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Govt should implement anti-money laundering recommendations of the Financial Action Task Force: Mustafizur Rahman

Published in The New Nation on Thursday 4 May 2017

Multi-billion capital flight from BD

Poor investment climate, political volatility blamed

Badrul Ahsan

Economists and criminology experts point out poor investment climate and political uncertainty of the country as the reasons behind the huge amount of capital flight from Bangladesh.
Besides, lack of good governance, weak anti-money laundering authority and poor anti-corruption activities also blamed for the chronic unethical practice.

According to a Global Financial Integrity (GFI) report, Bangladesh has lost between $6 billion and $9 billion to illicit money outflows in 2014.

The Washington-based research and advisory organisation on Monday released the report based on a research on 150 countries.

Besides, Bangladesh lost $75 billion due to trade misinvoicing and other unrecorded outflows between 2005 and 2014, the report said.

“Private sector investment in our country decreased in the last couple of years but import has increased during the same time which made us to think that a section of people are laundering money through over invoicing,”  Dr Mustafizur Rahman, Distinguished Fellow of Center for Policy Dialogue (CPD) told the New Nation.

“Infrastructural drawback of the country discouraged businessmen to make fresh investment. On the other hand, and political uncertainty encourages them to send their cash to a safe place,” he added.

The money market expert, however, opined that the government should adopt and fully implement all anti-money laundering recommendations of the Financial Action Task Force.

“Besides, policymakers should require multinational companies to publicly disclose their revenues, profits, losses, sales, paid taxes, subsidiaries, and staff levels.”

Dr Md Ziaur Rahman, Professor and Chairman of the Department of Criminology under Dhaka University said that not only businessmen but politicians and bureaucrats are also
largely siphoning off their illegal earnings to a safe place.

“We all know that the central bank has not approved a single application to invest in Malaysia under Malaysia my Second Home project (MM2H) in the last one decade but Bangladesh stood second highest investor under the privilege. It is a clear sign of siphoning off money from the country,” he added.

“Similarly, many people are buying luxurious houses and investing different types of business like filling stations, departmental stores and coffee houses in Australia, Canada and Singapore illegally. These people are also in free movement in Bangladesh.  What our anti-corruption and anti money laundering bodies are doing? If the authority becomes strict against such practices, then the trend could be lessen,” he opined. However, Executive Director of Bangladesh Bank, Suvonkar Saha did not want to give any opinion on the report and said that the country has increased its capability to fight against money laundering. “If we find any specific proof, we will go for action,” he added.

Meanwhile, according to the GFI report — Illicit Financial Flows to and from Developing Countries: 2005-2014 — provides low and high estimates of illegal flow of money out of the developing world, referred to as illicit financial flows (IFFs).

The GFI analysed discrepancies between bilateral trade statistics and balance of payments data, as reported to the International Monetary Fund, to detect flows of capital that were illegally earned, transferred, or utilised.

Illicit trade outflow equalled to 9 to 13 percent of Bangladesh’s total trade of $70.07 billion in 2014 — 7 to 11 percent due to trade misinvoicing and 2 percent due to balance of payments leakage.

As per the low estimates, $6.06 billion moved out of the country through IFFs. The figure is $8.97 billion if the high estimate is considered, which is enough to build three Padma Bridges.

The 2014 IFFs estimate for Bangladesh is lower than that of 2013.

If the highest estimate is considered, the outflow fell by 10.66 percent from 2013 when it was $10.04 billion, the highest recorded.

In case of the low estimate, the 2014 outflow was 9.13 percent less than that of 2013 when $6.67 billion went out of the country illegally.

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