2. 2
This study is conducted to reveal the “Money Laundering & Terrorist Financing and BDBL
Policy to Prevent It”. This study is conducted to find how the money laundering and terrorist
financing is emerging and how it is controlled by Bangladesh Development Bank Limited under
the supervision of Bangladesh Bank.
Money laundering and terrorist financing and their measures to combat it have become the focus
of an intense international effort. The effects of money laundering on economic devolopment are
difficult to quantify, however, it is clear that such activity damages the financial institutions,
reduces productivity in the economy’s external sector. For developing countries to combat
money laundering become more difficult than developed countries because of their inadequate
regulatory environment and vulnerable financial system.
An efficient and stable banking system is the prerequisite for overall development of the
country.To maintain stability and integrity of international financial system, Financial Action
Task Force (FATF), an inter-government body established by G-7 in 1989, has set 40
recommendations for preventing money laundering and terrorist financing.
In domestic level, Bangladesh Bank, as the major regulator of the financial system of the country
plays a pivotal role to stabilize and enhance the efficiency of the financial system. Considering
money laundering (ML) and terrorist financing (TF) as one of the major threats to the stability
and the integrity of the financial system, Bangladesh Bank has taken several initiatives including
issuance of circulars/circular letters/guidance notes under money laundering prevention Act and
Anti-terrorism Act. The regulator issued a comprehensive ‘Guidance Notes On Prevention Of
Money Laundering’ in 2003 based on Money Laundering Prevention Act,2002 which
enumerated the duties and responsibilities of commercial banks of the country to prevent money
laundering.
The purpose of this study is to outline the money laundering and terrorist financing routes and
forms and Bangladesh Development Bank Ltd. (BDBL) policy to prevent it through the guidance
1.1 Title Of The Study
1.2 Background Of The Study
3. 3
and assist of Bangladesh Bank. The other purpose of the study is to identify and describe the
overall banking of Bangladesh Development Bank Ltd. and its activities.
In addition to gaining great experience to complete classroom learning, by an internships a
student can beef up his knowledge and portfolio. Further business graduates need to have both
theoretical and practical knowledge to manage the business activity properly. In order to be
familiar with organizational culture and gain some practical knowledge about an organization,
School of Business, Ahsanullah University Of Science and Technology provides a 2 months
internship program as a part of the BBA program. After completion of the program period a
student must submit the study on the assigned topic to the Supervisor.
After the completion of four-year academic BBA program, I was placed in Bangladesh
Development Bank Limited Bank (BDBL), Head office, Rajuk Avenue, Dhaka for the internship
program by Bangladesh Development Bank Training Institute on basis of the forwarding letter
by the School Of Business, University of Ahsanullah University Of Science and Technology.
The duration of my organizational attachment was, by policy 60 working days, starting from
April 26, 2016 to June 21, 2016.As a requirement for the completion of the program I needed to
submit this study, which is to outline the the money laundering and terrorist financing routes and
forms and Bangladesh Development Bank Limited Bank (BDBL), policy to prevent it through
the guidance and assist of Bangladesh Bank. The other purpose of the study is to identify and
describe the overall banking of Bangladesh Development Bank Ltd. and its activities and new on
the job learning experiences.
I was assigned in Bangladesh Development Bank Ltd (BDBL) through School of Business. I
think BDBL is development financing institution continued its effort to make an effective
contribution towards expansion of industrialization process of Bangladesh. BDBL has already
started the commercial banking and the bank is now drowned with foreign exchange business
1.3 Origin Of The study
1.4 Rationale Of Selecting BDBL
4. 4
.Because of commercial banking and foreign exchange, there is a huge chance for money
laundering. it seems to me that in BDBL there is a sufficient opportunity to gain practical
knowledge about money laundering as well as its overall performance, shortfall of capital, loan
agreement of the bank. The working environment is good and the employees are very much
cooperative to provide practical knowledge. Here I worked in Anti Money Laundering and
Terrorist Financing department. After completion of my 2 months Internship period in consulting
with the supervisor of the program I have selected a topic “Money Laundering and Terrorist
Financing routes and forms and BDBL policy to prevent it”.
Main Objective:
The objective of the study is to comprehensive study on Bangladesh Development Bank
Limited to find out Money Laundering and Terrorist Financing routes and forms and
BDBL policy to prevent it.
Specific Objectives:
To Present an overview of Bangladesh Development Bank Ltd (BDBL).
To understand various department activities and their key responsibilities.
To Become familiar with organizational culture.
Describe BDBL policy and ways to identify the money laundering and terrorist financing.
To determine the limitations of Bangladesh Development Bank Ltd (BDBL).
To find out problems and suggesting recommendations for further improvement.
1.5 Objective Of The Study
5. 5
The scope of the study was on the organization of Bangladesh Development Bank Ltd
(BDBL).The study was enclosed only on the Head Office and gave more concentration on
money laundering, branch management department which works on money laundering and
terrorist financing prevention policy.
Correct and smooth completion of report requires adherence to some rules and methodology. In
order to make the report, the decision has been taken to collect various primary and secondary
data. Data have been collected by oral interviewing the responsible officers. They also gave me
annual report, annual budget granted through government of BDBL and other documents.
Different forms of statistical configurations such as table percentage rates and ratios have been
used to make the study meaningful and realistic.
After completing the institutional experience, practical performances in the formal stage
become difficult. So in performing this report my lack of proper knowledge greatly
influenced in this performance. Besides this, every study has some limitations. Those are as
follows:
Lack of sufficient knowledge.
Lack of available information and documents to support our study.
Up-to-date information was not available.
Prolonged process and long time involved in the evaluation of project.
Improper combination among various departments.
Confidentiality of the bureaucrats.
Unwillingness to give information.
Most of the manual of BDBL is maintained in bangle.
Only few days’ internship’s experience is not enough time to find out all the pros and
cons of such a vast project.
1.6 Scope Of The Study
1.7 Methodology Of The Study
1.8 Limitations Of The Study
the study
7. 7
With the decision of the Government, Bangladesh Development Bank Ltd. (BDBL) was
incorporated on 16 November, 2009 as a Public Company Limited by amalgamation of former
Bangladesh Shilpa Bank (BSB) and Bangladesh Shilpa Rin Sangstha (BSRS) which established
1972 provide loans and increase investment in Bangladesh.
Two Vendors’ Agreements were signed between the Government of the People’s Republic of
Bangladesh and the BDBL on 31 December, 2009 to acquire and take-over all of their (BSB &
BSRS) assets, benefits, rights, powers, authorities, privileges, liabilities, borrowings and
obligations and to carry on with the same business.
The defunct BSB had 15 branches while BSRS has two. BSB and BSRS have financed 174 and
69 projects. The paid up capital of the merged company will amount to 400 crore. Before merged
the paid up capital of BSB was TK 200 crore was TK 70 crore for BSRS.
As a public limited company, BDBL formally embarked its journey on January 03, 2010. It
extends financial assistance for setting up industries and provides all kinds of commercial
banking services to its customers through its branch network in Bangladesh. The BDBL also
inherited membership of Dhaka Stock Exchange Limited (DSE) and
Citation Stock Exchange Limited (CSE). In order to contribute to the capital market, it acts as
stock dealer and operates two brokerage houses, one at Motijheel and the other at
With the decision of the Government, Bangladesh Development Bank Ltd. (BDBL) was
incorporated on 16 November, 2009 as a Limited Company under the Companies Act. 1994 by
merger of former Bangladesh Shiplap Bank (BSB) and Bangladesh Shiplap Ran Sanest (BSRS)
are two Development Financial Institutions (Dais) in the public sector.
