Bangladesh fights against the money laundering

Bangladesh enacted legislation aimed at controlling and preventing money laundering. Money laundering is a criminal offense in Bangladesh and can result in imprisonment for up to seven years, in addition to financial penalties. The Bank of Bangladesh is responsible for investigating suspected cases and presenting them to the courts, as well as applying for orders freezing or seizing assets of accused money launderers. This article offers an overview of Bangladesh Money Laundering law.

 

In 2002, Bangladesh enacted the Money Laundering Prevention Act ("MLPA"), which applies to all forms of money laundering. MLPA appointed the central bank of Bangladesh (the “Bangladesh Bank”) as the entity responsible for overseeing financial institutions and ensuring that customer activities are adequately monitored and that suspicious acts are identified. Also, the law establishes a special court to hear money laundering cases called the "Money Laundering Court." This is a special court within the existing Courts of Sessions and therefore the Civil and Criminal Procedure Codes apply to actions before it.

Under the MLPA, money laundering is a non-bailable crime. A conviction for money laundering can result in imprisonment from a minimum of six months to a maximum of seven years, along with a fine of up to double the amount involved in the crime. The Bangladesh Bank can also request that a Bangladeshi court seizes or freezes assets belonging to a defendant accused of money laundering. According to Bangladeshi law, a court may not deny an application to freeze assets.

How does Bangladesh law define the crime of money laundering?

 

The MLPA defines money laundering as the direct or indirect acquisition of property by illegal means as well as the transfer, conversion, or concealment of any property in an illegal manner. The MLPA requires financial institutions to accurately identify suspicious customers, to report suspicious transactions to the Bangladesh Bank, and to preserve customer information while an account is open and for five years after it is closed. Every bank is required to maintain an Anti-Money Laundering Compliance Unit. The MLPA allows the Bangladesh Bank to fine financial institutions for failure to retain or report required data on suspicious transactions. The MLPA also provides for cooperation with other countries upon request.


What are some of the criticisms of the definition of money laundering set forth in the MLPA?

 

A Under the MLPA, the definition of money laundering includes all earnings or acquired property obtained through illegal means. This definition has been criticized as so broad that offenses such as theft, robbery, cheating, and forgery can also qualify as acts of money laundering.

What are some of the inconsistencies in the application of the MLPA?

 

The MLPA applies to acts involving the illegal transfer, change of nature, and concealment of property, acquired or earned through legal or illegal means. This provision was intended to criminalize the transfer of money by an unauthorized channel known as “Hundi.” However, such informal channels are used primarily by Bangladeshi wage earners living abroad, and not by traditional money launderers, a reality that can lead to the misapplication of the MLPA.

Additionally, certain regulators such as the Bangladeshi Securities and Exchange Commission, which maintains financial information through annual business reports, do not have responsibilities under the MLPA to report potentially unlawful transactions, a loophole that can hamper Bangladeshi government’s enforcement efforts. Finally, the MLPA is focused on banks and financial institutions and does not address other trade-based money laundering such as property developers, high value dealers of jewelry and car dealers, who can also be used as conduits of money laundering.