The Bangladesh Bank has seemingly failed to check capital flight from the country although it has a full-fledged unit to monitor and detect such illegal transactions widely known as ‘hundi’.
The BB governor, Atiur Rahman, in a statement to the parliamentary standing committee on ministry of finance recently expressed his helplessness about the matter saying that in most of the cases the smuggled-out money remained untraced.
He admitted that the central bank had failed to check the thriving hundi business, an illegal transaction system that operates bypassing the banking channel.
Atiur’s statement stunned many, including the BB insiders, who said that a wing under the central bank had been working for long to detect such illegal transactions and check those.
The financial intelligence unit under the BB is said to have been strengthened following an amendment to the money laundering law. The BB has struck memorandums of understanding with central banks of other countries to exchange information on shady transactions.
In the same statement seen by New Age, Atiur, however, hoped that the situation would improve after the completion of automation in the National Board of Revenue.
‘Transparency and accountability would be established after the automation,’ said the BB governor.
The Paris-based Financial Action Task Force (FATF), de-listed Bangladesh from its ‘Grey List’ in February for the country’s efforts in combating money laundering.
The organisation had kept the country in the negative list since 2008.
‘We are examining the statement of the BB on money laundering and illegal transactions,’ standing committee chairman M Abdur Razzak told New Age last week.
He said it was important to check hundi business to halt capital flight for the sake of the economy. He said they needed to crosscheck the documents on the country’s imports and exports.
Under-invoicing and over-invoicing are widely used by dishonest businessmen as a means to smuggle out money, said BB officials.
NBR was primarily responsible to detect such practices, but BB cannot overlook the matter as import payments and export receipts are done through the banking channel, they said.
They alleged that many dishonest businessmen gave false statements on their import consignments to send money abroad. Besides, many exporters buy time to bring the receipts for the same purpose, they said.
Finance minister AMA Muhith in a number of pre-budget discussions was urged by experts and the treasury bench members to bolster efforts to check capital flight.
Muhith observed that there had been capital flight from the country to Dubai of the United Arab Emirates and Malaysia in the absence of private sector investments in the country.