Stolen asset recovery: Zero budget but target is catching billions
The task force sought $20m govt budget since March to hire int’l firms for tracking laundered assets, but remained stuck in bureaucracy
Bangladesh's drive to recover billions in stolen and laundered assets has stalled for over a year — even before taking the first step of tracing the money — because the government has yet to allocate a central budget to hire international asset-tracking firms, The Business Standard has learned from bank officials and members of the task force created to work for the recovery effort.
The Stolen Asset Recovery Task Force, formed in September last year, proposed a $20 million central budget at its first meeting with Chief Adviser Muhammad Yunus in March. Seven months later, no decision has been made.
While countries such as Malaysia and Kazakhstan have invested hundreds of millions and successfully recovered billions in stolen wealth, Bangladesh has been trying to track at least $100 billion allegedly laundered through banking and government corruption — a figure 20 times greater than Malaysia's 1MDB scandal, one of the world's biggest financial frauds.
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A senior Bangladesh Bank executive involved with the task force said the government's effort remains "entirely unfunded," while "a single business group implicated in one of the country's largest banking scams is spending about $30 million a year on legal fees to a foreign law firm."
Task force without funds, guidance, or authority
Insiders say the government still lacks a standardised methodology for evaluating proposals from foreign law firms. The World Bank's Stolen Asset Recovery Initiative (StAR) only recently began assisting Bangladesh in developing this framework — months after the task force was formed.
Meanwhile, no commercial bank — the main source of data on laundered funds — has hired any foreign firm or filed civil suits in the past year.
Efforts to sign a central Non-Disclosure Agreement (NDA) with international firms to allow access to confidential banking data have also stalled for three months due to inter-agency gridlock, said an insider involved with the task force since its inception.
Officials remain uncertain about who has the authority to sign the NDA or how to fund the associated legal costs. The task force itself lacks legal authority to execute contracts, while even the Bangladesh Bank governor, who leads the task force, cannot act unilaterally as the other agencies involved do not report to him.
Inexperienced agencies, faulty requests
The task force has relied heavily on the Bangladesh Financial Intelligence Unit (BFIU) and the Anti-Corruption Commission (ACC) — neither of which has prior experience in international asset tracing.
Officials said at least 70 Mutual Legal Assistance (MLA) requests were sent to foreign governments seeking cooperation in tracing stolen assets. Only two countries responded, as most requests were improperly drafted or lacked supporting evidence.
Several foreign governments asked that the requests be redrafted because the formats did not meet international standards. MLAs — formal legal requests for cross-border cooperation — are only considered when backed by clear evidence and proper documentation.
Bangladesh Bank shifts to decentralised model
With the delay in the recovery process, the Bangladesh Bank finally adopted a decentralised and privatised approach, allowing individual banks to sign NDAs with foreign legal firms.
In a recent meeting with the managing directors of 32 banks, the BB governor instructed them to sign agreements with international law firms as part of this new approach. The NDAs aim to give foreign firms access to client information from banks to assess the merits of corruption cases. After reviewing the NDAs, these firms will submit proposals for asset tracing and legal assistance to build cases.
Referring to a recent media report on Bangladesh Bank advising banks to hire law firms, Zia Haider Rahman, a former anti-corruption lawyer and banker, posted on social media: "I'm surprised to see this reported as news: Either it should have happened a while ago and didn't, or it did happen already and the Bangladesh Bank re-issued the same news."
"The horse bolted, went over the hill, and crossed the river. But, sure, go ahead and shut the stable door," said Rahman, also the author of "In the Light of What We Know," which won Britain's oldest literary award, the James Tait Black Memorial Prize.
Why BB appointed a new coordinator for task force
Meanwhile, the Bangladesh Bank appointed Farhanul Gani Choudhury as the new consultant to the asset recovery task force in August, replacing Ifty Islam amid criticism over delays in engaging foreign legal firms to begin tracking assets and building cases.
Farhan Gani has 25 years of banking experience at HSBC, while Ifty Islam is the chairman of Asian Tiger Capital, a Dhaka-based investment banking firm.
Several foreign law firms expressed dissatisfaction over the delayed NDA process, as they had submitted detailed proposals outlining legal strategies for international asset recovery to Ifty Islam between October and December last year, but received no concrete decision.
Despite a series of discussions with international law firms held in Dhaka and abroad until June this year, the decision on the RFP (Request for Proposal) was delayed and eventually dropped.
When asked, a task force insider said it is true that the stolen asset recovery process has taken longer than expected, as the first year was largely a learning period. "Most countries struggle in the first year," he added.
Regarding the proposals from law firms, he explained that they submitted commercial proposals since they were essentially pitching for business. Moreover, he said, the task force had no budget and lacked a standardised methodology for evaluating the proposals.
