Governor admits trade-based money laundering

Bangladesh Bank Governor Abdur Rouf Talukder on Sunday said businesses used to launder money through over-invoicing and under-invoicing.

"There was a trend of money laundering through over and under-invoicing. But I don't know if the money was used for buying homes in foreign countries," the governor said while replying to a question on overseas property purchases by Bangladeshi businessmen.

"Since last July, we have been looking into whether there is any trade-based money laundering. We have found that some products have been imported at prices three times higher than the actual." 

In the cases of under-invoicing, traders collected dollars abroad using the illegal hundi system to pay their hidden amounts, which ultimately caused a cut in remittance influx to the country, he added. 

The reasons behind the irregularities were a lack of monitoring, he said after unveiling the monetary policy statement for the second half of FY23 at the Bangladesh Bank headquarters in the capital. 

Abdur Rouf Talukder, however, said the situation is now improving. "Our imports have declined substantially. One of the key reasons behind this is increased monitoring. The central bank and authorised dealers of commercial banks now cross-check prices."

No pressure on cenbank regarding Islami Bank

On the Islami Bank Bangladesh issue, the central bank governor said being panicked after some media reports on loan irregularities, many clients withdrew their deposits from the bank. 

"We, however, have taken some corrective measures. Hopefully, the liquidity crisis of the bank will fade out within four to five months."

"We have no pressure from any group regarding the bank. The Bangladesh Bank is not responsible to see who borrowed how much [from the bank]," he added.

Replying to a question regarding the Bangladesh bank support of Tk8,000 crore to the shariah-based bank, Abdur Rouf Talukder said the liquidity support has been given to the bank as it is one of the large banks of the country, which has Tk1,50,000 crore deposits of 1.9 crore clients.

"It [Islami Bank] repaid the money within one day."

On other shariah-based banks, the governor said they were not silent on the issues (irregularities) of Islamic banks. "We have formed probe committees and conducted investigations. We will take steps according to the probe reports."

"We have to go through a certain process. We cannot detain anyone based on just media reports," he added and noted that they have imposed some restrictions on several banks. 

Abdur Rauf hoped that the previous incidents will not repeat further in the banking sector in future.