Karwan Bazar which are providing services to investors- n small and medium. The BDBL is also
managing a close-end mutual fund with the paid up capital of TK 5.00 crore.
2.1 About The BDBL
8. 8
Table 2.1: An overview of Bangladesh Development Bank BDBL
Name Bangladesh Development Bank Limited (BDBL)
Established through merger of former BSB and
BSRS
1) Registered Office BDBL Bhaban, 8, Rajuk Avenue, Dhaka-1000
2) Legal Status Public limited Company
3) Date of Incorporation November 16, 2009
4) Extent of Shareholding 100% Share owned by the Government Of
Bangladesh
5) Authorized Capital Tk. 1000.00 crore
6) Paid-Up Capital Tk. 400.00 crore
7) Face Value Per Share Tk. 100.00
8) Accounting Period January-December
9) Date of Business Commencement
Certificate
November 16,2009
10) Banking License Issued by Bangladesh
Bank
November 19,2009
11) Date of Vendors Agreements Signed December 31,2009 between the Government of the
people’s Republic of Bangladesh and Bangladesh
Development Bank Ltd
12) Line of Business All Banking Business including Capital Market
Operation
13) Domestic Network
Number of Divisions in Head Office 11
Number of Departments in Head Office 27
Number of Zone Office 4
Number of Branch Offices 32
Number of Urban Branch 25
Number of Rural Branch 7
Number of AD Branch 5
Number of Human Resource 878
14) Membership of Stock Exchange Dhaka Stock Exchange
15) Subsidiary Companies BDBL Securities Ltd. 12, Karwan Bazar, Dhaka
BDBL Investment Service Ltd. 8, Rajuk
Avenue,Dhaka.
16) Corporate Tax Rate 42.50%
17) Auditors Howladar Yunus and Co. and MABS and J partners
18) Legal Adviser & Consultant
19) Income Tax Adviser K.M. Hasan and CO. Chartered Accountants
20) Credit Rating Agency Credit Rating Information and Services Limited
(CRISL)
21) Swift Code BIC: BDDBBDDH
22) Website www.bdbl.com.bd
(Source: Annual Report 2014)
2.2 Company Overview
9. 9
There are 37 branch around the country and the bank has a branch of employees in various
department in various sector according to the annual study of 2014 there are 878 employees
working here.
It goes without saying that the most important resource of any institution, more so for a bank, is
its human resource. As on December 31,2014 the total human resource was 878.Among these,
officers working in different disciplines including staff position were mentioned below:
Table 2.2: Number of employees of Bangladesh Development Bank BDBL
SL. No. Discipline Numbers
1 Accountants 01
2 Lawyers 14
3 Economists 49
4 Engineers 43
5 MBA/Financial Analysts 147
6 Statisticians 19
7 Senior Officers (IT) 20
8 Others 391
9 Staff 194
Total 878
(Source: Annual Report 2014)
2.3 Number Of Employees
10. 10
To emerge as the country’s prime Financial Institution for supporting private sector industrial
and other projects of great significance to the country’s economic development. Also be active
participant in commercial banking by introducing new lines of product and providing excellent
services to the customers.
To be competitive with other Banks and Financial Intuitions in rendering services;
To expand branch network in commercially and geographically important places;
To employ quality human resources and enhance their capability through
motivation and right type of training at home and abroad;
To delegate maximum authority ensuring proper accountability;
To maintain continuous improvement and up gradation in business policies and
procedures;
2.4 Company Logo
2.5 Vision
2.6 Mission
11. 11
To adapt to new technology;
To maximize profit by strong, efficient and prudent financial performance; and
To introduce new product lines according to market needs.
The Bank is always committed to serve the clients with the best values and innovative products
and services to enrich its portfolio looking at the client’s demands and desires.
1. Development Banking
•Industrial Loan with emphasis on syndicated arrangement (Power &
Energy, Telecommunication, Fiber Optic Cable, etc.)
•Public-Private Partnership (PPP) project (Port Development, Transport &
Communication like Road, Water & Air Ways etc.)
•Small & Medium Enterprise (SME like IT industries i.e. development of
Hardware & Software).
•Agro -based ventures depending on indigenous raw materials (like Jute
Twin/Yarn and other Industries).
•Green Banking (Environment & Eco-Friendly industries like automatic
brick kiln, renewable energy, effluent treatment plant, etc.)
•Lease Financing.
•Real Estate business (including housing loan).
2.7 Products Of The Bank
12. 12
2.Commercial & Foreign Exchange Business
A. Deposit Banking:
• Current Deposit
• Savings Deposit # Short Term Deposit
• Fixed Deposit ^Deposit Pensions Scheme
• Other Special savings deposit:
* 5-Year Term BDBL Sanchay Scheme (BDBLSS)
*10-Year Term Sheikh Sanchez Scheme (SSS)
*10-Year Term Chickasha Sanchez Scheme (CSS)
B. Short Terms Loans:
• Cash Credit (Hypothecation)
• Cash Credit (Pledge)
• Secured Advances (General)
• Secured Advances (Financial Obligation)
• Retail Banking
* Consumer’s Credit
* Personal Loan
C. Trade/Foreign Trade Financing
(1) Export Cash Credit
(2) Packing Credit
(3) Purchase of Local & Foreign Documentary Bills
(4) Payment Against Documents (PAD)
(5) Loan Against Imported Merchandise (LIM)
(6) Loan Against Trust Receipt (LTR)
Foreign Exchange:
• Local L/C
• Import L/C
• Export/C
• Back to Back L/C
13. 13
• Foreign Remittance
• Foreign Exchange Buy & Sale
D. Other Banking Service:
•Demand Draft Issue
•Payment order issue
• Selling of Prize Bond
• Selling of savings certificates, etc.
Fig 2.1: Corporate structure of BDBL
(Source : Annual report of 2014)
2.8 Corporate Structure
14. 14
BDBL provides long and medium-term loans both in local and foreign currencies, guarantees
repayment of loans raised by investors from other sources, and provides equity support by way
of outright purchase of shares and by underwriting the public issue of shares. Besides, the bank
also performs the following activities:
Fig 2.2: Activities of Bangladesh Development bank limited
Activities Of BDBL
Operational Others
Profit & Loss
Deposit Mobilization
Loan Application Receive
Term Loan Sanction
Disbursement Of Term Loan
Working Capital Sanction
Other Investing
Project Implementation
Loan Portfolio
Loan Recovery
Legal Option and Written Off
Advisory
Training
Computerization
Human Resources
Board News
Annual General Meeting
Observance Of National Days
( Source: BDBL internal information)
2.9 General Banking Activities
15. 15
Financial and strategic SWOT analysis provides a comprehensive insight into the company’s
history, corporate strategy, business and financial structure, management and operations. The
study contains a detailed SWOT analysis.
BDBL undertake time to time SWOT (Strength, Weakness, Opportunity, Threats) analysis for
reviewing bank’s market position.
