Experts at a workshop have identified several factors responsible for the rise of trade-based money laundering in the country.
The factors include under-qualified bankers, lack of effective communications between the customs and banks, unholy alliance of unscrupulous traders and bankers, and a lack of digitisation, they said.
They also found a correlation between the rise of non-performing loans (NPLs) and money laundering.
The non-ratification of the 'UN Vienna Convention on Contract of Sale' put the country's foreign trade at a grave risk, which also contributed to the rise of trade-based money laundering, said the experts.
The Bangladesh Institute of Bank Management (BIBM) organised the Review Workshop held at the BIBM auditorium in Dhaka and in the Sylhet office of Bangladesh Bank simultaneously through videoconferencing on Wednesday.
A paper on 'Trade Services Operations of Banks' was presented at the workshop by a team led by Professor and Director (Training) of BIBM Dr Shah Md Ahsan Habib.
Speaking at the event, BIBM Supernumerary Professor Md Yunus Ali said there is a close connection between NPLs and money laundering.
"A major portion of the total NPLs has flown out of the country," he said.
"Laundering money after misappropriating bank loans is a crime graver than misappropriating and using the money in the country," he said, comparing the former with 'colonisation'.
BIBM Director General Md Abdur Rahim said major loan scams that took place in the country's banking sector involved trade bills.
Traders are using the banks' money through LC bills, but the banks know nothing about it, which suggests that there are loopholes in the system, he said.
Another BIBM Supernumerary Professor Helal Ahmed Chowdhury said there is no system of uniform or standard pricing of goods in the country.
"The bankers should use their best knowledge and available data to check under-invoicing and over-invoicing of goods," he said.
He also suggested that bankers should use data from various trade associations and other open sources to crosscheck the prices.
SM Moniruzzaman, deputy governor of Bangladesh Bank, said the central bank has strengthened the requirements to enhance trade quality considering the related issues such as trade-based money laundering, compliance requirements and other financial crimes.
"Our policies are now updated according to the market needs and risks. The New Guidelines for Foreign Exchange Transaction was published in 2018," he said.
He also said integration between supervisors and the schedule bankers made the policies more operationally effective.
"With this view, the Foreign Exchange Policy Department (FEPD) has established an AD forum with the trade heads of the scheduled banks," he said.
Dr Moinul Khan, commissioner at the Customs Valuation and Internal Audit Commissionerate of the National Board of Revenue, suggested carrying out a joint supervision of foreign trade activities to avert money laundering.
The customs prepared a price list of 634 goods and the bankers can crosscheck it before initiating an import or export, he said.
Mohammad Anisur Rahman, deputy general manager of Bangladesh Bank, said there are many mismatches in information of customs and banks.
He said there are more than 1,00,000 export bills remained unprocessed in the central bank dashboard now, 80,000 of which are from 2018.
The review paper placed some recommendations, including ratification of the UN Vienna Convention on Contract of Sale, improvement of drafting of LC, and guidelines for international bank guarantee.
