The government’s multi-pronged approach, combining domestic investigations, international cooperation, and a commitment to long-term reforms, signals a determined effort to tackle the pervasive issue of money laundering and reclaim the nation’s stolen wealth.

In a significant move to combat money laundering and recover illicitly siphoned funds, Bangladesh is taking decisive action. The Bangladesh Financial Intelligence Unit (BFIU) has announced it will engage international litigation firms to pursue the recovery of laundered assets worth Tk 200 crore (approximately $23 million USD) and above from 19 commercial banks. This initiative follows revelations of massive capital flight from the country, estimated to be in the hundreds of billions of dollars over the past 15 years.

The decision was reached during a high-level meeting on January 30th between the BFIU and managing directors of the designated banks, according to official meeting minutes. The BFIU will initially focus on a cluster of high-value cases, each involving Tk 200 crore or more. The selected international law firms, specialising in legal disputes and asset recovery, will assess these cases based on the probability of successful retrieval. Their compensation will be a percentage of the recovered funds, ensuring no financial burden on the Bangladesh Bank or other involved institutions.

The meeting, presided over by Bangladesh Bank Governor Ahsan H Mansur, included top executives from Sonali Bank, Janata Bank, Agrani Bank, Rupali Bank, BASIC Bank, and several other prominent banks. The BFIU plans to extend these meetings to other commercial banks in the near future.

Time taking Process

Following the January 30 meeting, the BFIU, on February 4th, directed the 19 banks to submit lists of suspected cases involving Tk 200 crore or more being transferred abroad. Banks are also obligated to report any new potential cases immediately. Recognising the complexities of international litigation, the BFIU emphasised the importance of inter-bank coordination. Banks are required to provide all necessary documentation and evidence to support the legal proceedings, as the litigation firms will only pursue cases with thoroughly verified information. Governor Mansur has instructed all banks to meticulously collect and securely store relevant documents and evidence. He also clarified that banks can independently pursue domestic recovery of embezzled funds through their own established regulations and legal procedures.

However, this initiative will exclude 10 major business groups and the family members of ousted Prime Minister Sheikh Hasina, whose cases are being handled separately. On January 6, the Financial Institutions Division mandated the BFIU to form special investigation teams, including members from the Anti-Corruption Commission (ACC), the National Board of Revenue (NBR), and the Criminal Investigation Department (CID), to investigate alleged money laundering and financial misconduct in these 11 specific cases. International organisations, including the UK-based International Anti-Corruption Coordination Centre, the Stolen Asset Recovery Initiative (StAR), the US Department of Justice, and the International Centre for Asset Recovery, are providing assistance in these priority investigations.

Governor Mansur recently stated that the legal process for recovering laundered funds could span three to four years, aligning with the global average of four to five years for such complex cases. “Our short-term goal is to identify and attach foreign-held assets within one year. We have also launched major initiatives for asset recovery,” Mansur affirmed.

White Paper

A government panel’s white paper on the Bangladesh economy painted a stark picture, estimating that an average of $16 billion has been illicitly funnelled out of the country annually over the past 15 years. This staggering figure underscores the scale of the challenge the BFIU and the government face.

Dr. Abdullah Shibli, of the US-based International Sustainable Development Institute (ISDI), argues that corruption, embezzlement, and money laundering have plagued Bangladesh, reaching alarming levels during the previous Awami League-led government. He points to the white paper’s estimate of $234 billion siphoned off between 2009 and 2023. Shibli highlights the role of tax havens in the Middle East, Malaysia, the UK, Canada, the US, Hong Kong, and Singapore in facilitating these illicit financial flows. He claims that the Bangladesh Bank and the BFIU were fully aware of the extent of money laundering activities.

Writing for the Daily Star newspaper, Shibli emphasises the current administration’s commitment to combating money laundering and recovering stolen assets. He notes the establishment of a nine-member taskforce, headed by the central bank governor, dedicated to tracking down and recovering stolen assets abroad. He stresses that recovering these funds is crucial not only to replenish national coffers but also to deter future illicit activity and send a strong message of accountability.

Complex Process

Shibli outlines the complex process of asset recovery, which includes freezing assets, gathering intelligence, tracing funds through layers of shell companies and investments, and navigating international legal frameworks. He underscores the need for collaboration with international bodies like the World Bank’s StAR initiative, the Financial Action Task Force (FATF), and the US Department of Justice’s Money Laundering and Asset Recovery Section (MLARS). He also advocates for leveraging the expertise of global investigators to trace hidden assets and working closely with embassies and high commissions in countries known to be destinations for laundered funds.

Beyond recovering past losses, Shibli emphasises the importance of establishing a robust anti-money laundering framework to prevent future occurrences. This includes investing in training, strengthening internal controls, promoting accountability, and implementing early detection mechanisms. He calls for stricter regulations in key sectors like banking, safeguards against political influence, and the implementation of recommendations from previous commissions, such as the Farashuddin Commission. He also proposes a whistleblower program to incentivise reporting of illegal financial activities.

The government’s multi-pronged approach, combining domestic investigations, international cooperation, and a commitment to long-term reforms, signals a determined effort to tackle the pervasive issue of money laundering and reclaim the nation’s stolen wealth. The success of this endeavour will be crucial for restoring public trust, strengthening the economy, and ensuring accountability for past transgressions, says Shibli.