Demand for world body to monitor money laundering

Silence over unabated money-laundering, siphoning of tax-dodged money decried

SALEEM SAMAD

Social justice activists jointly decried Bangladesh’s silence over unabated money-laundering, siphoning of tax dodged money, which severely dented social development investment.

There is a demand of the government to punish those Bangladesh nationals who allegedly laundered money and are also involved in tax dodging.

The leader of the alliance Reazul Karim Chowdhury of EquityBD said that tax evasion is predominant among the nationals who have opted for second-home in Malaysia, Dubai, Canada, United States and other destinations.

Under this situation, Chowdhury suggested formation of UN Tax Management Authority or Commission to intervene in money laundering and tax evasion by multi-national companies (MNCs).

The activists deliberately did not mention the nationals who are engaged in money laundering and tax evasion, but have indicated that business entrepreneurs, politicians and even senior bureaucrats either have a second-home or are contemplating to have a second-home soon.

Among the business community, the majority are the importers, who make windfall profits, are unaccounted, and untaxed.

On the other hand, the number of exporter’s choice for second-home is far less than the importers. The exporters, mostly garments and textile exporters apply for immigration to Australia, New Zealand, Canada and United States, which could be deemed as second-home.

The flight of the capital and siphoning of national wealth are only possible when there is lack of vigilance of monitoring of the income of the tax evaders, the social activist remarked.

Tax evasion obviously encourages spatial corruption of bureaucrats and politicians, which is unfortunately never detected and unable to bring them under the tax regime.

The rights groups lauded the Bangladesh Bank’s stringent vigil against money-laundering, but said that the central bank needs to do more to detect flight of capital through informal money-laundering agents, the money-changers.

The NGOs urged the central bank to bring the money-changers, engaged in ‘hundi’ under the scanner to check siphoning of capitals.

They blamed the MNCs for dodging huge taxes on various activities, which has become difficult of the state machineries to realise from the foreign companies.

Saleem Samad, an Ashoka Fellow (USA) is an award winning investigative reporter and is Diplomatic Correspondent with Daily Observer, Bangladesh. Twitter @saleemsamad

Bangladesh: Uncharitable Charities

SANCHITA BHATTACHARYA

Identifying and neutralising the sources of terrorist funding have become global concerns. The United States' Ambassador to Bangladesh, Dan W. Mozena, on December 10, 2014, asserted, "The terrorists who seek to destroy our communities of peace, diversity and tolerance have developed many avenues for generating money to fuel their vast machines of death...One source of financing terrorism and violent extremism is charity, the vast network of charitable organisations thrives across South Asia and we must fight back against it."

Echoing similar concerns, Bangladesh Law Minister Anisul Huq stated, as reported on December 10, 2014, that millions of dollars were collected every year in the name of benevolence and charitable activities but a portion of it, either by design or exploitation of organisational structure, is diverted to fund acts of terrorism. The fight against terrorism should be a global and collaborative effort so that charitable and Non-Government Organisation (NGO) activities do no turn into support for terrorism, he added.

Bangladesh has a history of involvement in money-laundering and terrorist financing cases. Interestingly, the Bangladesh Cabinet, on December 1, 2014, approved the draft of the much awaited Foreign Contributions (Voluntary Activities) Regulation Act, 2014, intended to regulate the flow of foreign aid being channelled to non-profit groups. The approval was given in the weekly meeting of the Cabinet held at the Bangladesh Secretariat, with Prime Minister Sheikh Hasina Wajed in the Chair. The proposed draft law is intended to ensure transparency, accountability, proper inspection, monitoring, evaluation and appropriate use of foreign funds by NGOs.

Cabinet Secretary M. Musharraf Hossain Bhuiyan subsequently stated, "No NGO will be able to run its activities without taking registration from the NGO Affairs Bureau. No registration is required in case of individuals, but approval has to be taken from the Bureau... The proposed law has also a provision for punishment, cancellation of registration and imposition of fines for violating the law".

The Act is supposed to be a comprehensive and wide ranging legal instrument to provide support and regulation of NGO activities. It has been prepared by integrating two previous legal instruments: The Foreign Donations Voluntary Activities Regulation Ordinance, 1978; and the Foreign Contributions Regulation Ordinance, 1982.