Fig 2.3: SWOT Analysis of BDBL
( Source: BDBL Internal Information)
Strategic Analysis
Internal External
Strength
Build &
Enhance
Weakness
Resolve
& Reduce
Opportu
nities
Exploit&
Expand
Threats
Avoid&
Thwart
2.10 SWOT Analysis Of BDBL
16. 16
A . Strength
Strength is an internal part of a firm and they should be enhanced and build it more its further
development. In this sector BDBL has its own strategy to build and enhance its strength.
There are as follows:
Table 2.3: Strength Of BDBL
Strength 1 BDBL has skilled financial management, good credit control and few bad debts.
Strength 2 One of the fundamental objectives of BDBL is to boost up small and medium
scale industries ,which makes a special perception about the bank.
Strength 3 BDBL is unique in its nature having both specialized and commercial operation
it is regarded as a development bank as well as commercial one.
Strength 4 Online banking operation and branch banking facility.
Strength 5 A strong balance sheet. Access to extensive credit, a strong credit rating, and a
good relationship with the bank and the other source of finance.
Strength 6 Effective research and development, use of design and innovation.
Strength 7 Skilled employees, successful recruitment, and effective training and
development.
Strength 8 Govt. support and Encouragement.
Strength 9 BDBL follows leading finance
B . Weakness
In this sector BDBL has its own strategy to should resolve and reduce the weakness.These are as
follows :
Table 2.4: Weakness Of BDBL
Weakness-1 Shortage of branches.
Weakness-2 Lack of competitive banking.
Weakness-3 Lack of promotional activities.
17. 17
Weakness-4 Decision making process is lengthy.
Weakness-5 Less diversified product and service line. The salary of BDBL is not high enough
related with other commercial bank operating in Bangladesh.
Weakness-6 MAN/Internet/ On-line services in BDBL is not upgraded
C . Opportunities
In this sector BDBL has its own strategy to exploit and expand its opportunities. These are as
follows:
Table 2.5: Opportunities Of BDBL
Opportunity-1 There are huge demand of micro-credit, small and medium scale finance.
Opportunity-2 There are opportunities of innovation in the banking industry.
Opportunity-3 Bangladesh economy is expanding rapidly, so the need of bank is growing
up.
D . Threats
In this sector BDBL has its own strategy to avoid and thwart its threat. These are as follows:
Table 2.6: Threats Of BDBL
Threat-1 More and less all the competition in the banking industry are competent, so to
survive BDBL has to face the competition.
Threat-2 Too much interrupted by international assistance institutions like World Bank,
IMF, WTO.
Threat-3 Due to the gov’t institution many of the banking decision basic by political
government.
18. 18
Table 2.7: Five year performance at a glance
Sl.
No.
Particulars 2014 2013
(Restated)
2012 2011 2010
A. Balance Sheet Matrix
1. Authorized Capital 1000.00 1000.00 1000.00 1000.00 1000.00
2. Paid up Capital 400.00 400.00 400.00 400.00 400.00
3. Reserve Fund & Other Reserve 1320.55 1247.03 1165.70 1082.33 1160.06
4. Retained Earnings 33.23 18.77 4.19 4.05 3.67
5. Total Equity 1753.78 1647.03 1569.88 1486.38 1563.73
6. Capital Required (As per Basel
II)
531.02 481.56 407.21 400.00 400.00
7. Capital Maintained (As per
Basel II)
1305.37 1193.43 1109.72 1030.35 1063.25
8. Capital Surplus (As per Basel II) 774.35 711.87 702.51 630.35 663.25
9. Capital Adequacy Ratio (Basel
II)
24.58% 24.78% 27.26% 28.90% 28.08%
10. Deposits (including Bills
Payable)
2335.01 1998.88 794.55 470.68 325.40
11. Investments 1167.03 771.83 323.03 282.09 158.84
12. Loans & Advances 1650.10 1545.72 1474.31 1004.61 990.60
13. Fixed Assets 845.67 858.34 871.35 882.47 896.15
14. Advances to Deposit Ratio
(ADR)
64% 86% 155.12 % 148.48 % 168.92 %
16. Total Assets 5025.99 4685.78 3271.05 2884.77 2751.88
B. Capital Matrix
17. Total Risk Weighted Assets
(Basel II)
5310.20 4815.58 4069.37 3564.71 3786.00
18. Core Capital (Tier- I) 942.43 825.06 733.05 656.85 603.25
19. Supplementary Capital (Tier- II) 362.93 368.37 376.40 373.30 460.00
20. Total Eligible Capital (Tier I, II 1305.37 1193.43 1109.45 1030.15 1063.25
2.11 Last Five Years Performance Of BDBL
19. 19
& III)
21. Paid up Capital & Statutory
Reserve
594.77 565.79 542.36 521.80 504.58
C. Asset Quality
22. Classified Loans & Advances
(excluding Staff Loan)
524.14 520.27 541.79 310.70 310.17
23. % of Classified Loans &
Advances (excluding Staff Loan)
38.32 40% 42.99% 38.28% 31.31%
24. Required Provision against
Classified Loans & Advances
236.46 298.38 215.90 119.87 140.52
25. Provision Maintained 237.58 331.95 217.38 176.83 168.61
26. Surplus of Loan Provision 1.12 33.57 1.48 56.96 28.09
27. Amount of Written of Loan 1964.44 1861.88 1946.78 2126.45 2387.23
D. Income & Expenditure
Statement Matrix
28. Interest Income 239.53 197.73 150.84 120.68 79.98
29. Interest Paid on Deposit &
Borrowings
209.37 102.83 62.86 31.10 11.52
30. Net Interest income 30.15 94.91 87.98 89.58 68.46
31. Income from Investment &
Capital Market Operation
207.41 192.28 47.23 36.17 86.21
32. Dividend Paid for 1st BSRS
Mutual Fund
110% 100% 125% 70%
33. Non-Funded Income 30.56 39.90 53.96 34.17 20.00
34. Total Operating Income 268.12 327.09 189.17 159.92 172.25
35. Administrative & Operating
Expenditure
118.22 115.29 86.37 73.81 89.77
36. Net Profit before Tax 144.90 117.13 102.80 86.11 82.24
37. Provision for Income Tax 31.98 28.83 19.10 17.51 17.79
38. Net Profit after tax 112.92 88.30 83.70 68.60 64.45
E. Foreign Exchange Business
39. Import L / C (Sight) 90.96 85.57 113.84 - -
40. Import L / C (Deferred) 20.47 28.21 144.80 - -
41. Export 27.28 16.41 8.40 - -
F. Shareholders’ Information
42. Dividend Paid to the Govt. 10.00 10.00 7.50 5.00 5.00
43. Net Assets Value Per Share
(Taka)
438.44 411.76 392.47 371.59 390.93
20. 20
44. Earning Per Share (Taka) 28.23 22.07 20.92 17.15 16.11
G. Financial Indicators (%)
45. Net Interest Margin 5% 5.53% 6.15% 6.49% 5.58%
46. Net Operating Income to Assets 2.98% 4.53% 3.14% 2.98% 3.00%
47. Cost of Fund 10.36% 9.84% 10.12% 8.04% 8.91%
48. Cost to Income Ratio 68.61% 50.70% 59.21% 54.92% 55.12%
49. Return On Assets (ROA) 2.25% 1.88% 2.56% 2.38% 2.34%
50. Return On Investment (ROI) 17.77% 24.91% 14.62% 12.82% 52.75%
51. Return On Equity (ROE) 6.44% 6.19% 5.33% 4.61% 4.12%
H. Other Information
52. Number of Shareholders 100% Govt.
owned
-do- -do- -do- -do-
53. Number of Zone Offices 4 4 4 4 4
54. Number of Branch Offices 32 28 24 21 17
55. Number of Employees (Regular) 878 826 857 836 757
(Source : Annual report of 2014)
22. 22
On recent days money laundering has become a sweltering issue in financial arena
internationally. Money laundering is a very sophisticated and dynamic crime.
