BFIU suspends cash out from 230 MFS accounts over hundi transactions

TBS Illustration

The Bangladesh Financial Intelligence Unit (BFIU) has suspended cash out from 230 customer accounts with four mobile financial services (MFS) providers for transacting remittances through hundi – an informal cross-border money-transfer system that bypasses the legal banking channel.

The BFIU has taken this new initiative to prevent the transactions of remittances through hundi.

According to BFIU sources, the customers concerned will not be able to withdraw money from these accounts until further instructions but money can be sent to these accounts.

The accounts will be fully reactivated on the condition that the account holders encourage their relatives abroad to send remittances through legal channels, they added.

The suspended accounts are with bKash, Nagad, upay, and Rocket.

Seeking anonymity, a senior BFIU official told The Business Standard, "Our intention is not to scare them or block their money. We want them and the people around them to be aware and send a message that taking remittances through hundi like this may lead to punishment."

"We have asked the customers whose cash out has been suspended to visit the nearby call centre of the respective MFS provider. From there they will be encouraged not to receive remittances through hundi," he added.

The BFIU official further said that the MFS clients will be asked to convince their expatriate relatives that sending remittances through proper channels benefits the country and that everyone can be safe.

In a press statement on Wednesday, the Bangladesh Bank said transactions through hundi are a punishable offence.

"The BFIU is taking actions against all those who are involved in sending remittances through any informal channels," it read.

To address digital hundi, the BFIU has set some parameters to identify suspicious transactions through MFS accounts, said a senior executive of the BFIU.

The parameters are – transactions after midnight, accounts that show only cash-in or only cash-out, the highest four transactions in a minute in one account, and agent accounts with Tk3 crore only cash out or only cash in.

Operators were instructed to filter MFS accounts following the parameters and report to the BFIU.

The BFIU official further said the unit and the Criminal Investigation Department (CID) of police are working together to prevent the spread of digital hundi.

Based on the BFIU's intelligence report, the CID has arrested several people involved in the process and filed five cases, he added.

Masud Biswas, head of the BFIU, earlier said the unit has identified more than 5,000 highly suspicious MFS accounts and sent details of those to law enforcement agencies as they have field-level forces to detect people related to the hundi transactions.

A syndicate of hundi "traders" has laundered around Tk75,000 crore in the past one year through different MFS operators in the country, according to the CID.

Around 5,000 MFS agents have laundered some Tk25,000 crore through hundi in the last four months alone, the CID said following the arrest of 16 members of a gang, including the mastermind, behind the money laundering in the first week of September this year. 

Contacted, bKash Head of Corporate Communications Shamsuddin Haider Dalim told TBS that it has a separate team that, using modern technology including artificial intelligence, identifies suspicious transactions and suspicious activity in transactions.

"We send the report to the central bank. Besides, when law enforcement forces seek detailed information about these transactions, we also provide that," he added.

While manpower export has been rising substantially since the beginning of the year, remittance inflow shows a completely opposite trend, putting foreign exchange reserves under more stress.

Bangladesh sent 7.84 lakh workers in the first eight months of this year, nearly double the 2.76 lakh sent in the same period last year.

This paradoxical situation is blamed on two reasons – the remittance rate cap and digital hundi.

At present, the dollar rate for sending remittances through banking channels is Tk107 plus a 2.5% government incentive. On the other hand, the rate in hundi is around Tk114-115.

Ahsan H Mansur, executive director at the Policy Research Institute, expressed his opinion regarding the BFIU's decision to prevent hundi, saying "We need to arrest the masterminds of hundi transactions. Otherwise, these steps will be of no use."

Usually, the dollar rate difference between legal and illegal channels remains at Tk2 to Tk3. But it is now at least Tk5.

This economist commented that as the difference increases, the hundi also shoots up.