Of late, the government has adopted a new strategy to combat trade-based money laundering and illicit financial outflow from the country with the incorporation of a few stringent provisions into it.
According to reports, the strategy has been included in the 'National Strategy for Preventing Money Laundering and Combating Financing of Terrorism 2019-2021'. The government has started implementing key components of the national strategy to curb money laundering and terror financing mainly across the country.
Major items include recovering siphoned money, avoiding the lengthy process in investigation of money laundering and terror financing, developing an effective judicial system, deterring all sorts of corruption, and modernising border controls.
The government hardly made any progress in implementing key components of its earlier strategy for curbing money laundering and terror financing mainly due to procedural complexities and dilly-dallying of the authorities concerned.
A number of action items remain unimplemented due to lack of required steps by the authorities concerned despite repeated reminders from Financial Institutions Division (FIB).
The 2019 Global Financial Integrity report on illicit financial flows to and from developing countries showed that at least U$5.90 billion flew out of Bangladesh in 2015 through mis-invoicing in international trade with advanced economies.
The 2017 report showed that annual average illicit capital outflow from Bangladesh stood at U$7.58 billion during 2005-2014 and the amount was $9.10 billion in 2014.
Being a progressive economy, it's really hard to believe how a huge amount of money is being siphoned out of Bangladesh through laundering. True, many people seek to keep the money they earn in a secure environment. Since stability persists here now, why should they send money abroad?
A report prepared by the Global Financial Integrity (GFI) ranked Bangladesh second in South Asia in terms of illicit outflows of money. It said a staggering amount of $5.9 billion was taken out of Bangladesh just in a year through trade mis-invoicing.
The new GFI study estimated that Bangladesh is losing between $6.0 billion and $9.0 billion to illicit money outflow on an average every year. The country lost, according to the latest report, the second highest amount of illicit fund flows (IFFs) after India among the South Asian nations.
Bangladesh tops the list of lesser developed countries for illicit financial outflow and ranks 40th among the top 100 countries. The amount of finance transferred unlawfully from the country over the past 10 years, exceeds the current fiscal year's budget.
The deposits of Bangladeshis in various Swiss banks dropped recently as the central bank is reportedly keeping a close watch on money laundering. The central bank has taken cautinery measures in the new monetary policy, keeping in mind the issue of money laundering.
Bangladesh's total debt burden would be less if the nation could curb illegal capital flight of money. Cooperation with the relevant countries should be stepped up to prevent suchillicit transfers of money.
According to a report, 85 of 90 per cent of this illegal wealth transfer is done in the guise of international trade. This sector needs to be closely monitored. However, political will appears to be the most important tool to prevent such illegal capital flight.
A healthy business environment can attract more foreign direct investment (FDI), encourage more entrepreneurs to invest in the country, reduce flight of capital throgh local and multinational enterprises and help sustain a sound economic environment.
It is shocking that it also shows the businesses' lack of confidence in investing in the country. Such a huge illegal outflow of capital is happening at a time when the country is suffering from a lack of adequate investment. It has to be reversed at all costs.