December 6, 2014, reports indicated that Bangladesh Bank, the country's central bank, had also asked commercial banks to take effective measures under the anti-money laundering and anti-terror financing laws to check illegal fund transfer and associated pecuniary offences. Bangladesh Bank Governor Atiur Rahman noted that money-laundering offences hindered the socio-economic development of the country: "Such risk will increase gradually if money laundering is not prevented effectively... Recently, different banks have been fined due to non-compliance with the KYC provisions."

The previous Money Laundering Prevention Act, 2012 and Anti Terrorism Amendment Act, 2013 also sought to regularise financial activities. The 2013 Act, provides capital punishment as highest penalty for terrorism and subversive activities. Further, it allowed the courts to accept videos, still photographs, and audio clips used in facebook, twitter, skype and other social media, as evidence. In December 2014, eight banks in Bangladesh were fined for not keeping client affidavits and not informing authorities of suspicious transactions in time. The banks include: Islami Bank, Premier Bank Limited, BRAC Bank, Mercantile Bank, Dutch-Bangla Bank, Southeast Bank, Uttara Bank and Bangladesh Investment Finance Corporation. They were slapped with fines ranging from Tk 200,000 to Tk 2 million under the law to prevent money laundering, Mohammad Mahfuzur Rahman, Deputy Head of the Bangladesh Financial Intelligence Unit (FIU) disclosed.

In order to extract information on money laundering by various elements, the Anti Corruption Commission (ACC), in the month of November 2014, sent Mutual Legal Assistance Requests (MLAR) to 14 countries, for information regarding alleged money laundering by the country's businessmen, politicians, industrialist, and government officials. However, ACC Secretary M. Maksudul Hasan Khan did not disclose the names of the 14 countries and the suspected money launderers.

Bangladesh has long been plagued by illicit financial transfers from both national and international sources. It is suspected that militants regularly tap into these illegal money flows to fund their operations. Money laundering is also a prime way of generating funds. Remittances from expatriate Bangladeshis working in the Middle East, the United Kingdom and elsewhere, are a further area of concern. There is a broad consensus that such techniques are used by militant organisations. One of the most significant links to funding from the Diaspora was uncovered in March 2009, when a madrasa (Islamic seminary) in Bhola District in southern Bangladesh was raided by an anti-terrorist unit, which seized 10 firearms, 2,500 rounds of ammunition and radical Islamic literature. Subsequent investigations revealed that the madrasa was funded by the British-registered charity Green Crescent.

Further, the Saudi Arabia-based al-Haramain Islamic Foundation, banned internationally by United Nations Security Council (UNSC) Resolution 1267, along with other charities from the Middle East, is infamous for financing terrorism in Bangladesh. NGOs and charities, such as the Kuwait-based Revival of Islamic Heritage Society (RIHS) and the Saudi Arabian Hayatul Igachha (HI), have also been linked to Islamist extremism in the country.

The Islami Bank Bangladesh Limited (IBBL) reportedly handled accounts of various Wahhabi organisations, that propagate radical Islam in the country. In 2011, the Bangladeshi Home Ministry intelligence revealed that eight per cent of the Bank's profits were diverted to support jihad in Bangladesh. Another sharia bank, Social Islami Bank, worked with HSBC. In 2011, the US Senate implicated HSBC for disregarding evidence of terror financing at the Social Islami Bank.

More recently in February 2014, UNSC provided definite information that al Qaeda network was active in Bangladesh. The UN has indicated that two NGOs, Global Relief Foundation and al-Haramain Islamic Foundation, working in Bangladesh, were involved with al Qaeda.

In a positive initiative, the Shiekh Hasina-led Government is not only trying to monitor and regulate NGO-related funding channels and activities, but, at the same time, is also looking into the bigger picture of financial fraud and terror connections. The existence of financial networks related to the infrastructure of terrorism in Bangladesh constitute a serious threat not only to the country itself, but to the stability of the wider region as well.

First published in South Asia Intelligence Review, Weekly Assessments & Briefings, Volume 13, No. 24, December 15, 2014

Sanchita Bhattacharya is Research Associate, Institute for Conflict Management, India