held through banking system of the country, BFIU has
issued guidelines for banks suggesting they establish appropriate measures
and techniques to combat TBML/TF, he said.
Earlier, at the beginning of 2020, Director General of the Customs
Intelligence and Investigation Directorate (CIID) Muhammad Mubinul Kabir told
the media that global trade was disrupted by the emergence of Coronavirus
(COVID-19), a pandemic that has devastated normal life in all parts of the
world.
The government of Bangladesh has responded to the pandemic with a
comprehensive set of measures, including travel restrictions, social
distancing measures, strict hygiene protocols and direct interventions in
national economies, he added.
With global supply chains severely disrupted and economic activities
halted for travel and transportation restrictions to check transmission of
Coronavirus, some organised transnational crime networks have taken advantage
of ineffective regulatory frameworks and supply shortages.
The problem is so large that the World Economic Forum (WEF) estimates
over US$2.2 trillion, some 3 percent of global GDP, will be lost due to
illicit trade leakages in 2020. Many of these will double within five years.
Counterfeiting and smuggling of fake, tainted or counterfeited alcohol
and tobacco products have become big business for criminals, as lockdowns and
bans on excisable goods cost governments hundreds of millions of dollars in
lost revenue.
For example, a ban on cigarette sales in South Africa fuelled a black
market that lost the finance ministry around US$2.2 million per day. Similar
losses were seen in Malaysia and the Philippines, which have also had
cigarette bans during lockdowns.
The United Nations Office on Drugs and Crime (UNODC) has warned that
Covid-19 has created new opportunities for organized crime to profit,
including human traffickers who are increasingly active and preying on people
who are more vulnerable than before due to the economic costs of the
pandemic.
Often the ‘front door’ is illicit tobacco sales or financial crime but
behind that is a more sinister business of trafficking and modern slavery.
As markets reopen, and Covid restrictions are gradually lifted, it is
vital that organised criminal groups are not allowed to prosper further by
capitalising on job losses and dwindling buying power.
To protect against illegal activities, the director general said, the
government instructed all concerned to remain more aware and check illicit
trade with strict hands.
Muhammad Mubinul Kabir said that, so far, a total of 82 cases, involving
around Taka 3,200 crore, have already been filled on trade-based money
laundering.
The Global Financial Integrity report has ranked Bangladesh as one of the
top countries facing trade-based money laundering (TBML), which is a
significant threat to growth and sustainable development.
Senior Research Fellow at the Centre for Policy Dialogue (CPD) Towfiqul
Islam Khan said the government has adopted a new strategy titled ‘National
Strategy for Preventing Money Laundering and Combating Financing of Terrorism
2019-2021’ to combat trade-based money laundering and illicit financial
outflow from the country.
He urged the authorities concerned to implement the strategy effectively
and check illicit trade to help the country achieve development goals.
The budget for fiscal 2020-21 has imposed 50 per cent penalty on mis-
declaration of exports, imports and investment in foreign countries. This
seems to be a sound proposal from the revenue point of view.
BSS/RI-KUC/FI/ 1632 hrs