3.1.1 Definition Of Money Laundering
According to Money Laundering prevention Act-2009, Money Laundering means-
(i) Transfer, conversion, remitting abroad or remitting or bringing from abroad to Bangladesh
proceeds or property acquired through commencement of a particular offence for the purpose
of disguising the illicit origin of the proceed or property or transferring abroad of proceeds or
property acquired through legal or illegal means;
(ii) Conduct or attempt to conduct a financial transaction in a manner that will not be required to
report under the ACT;
(iii) Do such activities so that the illegitimate source of such proceed or property cab be
disguised or attempt to do such activity or knowingly assist or conspire to perform such
activities.
The U.S. Customs service, an arm of the Department of Treasury, provides a lengthy
definition of money laundering as “the process whereby proceeds, reasonably believed to
have been derived from criminal activity, are transported, transferred, transformed, converted
or intermingled with legitimate funds for the purpose of concealing or disguising the true
nature, source disposition, movement or ownership of these proceeds. The goal of the money
laundering process is to make funds derived from, or associated with, illicit activity appear
legitimate.”
3.1 Money Laundering
23. 23
3.1.2 International Definition Of Money Laundering
Another definition of money laundering under U.S law is “… the involvement in any one
transaction or series of transaction that assists a criminal in keeping, concealing or
disposing of proceeds derived from illegal activities.
The European union defines it as “ the conversion or transfer of property, knowing that
property is derived from serious crime, for the purpose of concealing or disguising the illicit
origin of the property or of assisting any person who is involved in committing such an
offence or offences to evade the legal consequences of his action, the concealment or disguise
of the true nature, source, location, disposition, movement, rights with respect to, or
ownership of property, knowing that such property is derived from serious crime”
The joint Money Laundering Sterling Group (JMLSG) of the U.K defines it as “the
process whereby criminals attempts to hide and disguise the true origin and ownership of
the proceeds of their criminal activities, thereby avoiding prosecutions, conviction and
confiscation of their criminal funds”
In lay terms money laundering is most often describe as” turning of dirty or black money
into.
clean or white money”. If undertaken successfully, money laundering allows criminals to
legitimize “dirty” money by mingling it with “clean” money, ultimately providing a legitimate
cover for the source of their income. Generally, the act of conversion and concealment is
considered crucial to the laundering process.
3.2 Defining Terrorist Financing
Terrorist financing can simply be defined as financial support, in any form, of terrorism or of
those who encourage, plan, or engage in terrorism. The International Convention for the
Suppression of the Financing of Terrorism (1999) under the United Nations defines TF as
follows:
24. 24
1. If any person commits an offense by any means, directly or indirectly, unlawfully and
willingly, provides or collects funds with the intention that they should be used or in the
knowledge that they are to be used, in full or in part, in order to carry out:
a. An act which constitutes an offence within the scope of and as defined in one of the treaties
listed in the link given below or
b. Any other act intended to cause death or serious bodily injury to a civilian, or to any other
person not taking any active part in the hostilities in a situation of armed conflict, when the
purpose of such act, by its nature or context, is to intimidate a population, or to compel a
government or an international organization to do or to abstain from doing an act.
2. For an act to constitute an offense set forth in the preceding paragraph 1, it shall not be
necessary that the funds were actually used to carry out an offense referred to in said paragraph
1, subparagraph (a) or (b). Bangladesh has ratified this convention and criminalized terrorism or
terrorist activities under section 6(1) of Anti Terrorism Act, 2009 in line with the requirement set
out in 9 (nine) conventions and protocols that were annexed in the convention. Section 7(1) of
Anti Terrorism Act (ATA), 2009, defines terrorist financing as follows-
If any person or entity willfully provides, receives, collects or makes arrangements for money,
service or any other property, whether from legitimate or illegitimate source, by any means,
directly or indirectly, with the intention that, it would, in full or in part, be used-
a) to carry out terrorist activity;
b) by a terrorist person or entity for any purpose, or is in the knowledge that it may be used by
a terrorist person or entity;
the said person or entity shall be deemed to have committed the offence of terrorist financing.
Moreover, according to Anti Terrorism Act (ATA), 2009 conviction for terrorist financing shall
not depend on any requirement that the fund, service or any other property was actually used to
carry out or direct or attempt to carry out a terrorist act or be linked to a specific terrorist act. The
penalties for the offences for money laundering are-
(1) In case of a TF offence made by a person, he/she shall be punished with rigorous
imprisonment for a term not exceeding 20 (twenty) years but not less than 4 (four) years, and in
25. 25
addition to that, a fine equivalent to twice the value of the property involved with the offence or
taka 10(ten) lac, whichever is greater, may be imposed.
(2) In case of a TF offence made by an entity, the Government may listed the entity in the
Schedule or proscribe and listed the entity in the Schedule, by notification in the official Gazette
and in addition to that, a fine equivalent to thrice the value of the property involved with the
offence or of taka 50 (fifty) lac, whichever is greater, may be imposed. Moreover, the head of
that entity, whether he is designated as Chairman, Managing Director, Chief Executive or by
whatever name called, shall be punished with rigorous imprisonment for a term not exceeding 20
(twenty) years but not less than 4 (four) years and, in addition to that, a fine equivalent to twice
the value of the property involved with the offence or of taka 20 (twenty) lac, whichever is
greater, may be imposed unless he/she is able to prove that the said offence was committed
without his knowledge or he had tried his best to prevent the commission of the said offence.
Property means-
(i) Any kind of assets, whether tangible, movable or immovable; or
(ii) Cash, legal documents or instruments in any form, including electronic or digital,
evidencing title to, or interest in such assets.
“Predicate offence” means the offences from which the proceeds derived from committing or
attempt to commit the following offences:
(1) Corruption and bribery
(2) Counterfeiting currency
(3) Counterfeiting documents
(4) Extortion
(5) Fraud
(6) Forgery
(7) Illicit arm trade
3.3 Property Of Money Laundering
3.4 Predicate Offences Of Money Laundering
26. 26
(8) Illicit narcotic drugs and psychotropic substance trade
(9) Trade of stolen goods
(10) Kidnapping, illegal restraint, hostage-taking
(11) Murder, grievous bodily injury
(12) Woman and child trafficking
(13) Smuggling and trafficking of local and foreign currency
(14) Theft or robbery or piracy or sea piracy or air piracy
(15) Human trafficking
(16) Dowry;
(17) Illegal trafficking of customs related crime
(18) Tax related crime
(19) Piracy of intellectual property
(20) Terrorism and terrorist financing
(21) Environmental crime
(22) Sexual exploitation
(23) Insider trade and market manipulation
(24) Organized crime
(25) Obtaining money by threatening
(26) Any other offence which Bangladesh bank declares as predicate offence with Govt.
approval.
