Govt readies strategy to recover laundered money

Infographic: TBS

The government is working on a strategy to freeze or confiscate unreported offshore assets soon after their detection, according to a draft guideline awaiting approval of the finance ministry.

The next course of action will be an investigation jointly with countries to where the money has been syphoned off and initiatives for repatriation.

In case of a delay in getting court order to seize the assets, the government via the Bangladesh Financial Intelligence Unit will send a letter of rogatory – a formal request from a court to a foreign court for judicial assistance – to the countries concerned so the laundered money cannot be transferred to another country, according to the guideline on legal framework and strategic process for laundered asset recovery.

The government thinks such plans of action will weaken a money launderer financially, psychologically and socially, and will also limit their ability to influence investigation, which will lead to a prompt and proper investigation.

In the FY23 budget, the government had offered Bangladeshis a scope for legalising their unreported movable assets abroad if repatriated to Bangladesh, subject to paying a 7% tax. But no one has availed this offshore tax amnesty yet.

And, as part of the government's coordinated and effective initiatives to bring back the laundered money, six agencies engaged with checking money laundering such as the Anti-Corruption Commission, the Bangladesh Financial Intelligence Unit, the Criminal Investigation Department, the Bangladesh Securities and Exchange Commission, the Customs Intelligence and Investigation Directorate, and the Department of Narcotics Control have jointly prepared the draft guidelines.

The working committee – constituted for formulating and implementing policies on prevention of money laundering and terrorist financing – has already given its go-ahead to the guidelines, which was forwarded to the finance ministry on 11 August for its seal of approval as well. Later, the draft strategies will be submitted to the national coordination committee on preventing money laundering and combating financing of terrorism, headed by the finance minister, for its consent.

The government has no data on how much money is laundered abroad every year. But according to the US-based think-tank Global Financial Integrity, Bangladesh lost a whopping $49.65 billion or around Tk4,71,675 crore on an average between 2009 and 2015 (except the year 2014), mainly to trade misinvoicing and under-invoicing. On an average, around Tk84,475 crore was syphoned off the country each year during the period.

Bank accounts of many launderers were seized and cases were filed against them under the Money Laundering Prevention Act, but there had been only two instances of bringing the money back since independence.

One was the Tk21 crore, laundered by BNP Chairperson Khaleda Zia's youngest son Arafat Rahman Koko, brought back from Singapore. Besides, of the $81 million stolen from the Bangladesh Bank's reserve, $150,000 from the Philippines and $20 million from Sri Lanka were retrieved as well.

Ghulam Rahman, who was the chairman of the Anti-Corruption Commission when Koko's laundered money was recovered from Singapore, told The Business Standard that the Singapore government and its court had helped Bangladesh a lot in retrieving the money.

Mentioning that Bangladesh's money is mainly laundered to Dubai, Canada, the United States, Australia, Malaysia, Hong Kong and Singapore, he said, "We have to make a bilateral agreement with those countries to repatriate our smuggled money."

When contacted, ACC lawyer Khurshid Alam Khan said, "Switzerland does not provide us with any information on Bangladesh citizens' funds in Swiss bank accounts as there is no bilateral agreement with the country."

Ghulam Rahman said, "We will be able to bring back laundered money following the draft strategies if we ensure an inter-agency coordination."

But it will be difficult to bring back the undisclosed money kept in tax haven countries that will not cooperate much in this matter, he also said.

In the assessment of the Asia Pacific Group on Money Laundering, Bangladesh's legal and institutional framework is of international standards, but it has not been successful in recovering money laundered abroad.

Bangladesh has made many requests for legal assistance to some countries to retrieve the unreported offshore money, but legal processes of those cases now hang in the balance owing to no response for a long time, according to the draft guidelines.

However, according to the ACC's annual reports for 2020 and 2021, the shares of two companies in Dubai and five bank accounts in Malaysia were seized in connection with money laundering following court orders in 2019. Besides, in2021, the ACC froze 21 bank accounts in Canada, 24 in Australia and five in Singapore.

In its annual reports, the ACC said, "The commission is also chasing holders of illegal assets abroad. It is fulfilling its legal responsibility to ensure that no one enjoys money earned beyond known sources of income."
 
Seizure of assets before conviction

The government will go for non-conviction based confiscation, meaning that it will confiscate laundered assets even before criminal charges are proven in court as the prosecution takes a lot of time, money and effort. Many countries are following this approach. 

If it follows a typical method – first, proving laundering charges in court, then confiscating assets and finally repatriating those, there will be many more complications in the process but a low success rate.

Bangladesh will also form a joint investigation team or taskforce, comprising all relevant agencies or competent persons, to bring back money or assets smuggled abroad. Considering the nature and sensitivity of each case, the investigation team will conduct a joint investigation with foreign authorities if necessary.

The guidelines also state that financial intelligence officers and financial sector experts should be involved at all stages of a money laundering investigation for coordination among the parties concerned from the beginning of a case.

According to the draft guidelines, it is not possible to bring back the money without the maximum cooperation of the countries where the money has been laundered to. In this regard, the government will take assistance from the International Centre for Asset Recovery, the Star Protection Agency and the United Nations Office on Drugs and Crime. 

Besides, the government will give priority to getting mutual legal assistance in countries, such as Switzerland, where access to informal information is limited.

Getting foreign government assistance in recovering laundered money depends largely on the capability of the Ministry of Foreign Affairs, the guidelines also noted.

In the case of the accused is absconding and no charge of criminal offence can be framed against them or if the accused dies before conviction, their assets will be confiscated before they are convicted.  

The same asset forfeiture approach will be applicable if the accused is so powerful that it is impractical to frame a criminal charge against them or if assets are transferred to a third party who is not interested in participating in the hearing against the confiscation of the assets or if it is not possible to collect evidence to prove the offence in a criminal court. 

Former ACC chairman Ghulam Rahman said, "We have to maintain international standards during trial proceedings to repatriate laundered money."

The tracking should be completed fast, otherwise, launderers will move their assets to another country, he added.
Syphoning legally earned money or assets out of the country is a crime according to the law of Bangladesh, but not in laws of many countries, the guidelines said.  

Besides, some countries, while sending back laundered money, make it a condition that part of it be spent on anti-corruption or other public welfare activities.