He said, "What are the criteria you're going to use to judge a proposal? A law firm submits a proposal – how do you determine if it's the right one? Is it fair? Who decides whether a proposal is right or fair?"
However, he appreciated the central bank's recent move to adopt a privatised approach, allowing banks to deal directly with legal firms.
He added that the World Bank's Stolen Asset Recovery Initiative has been working with the government for two to three months to create the Terms of Reference (TOR) for an RFP methodology to assess proposals.
Why NDAs are crucial
Speaking with TBS, a senior task force executive said banks need to sign NDAs with foreign firms so they can file civil suits in international courts to recover stolen money. Meanwhile, other law enforcement agencies are pursuing criminal cases against 11 priority business groups.
He explained that criminal cases alone will not help recover the money, which is why the task force is pursuing both criminal and civil avenues.
He added that litigation funders have been requesting information to assess the merit of cases for potential investment. Since banks are the primary source of information for tracking stolen money, they must engage with these firms.
The NDAs, which would allow firms access to client information to assess cases, should have been completed months ago. The delay, he said, occurred because the task force was stalled for three to four months over the appointment of a new coordinator.
However, the task force has finally allowed banks to sign NDAs with international law firms, a process that will take at least two months to review the cases for agreement. The Bangladesh Bank will coordinate the banks to avoid duplication, he said.
For example, one business group may be involved with 20 banks. If each bank pursued the same assets separately, it would be a waste of resources. In such cases, the relevant banks will work with the same law firm, with the central bank providing coordination.
After the NDA review, litigation funders will submit investment proposals to support asset tracking and provide legal assistance.
Budget urgently needed
During multiple discussions over the past year, litigation funders proposed taking a 30–40% share of any recovered assets if the government were to rely entirely on litigation funding, a task force insider told TBS on condition of anonymity.
"We may end up giving away 30-40% of the recovery to litigation funders, but we need a central budget to speed things up and maintain control over some cases ourselves," he added.
For example, Kazakhstan centrally funded all of its cases, spending hundreds of millions of dollars, and recovered billions. Malaysia recovered $7 billion from the 1MDB scandal by investing millions.
"So, relying solely on litigation funding or only on central funding is a mistake. We need a blended approach that supplements central resources with private-sector support," he said.
He further explained that if the government invests millions to track laundered assets and estimates the recovery potential, it can then negotiate with litigation funders for legal assistance. "At this moment, we have no achievement to negotiate and would have to give away 30-40%," he added.
Regarding funding options, he said: "The budget could come from the government, banks [with central bank approval], or litigation funders. Another option is a government-to-government (G2G) approach, but that is very slow and would take a long time."
G2G route too slow and complex
A local lawyer working with a global firm explained that the G2G approach — where Bangladesh requests another country's help through an MLA — is technically free but "painfully slow."
"Each request requires detailed investigation, proper evidence, and exact location of assets," he said. "Even then, MLAs are often delayed by bureaucracy — they move from the interim government to the Home Ministry, and then onward, sometimes without coordination."
He compared criminal versus civil approaches: "The advantage of criminal proceedings is that there's no cost – the foreign government handles the case. Civil cases, on the other hand, require millions or tens of millions of dollars, but they are more within Bangladesh's control, allowing us to manage the process. That's the balance."
Regarding private firms, he said, "This has nothing to do with G2G. When we hire private firms, they trace how money moved – for example, from an Islamic bank here, through the British Virgin Islands, Malaysia, or other countries. These firms are experts but expensive."
Failed settlement effort
The task force attempted its first settlement initiative with one of the 11 business groups but it failed because the government was unwilling to pursue it.
A task force insider said they opened negotiations with the business groups to prepare a proposal acceptable to both sides. The chairman of the group was suggested to meet the chief adviser and other government officials for discussions. However, confusion over who had the authority to approve the deal stalled the process, as inter-agency disagreements persisted.
The task force chose this particular group because not all business groups were in a position to negotiate, the insider explained.
He added that, for groups like S Alam, settlement is not feasible since the stolen money came from banks. "If the group agrees to settle at 10% or 20% of the stolen money, what about the remainder taken from banks? The banks are the final authority in such cases. Moreover, criminal cases can only be settled by courts."
In contrast, settlements are possible in cases of non-bank government corruption. The business group chosen for the settlement initiative fell under this category, he said.
The insider noted that settlements have helped other countries recover laundered money. For instance, the Malaysian government recovered $107.3 million in a settlement with Riza Aziz, stepson of former prime minister Najib Razak, dropping money laundering charges in the 1MDB scandal.
Malaysia also reached a $3.9 billion settlement with US investment bank Goldman Sachs, ending its criminal investigation into the bank's role in 1MDB.
JPMorgan Chase agreed to pay Malaysia $330 million to settle issues related to its involvement in the multibillion-dollar 1MDB scandal.