3.5 Reasons Behind Money Laundering
Criminals mainly engage in money laundering for three reasons:
(1) To show Legitimacy of Funds
(2) Hide Sources of illicit proceeds
(3) Shield against investigation and capture
1.To Show Legitimacy Of Funds
organization that engages in criminal conduct for financial gain because;
It covers operating expenses
27. 27
Replenishes inventories
Purchase the service of corrupt officials to escape detection
Promotes the interests of illegal enterprise and
Pays for extravagant life style
To spend money in this ways, criminals must make the money they derived illegally
appear
legitimate.
2. Hide Sources Of Illicit Proceeds
Criminals mainly hide the source of their money to ensure that illicit proceeds are not used to
prosecute them.
3. Shield Against Investigation And Capture
The proceeds from crime often become the target of investigation and seizure. To shield unfair
gains from suspicion and protect them from seizure, criminal must make them look legitimate.
3.6 Stages Of Money Laundering:
There is no single method of laundering money. In most of the criminal cases, the initial
proceeds usually take the form of cash. For example, bribery, extortion and street level trade of
drugs are almost always made with cash. This cash need to enter into financial system by some
means so that it can be converted into a form which can be more easily transformed, concealed
or transported.
Despite of variety of methods employed, the laundering is not a single act but a process
accomplished in 3 basic stages-
1. Placement
2. layering and
3. Integration.
Placement
The physical disposal of the initial proceeds derived from illegal activity. This means the
movement of cash from its source. On occasion the source can be easily disguised. This is
28. 28
followed by placing it into circulation through financial institutions, shops, exchange house,
security brokers and other business, both local and abroad.
Layering
Separating illicit proceeds from their source by creating complex layers of financial transactions
designed to disguise the audit trial and provide anonymity. The purpose of this stage is to make it
more difficult to detect and uncover a laundering activity.
Integration
The provision of apparent legitimacy to wealth derived criminally. If the layering process has
succeeded, integration schemes place the laundered proceeds back into the economy in such a
waythat they re-enter into the financial system appearing as normal business funds.
These three steps may occur as separate distinct phase. They may also occur simultaneously or
more commonly, may overlap. How the basic steps are used depends on the available laundering
mechanisms and the requirements of the criminal organizations.
These three steps can be illustrated in to the following figure
Figure:
Fig 3.1: The Steps Of Money Laundering
29. 29
The table below provides some typical example of the stages of money laundering-
Table 3.1 : Examples Of Money Laundering
3.7 The Link Between Money Laundering And Terrorist Financing
The techniques used to launder money are essentially the same as those used to conceal the
sources of and uses for terrorist financing. But funds used to support terrorism may originate
from legitimate sources, criminal activities or both. Nonetheless, disguising the source of
terrorist financing, regardless of whether the source is of legitimate or illicit origin, is important.
If the source can be concealed, it remains available for future terrorist financing activities.
Similarly, it is important for terrorists to conceal the use of the funds so that the financing
activity goes undetected.
As noted above, a significant difference between money laundering and terrorist financing is that
the funds involved may originate from legitimate sources as well as criminal activities. Such
legitimate sources may include donations or gifts of cash or other assets of organizations, such as
foundations or charities that, in turn, are utilized to support terrorist activities or terrorist
organizations.
30. 30
3.8 Reasons Of Combating Money Laundering:
There are plenty of factors for what we have to combat money laundering. They are-
1. Money laundering has a devastating economic, security and social consequences. Its
provide fuel for drug dealers, smugglers, terrorists, illegal arms dealers, corrupt public
officials and others to operate and expand their criminal networks.
2. These increases governments cost for law enforcement and health care expenditure
3. Money laundering reduces government’s tax revenue. It also makes government’s tax
collection difficult and as a result tax rate goes up.
4. Money laundering misleads asset and commodity prices and leads to a misallocation of
resources.
5. Money laundering can leads to an unsound asset structure and thus create risk of
monetary instability for banks.
6. One of the most serious micro economic effects of money laundering is felt in the private
sector. Money laundering often uses front companies, for co-mingling their illicit
proceeds with legitimate funds, to hide the ill-gotten gains. Because of substantial illicit
funds, these front companies can subsidize their products and services at levels well
below market rates. This makes it difficult for legitimate business to compete against
front companies. This situation can result in the crowding out of legitimate private sector
business by criminal organizations.
7. Another negative socioeconomic effect of money laundering is, it transfers from the
market, governments and citizens to criminals.
8. The social and political cost of laundered money is also serious as laundered money may
be used to corrupt national institutions.
9. Money laundering damages the moral fabric of society and weakens collective ethical
standards.
10. Money laundering weakens reputation of financial institution and at the same time
reputation of the country.
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3.9 Vulnerability Of The Financial System To Money Laundering
Money laundering is often thought to be associated solely with banks and
moneychangers. All financial institutions, both banks and non-banks, are susceptible to
money laundering activities. Whilst the traditional banking processes of deposit taking,
money transfer systems and lending do offer a vital laundering mechanism, particularly
in the initial conversion from cash, it should be recognised that products and services
offered by other types of financial and non-financial sector businesses are also attractive
to the launderer. The sophisticated launderer often involves many other unwitting
accomplices such as currency exchange houses, stock brokerage houses, gold dealers,
real estate dealers, insurance companies, trading companies and others selling high value
commodities and luxury goods.
Certain points of vulnerability have been identified in the laundering process, which the
money launderer finds difficult to avoid, and where his activities are therefore more
susceptible to being recognized. These are:
entry of cash into the financial system;
cross-border flows of cash; and
Transfers within and from the financial system.
Financial institutions should consider the money laundering risks posed by the products
and services they offer, particularly where there is no face-to-face contact with the
customer, and devise their procedures with due regard to that risk.
Although it may not appear obvious that the products might be used for money
laundering purposes, vigilance is necessary throughout the financial system to ensure that
weaknesses cannot be exploited.
Banks and other Financial Institutions conducting relevant financial business in liquid
products are clearly most vulnerable to use by money launderers, particularly where they
are of high value. The liquidity of some products may attract money launderers since it
32. 32
allows them quickly and easily to move their money from one product to another, mixing
lawful and illicit proceeds and integrating them into the legitimate economy.
All banks and non-banking financial institutions, as providers of a wide range of money
transmission and lending services, are vulnerable to being used in the layering and
integration stages of money laundering as well as the placement stage
.
Electronic funds transfer systems increase the vulnerability by enabling the cash deposits
be switched rapidly between accounts in different names and different jurisdictions.
However, in addition, banks and non-banking financial institutions, as providers of a
wide range of services, are vulnerable to being used in the layering and integration stages.
Other loan accounts may be used as part of this process to create complex layers of
transactions.
Some banks and non-banking financial institutions may additionally be susceptible to the
attention of the more sophisticated criminal organizations and their “professional money
launderers”. Such organizations, possibly under the disguise of front companies and
nominees, may create large scale but false international trading activities in order to move
their illicit monies from one country to another. They may create the illusion of
international trade using false/inflated invoices to generate apparently legitimate
international wire transfers, and may use falsified/bogus letters of credit to confuse the
trail further. Many of the front companies may even approach their bankers for credit to
fund the business activity. Banks and nonbanking financial institutions offering
international trade services should be on their guard for laundering by these means.
Investment and merchant banking businesses are less likely than banks and money
changers to be at risk during the initial placement stage.
Investment and merchant banking businesses are more likely to find them being used at
the layering and integration stages of money laundering. The liquidity of many
33. 33
investment products particularly attracts sophisticated money laundering since it allows
them.
Although it may not appear obvious that insurance and retail investment products might
be used for money laundering purposes, vigilance is necessary throughout the financial
system to ensure that non traditional banking products and services are not exploited.
Intermediaries and product providers who deal direct with the public may be used at the
initial placement stage of money laundering, particularly if they receive cash. Premiums
on insurance policies may be paid in cash, with the policy subsequently being cancelled
in order to obtain a return of premium (e.g. by cheque), or an insured event may occur
resulting in a claim being paid out. Retail investment products are, however, more likely
to be used at the layering and integration stages. The liquidity of a mutual funds may
attract money launderers since it allows them quickly and easily to move their money
from one product to another, mixing lawful and illicit proceeds and integrating them into
the legitimate economy.
Lump sum investments in liquid products are clearly most vulnerable to use by money
launderers, particularly where they are of high value. Payment in cash should merit
further investigation, particularly where it cannot be supported by evidence of a cash-
based business as the source of funds.
Insurance and investment product providers and intermediaries should therefore keep
transaction records that are comprehensive enough to establish an audit trail. Such
records can also provide useful information on the people and organizations involved in
laundering schemes.
Corporate vehicles trust structures and nominees are firm favorites with money
launderers as a method of layering their proceeds. Providers of these services can find
themselves much in demand from criminals.
34. 34
3.11 Requirements For Banks Under Money Laundering
The facility with which currency exchanges can be effected through a bureau is of
particular attraction especially when such changes are effected in favor of a cheque or
gold bullion.
3.10 Legal Framework and Guideline Against Money Laundering
Money laundering prevention Ordinance,2012
Money laundering prevention Act, 2012.
Under the money laundering prevention act, 2009, al the bank has to fulfil some requirement to
comply with the policy and facilitate Bangladesh Bank’s initiatives to prevent money laundering.
All the banks consider these four requirement as their main responsibility against preventing
money laundering-
KYC Requirement: are require to retain correct and full information of customer and
their accounts that will be used to identify customers.
Record Keeping: The Act also requires the banks to retain transection records at least for
5 years after termination of relationships with their customers.
Provide Information: According to the Act all the Banks have to provide customer
identification and transection records to Bangladesh Banks on demand.
STR Reporting: All the Banks have to report to Bangladesh Bank where that suspect
that a money laundering offence has been or being committed.
35. 35
3.12 Why We Must Combat ML & TF
Money laundering has potentially devastating economic, security, and social consequences.
Money laundering is a vital process to make crime worthwhile. It provides the fuel for drug
dealers, smugglers, terrorists, illegal arms dealers, corrupted public officials, and others to
operate and expand their criminal enterprises. This drives up the cost of government due to the
need for increased law enforcement and health care expenditures (for example, for treatment of
drug addicts) to combat the serious consequences resulted from ML & TF.
Money laundering diminishes government tax revenue and therefore indirectly harms honest
taxpayers. It also makes government tax collection activities more difficult. This loss of revenue
generally means higher tax rates than would normally be the case if the untaxed proceeds of
crime were legitimate. We also pay more taxes for public works expenditures inflated by
corruption. And those of us who pay taxes pay more because of those who evade taxes. So we all
experience higher costs of living than we would if financial crimes including money laundering
were prevented.
Money laundering distorts assets and commodity prices and leads to misallocation of resources.
For financial institutions it can lead to an unstable liability base and to unsound asset structures
thereby creating risks of monetary instability and even systemic crisis. The loss of credibility and
investor’s confidence, that such crisis can bring, has the potential of destabilizing financial
systems, particularly in smaller economies.
One of the most serious microeconomic effects of money laundering is felt in the private sector.
Money launderers often use front companies, which co-mingle the proceeds of illicit activity
with legitimate funds, to hide the ill-gotten gains. These front companies have access to
substantial illicit funds, allowing them to subsidize front company products and services at levels
well below market rates. This makes it difficult, if not impossible, for legitimate business to
compete against front companies with subsidized funding, a situation that can result in the
crowding out of private sector business by criminal organizations.
Among its other negative socioeconomic effects, money laundering transfers economic power
from the market, government, and citizens to criminals. Furthermore, the sheer magnitude of the
36. 36
economic power that accrues to criminals from money laundering has a corrupting effect on all
elements of society.
The social and political costs of laundered money are also serious as laundered money may be
used to corrupt national institutions. Bribing of government officials undermines the moral fabric
in society, and, by weakening collective ethical standards, corrupts our democratic institutions.
When money laundering goes unchecked, it encourages the underlying criminal activity from
which such money is generated.
37. 37
A nation cannot afford to have its reputation and financial institutions tarnished by involvement
with money laundering, especially in today's global economy. Money laundering erodes
confidence in financial institutions (FIs) and the underlying criminal activities like fraud,
counterfeiting, narcotics trafficking, and corruption weaken the reputation and standing of any
financial institution. Actions taken by FIs to prevent money laundering are not only a regulatory
requirement, but also an act of self-interest. A financial institution tainted by money laundering
accusations from regulators, law enforcement agencies, may loss their good market reputation
and damage the reputation of the country. It is very difficult and requires significant resources to
rectify a problem that could be prevented with proper program.
Besides its effect on macro level, ML & TF also affects individual financial institution. If a
money launderer uses a financial institution for making his/her money legitimate, the business of
that financial institution may hamper. If the money launderer withdraws his/her deposited money
from an FI before maturity, the FI will face liquidity crisis if the amount is big enough.
Moreover, if it is found that an FI was used for ML & TF activities, and it did not take proper
action against that ML & TF as per the laws of the country, the FI will have to face legal risk.
Finally, the reputation of an FI can also be heavily affected through its involvement with ML &
TF activities.
It is generally recognized that effective efforts to combat ML, TF & PF cannot be carried out
without the co-operation of financial institutions, their supervisory authorities and the law
enforcement agencies. Accordingly, in order to address the concerns and obligations of these
three parties, these Guidance Notes are drawn up.
39. 39
4.1 procedures Followed In BDBL To Combat Money Laundering and Terrorist Financing
BDBL identified the money laundering as one of its core risk areas and has been making all out
efforts to prevent money laundering. For mitigating the risk, the bank has designated Chief Anti-
Money Laundering Compliance Officer (CAMLCO) at central compliance unit under Anti
Money Laundering Division, Head Office, who has sufficient authority to implement and efforce
corporate wide AML policy, procedure and measure who is reporting directly to the Senior
Management and the Board of Directors, moreover every branch of this bank has a designated
Branch Anti-Money Laundering Compliance officer (BAMLCO) under Branch Anti-Money
Laundering Compliance Unit, who independently reviews the transaction of accounts, with
verification of Know Your Customer (KYC) and Suspicious Transaction Report (STR).
The Central Compliance Unit has also arranged Training/Workshop for developing awareness
and skill regarding AML activities of Executives and Officers of the bank and conducting
inspection regarding AML activities of the branch Bank has established a Manual for Prevention
of money laundering and issues circulars time to time giving specific guidelines in accordance
with Bangladesh Bank guidelines, regulations, Anti-Money Laundering Act, 2002 And Anti-
Terrorism Act, 2012. All the guidelines and circulars issued by Bangladesh Bank from time to
time are being strictly complied with by Central Compliance Unit and branches of the Bank.
4.1.1 Compliance Structure Of BDBL
It deals with AML and CFT compliance of the bank and the reporting procedure. This includes-
Central Compliance Unit (CCU)
Chief Anti-Money Laundering Compliance Officer (CAMLCO)
Branch Anti-Money Laundering Compliance Officer (BAMLCO)
40. 40
4.2 Money Laundering and Terrorist Financing Prevention Structure of BDBL
Fig4.1: PreventionStructureOf BDBL
Chief Executive Officer (CEO)
Central Compliance Unit (CCU)
Chief Anti-Money Laundering Compliance Officer
CAMELCO
Deputy CAMELCO
Members & Employees of branch management
Department
BAMELCO
Operation Officer in branch
41. 41
4.2.1 Operation Officer Responsibilities In Branch
Perform due diligence on prospective clients prior opening an account.
Be diligent regarding the identification of account holder and the transactions relating to
the account.
Ensure all required documentation is completed satisfactorily.
Complete the KYC profile for the new customer.
Ongoing monitoring of customers KYC profile and transactions activity.
Obtain documentary evidence of large cash deposits.
4.2.2 Branch Anti-Money Laundering Compliance Officer (BAMLCO) Of BDBL
BDBL has experienced Branch Anti-Money Laundering Officer (BAMLCO) in every branch.
The manager, the second man of the branch or a high official experienced in general banking
shall be nominated as the BAMLCO. The BAMLCO has to have detailed knowledge in the
existing acts, rules and regulations, BFIU’s instructions and BDBL own policies on preventing
Money Laundering and Terrorist Financing. BAMLCO do 5 types of work in branch-
Know Your Customer
Transaction monitoring
Identifying and reporting of suspicious transactions
Record keeping
Training
42. 42
4.2.2.1 Responsibilities of BAMLCO
The BAMLCO should perform the following responsibilities;
1. Ensure that the KYC of all customers have done properly and for the new customer KYC
is being done properly.
2. Ensure that the UN security council and domestic sanction list checked properly before
opening of account and while making any international transactions.
3. Keep information of ‘dormant accounts’ and take proper measures so that any withdrawal
from these accounts shall not be allowed without compliance of BFIU’s instruction.
4. Ensure regular transaction monitoring to find out any unusual transaction.
5. Review cash transactions to find out any structuring.
6. Review of CTR to find out STR.
7. Ensure the checking of UN sanction list before making any foreign transaction.
8. Ensure that all the employees of the branch are well aware and capable to identify any
unusual transaction or any attempt of unusual transaction.
9. Compile self-assessment of the branch regularly and arrange quarterly meeting regularly.
10. Accumulate the training records of branch officials and take initiatives including
reporting to CCU, HR and training academy.
11. Ensure all the required information and document are submitted properly to CCU and any
freeze order or stop payment order are implemented properly.
12. Follow the media report on terrorism, terrorist financing or other offences like corruption,
bribery, gold smuggling, kidnapping.
4.2.3 Members and Employees of Branch Management Department of BDBL
If BAMLCO finds any suspicious transaction he/she must make a Suspicious Transaction
Report (STR). Then it is send to the members and employees of branch management
department for investigation. All the members and employees review the document and try to
find out about the information of the suspicious client. if any suspicious information comes
43. 43
out then they inform the Deputy CAMLCO. Then the Deputy CAMLCO takes all the
necessary steps.
4.2.4 Deputy CAMLCO
In BDBL the head of the branch management dept. is known as Deputy CAMLCO. If any
suspicious transaction and information is arisen regarding a client it is sent to the Deputy
CAMLCO for taking necessary steps and the Deputy CAMLCO analyzes all the information
that is collected by the employees of branch management and if all the information is right
then he signatures on it then send it to the CAMLCO for further investigation and necessary
steps.
4.2.5 Chief Anti-Money Laundering Compliance Officer (CAMLCO) of BDBL
BDBL designates a Chief Anti-Money Laundering Compliance Officer at its head office who
has sufficient authority to implement and enforce corporate wide AML & CFT policies,
procedures and measures and who will report directly to CEO or MD. CAMLCO should not
be bellow the 2 step below the MD or CEO. This provides evidence of senior management’s
commitment to efforts to combat money laundering and terrorist financing.The CAMLCO is
responsible for oversight of the bank’s compliance with the regulatory requirements on
systems and controls against money laundering and terrorist financing.
The name of CAMLCO is-
Md. Syeedul Huq
DGM, Banch Management
Department
Head Office,BDBL
Dhaka.
44. 44
4.2.5.1 Authorities & Responsibilities of CAMLCO
Authorities
1. CAMLCO should be able to act on his own authority.
2. He/She should not take any permission or consultation from/with the MD or CEO
before submission of STR/SAR and any document or information to BFIU.
3. He/She shall maintain the confidentiality of STR/SAR and any document or
information required by laws and instructions by BFIU.
4. He/She must have access to any information of the bank.
5. He/She shall ensure his/her continuing competence.
Responsibilities
1. CAMLCO must ensure overall AML & CFT compliance of the bank.
2. Oversee the submission of STR/SAR or any document or information to BFIU in
time.
3. Maintain the day-to-day operation of the bank’s AML & CFT compliance.
4. CAMLCO shall be liable to MD,CEO or BOD for proper functioning of CCU.
5. CAMLCO shall review and update ML&TF risk assessment of the bank.
6. Ensure that corrective actions have taken by the bank to address the deficiency
identified by the BFIU or BB.
4.2.6 Central Compliance Unit (CCU)
The central compliance unit must be headed by a high official. The CCU shall issue instructions
for the branches, where transactions monitoring system, internal control system, policies and
techniques will be included to prevent money laundering and terrorist financing. The CCU will
report to BFIU without any delay in case of any account/business relationship found with any
person/entity whose name/names appeared to the mass media (TV or News Paper) regarding
ML,TF,PF or any predicate offences under MLPA, 2012. The CCU could also make a
Suspicious Transaction Report (STR) or Suspicious Activity Report (SAR) directly to BFIU in
this regard.
45. 45
The CCU of BDBL has been established in the head office and it consists of 5 officials. Among
them 2 officials are familiar with general banking and 1 is expert in information technology.
4.2.6.1 Authorities and Responsibilities of the CCU
CCU is the prime mover of BDBL for ensuring the compliance of AML& CFT measures. Its
main responsibilities are to-
1. Develop banks policy, procedure and strategies in preventing ML,TF&PF.
2. Coordinate banks AML&CFT compliance initiatives.
3. Coordinate the ML and TF risk assessment of the bank and review thereon.
4. Present the compliance status with the recommendations before the CEO or MD on half
yearly basis.
5. Forward STR/SAR and CTR to BFIU in time and in proper manner.
6. Report summary of self-assessment and independent testing procedure to BFIU in time
and in proper manner.
7. Impart training, Workshop. seminar related to AML and CFT for the employees of the
bank.
8. Take required measures to submit information, report or documents in time.
For shouldering these responsibilities bank authority may consider to give the following
authority to CCU –
Appointment of BAMLCO and assign their specific job responsibilities
Requisition of human resources and logistic supports for CCU.
Make suggestion or administrative sanction for non-compliance by the employees.
46. 46
4.2.7 CEO or MD Responsibilities
The managing director of BDBL is-
He is the authorized person who control the whole reporting structure of money laundering and
terrorist financing prevention work process. If any big problem arise he solve it and give
instruction.
4.3 Techniques Used by BDBL to protect Money Laundering and Terrorist Financing
4.3.1 Know Your Customer (KYC) program
Know your customer (KYC) is a risk based approach of BDBL with respect to profiling of
customers with a proactive anticipation of their propensity to launder money or conduct any
other illegal activity. The KYC program is a unique program practiced at BDBL. It involves the
necessity of the bank to get acquainted to the customers on a personal note to ensure that the
customers are not engaged in any suspicious activities that might affect smooth flow of the
bank’s operations.
An effective KYC procedure is fundamental part of any Anti-Money Laundering internal control
regime. They can reduce the risk of accounts being used for Money Laundering or terrorist
financing and can help identify suspicious transactions. They can also protect the Bank against
fraud and other reputation risks.
4.3.1.1 KYC Form
KYC includes customers identification (evidence of identity and address), but, depending on the
risk associated with an account, it can also extend to more detailed due diligence about the
Dr. Md. Zillur Rahman
Managing Director
Head Office,BDBL
Dhaka
47. 47
customer and their business. This page contains all necessary background information about the
client and even the clients source of wealth. If bank officials asked to a client, under new AML
rules and regulations, she/he has to show proof of wealth which is attached with the KYC. KYC
is an ongoing process and does not end when account opening procedures are completed. A
typical KYC form is attached in appendix.
4.3.1.2 Risk Assessment
In the account opening form there is a part called risk assessment. In this part the customers are
categorized in three segments according to their occupation. The customers are categorized into
high, moderate, low risk level. Without the risk assessment no account can be open. It is done by
the account opening officer. Before opening an account the officer has to categorize the customer
one of this level.
Fig 4.2: RiskassessmentoncustomerLevel Of BDBL
Staff/Officer
Assessment or
customer provided
KYC Profile Risk Classification Frequency of
Monitoring and
Review
4.3.1.3 Periodic KYC Review for All Levels
The KYC basically does the client profiling, i.e. obtain the client relevant background
information and document. As already mentioned the KYC process does not stop when the
account is opened. The information gathered on the customer is used periodically to evaluate the
appropriateness and reasonableness of the client transaction activity.
The first and foremost objective of the review is to keep the KYC information up to date. That is
why KYC is an ongoing process and KYC data must be amended when the customers notifies
the bank of any changes.
48. 48
Secondly, this periodic review is to check that the activity on the account is consistent with
knowledge gained on the customer and an understanding of the nature of the transaction they do
and their business. This will ensure that the risk rating for the account remains correct.
4.3.2 Transaction Profiling (TP)
The transaction profile gives a general idea about the number of transaction that a customer will
conduct in a month. The form contains information such as:
Nature of the profession.
Source of funds.
Cash Deposit and Withdrawal per month along with expected volume.
Cheque Deposit and Withdrawal per month along with expected volume.
Inward and Outward Remittance per month along with the expected volume.
Demand draft, Telegraphic Transfers and Payment Order per month along with expected
volume.
4.3.3 Cash Transaction Report (CTR)
Every month BDBL has to send a report to the Central Compliance Unit, Head Office, which is
known as Cash Transaction Report (CTR). In this report, every cash transaction of the branch
has to be reported to the Central Compliance Unit. Head Office by using FIU reporting system
software provided by Bangladesh Bank. Finally the Head Office sends the report to Anti-Money
Laundering Department of Bangladesh Bank. Possible areas to monitor could be :-
Transaction type
Frequency
Unusually large amounts
Geographical origin/destination
Change in account signatories
4.3.4 Suspicious Transaction Report (STR)
It is another type of report which has to be sent to the Bangladesh Bank. The transaction which
amounts started from 700001 are suspicious in nature to the bank authority, has to be reported to
the Bangladesh Bank immediately through the Central Compliance Unit, Head Office. The
Bangladesh Bank then verifies and judges the source of the transaction whether legal or illegal. If
Bangladesh Bank founds anything illegal, it takes necessary steps against the party.
49. 49
4.4 Reporting Go AML
4.3.5 Online Banking
Online banking transaction is very helpful to do money laundering and terrorist financing. In this
sector BDBL do a perfect investigation and BDBL do not allow the full amount transaction at a
time.
4.3.6 Wire Transfer
Money launders use the wire transfer or massage system to transfer money. In this system BDBL
collect all detail information of sender and receiver and record all the activities and information
about the transaction with a continuous observation. There are two types of wire transfer rules-
1. Cross country wire transfer : If the transaction cross 1000 USD it need further carefull
observation and need full information of the client.
2. Inter country wire transfer : If the transaction cross the amount of 25000 taka it need full
observation and need full information of the client.
4.3.7 Record Keeping
BDBL retains correct and full records of customers identification and transactions at least for
five years after termination of relationships with the customers is an essential constituent of the
audit trail that law seek to establish.
4.3.8 Training and Awareness
BDBL provides training to the officers engaged in financial activities in order to combat money
laundering. Training is provided for identification, reporting and record retention. Training is
important to prevent money laundering and for identification, record keeping and internal
reporting and recognition and handling of suspicious transactions.
By go AML BDBL officers do some procedures, these are follows-
1. User Creation
2. Transactions data entry
3. XML generation
4. XML file save and print
5. Submit full report to Bangladesh Bank.
50. 50
4.5 Reporting System Flowchart Of BDBL
Detect unusual
transaction/activity
Evaluate by
BAMLCO
Arrange proper
documents and
sent to CCU
Check the
sufficiency of
documents by
CCU
Report to BFIU
Fig 4.3: Reporting System Flowchart Of BDBL
Close with proper
records
Findings
52. 52
5.1 Findings
BDBL has skilled financial management, good credit control and few bad
debts.
One of the fundamental objectives of BDBL is to boost up small and
medium scale industries ,which makes a special perception about the
bank.
BDBL is unique in its nature having both specialized and commercial
operation it is regarded as a development bank as well as commercial one.
Online banking operation and branch banking facility.
A strong balance sheet. Access to extensive credit, a strong credit rating,
and a good relationship with the bank and the other source of finance.
Effective research and development, use of design and innovation.
Skilled employees, successful recruitment, and effective training and
development.
Govt. support and Encouragement.
BDBL follows leading finance
5.2 Analysis
CAMEL (capital adequacy, asset quality, management quality, earnings,
liquidity) rating by Bangladesh Bank is not so good. This rating measures
the performance of the bank for preventing money laundering and terrorist
financing . it is only 3.2 on the scale of 5.
Cash transaction report send to the Bangladesh Bank in monthly basis, it
is creating a way to increase the chances for terrorist financing.
Agent banking and mobile banking creating a bunch of money laundering
opportunity.
A long time account freezing because of BIFU investigation can harm the
long term relation between the client and bank.
53. 53
The self- assessment procedure takes a long time which is six month can
slow down the self-judgement policy.
There is not enough number of employees to work about money
laundering and terrorist financing.
Need of a go AML operator for all time in office hour.
55. 55
6.2 Conclusion
6.1 Recommendations
BDBL should improve its total working process speed and efficiency of preventing money
laundering and terrorist financing to get a good CAMEL rating by Bangladesh Bank.
BDBL should complete its investigation in 2 working days and Bangladesh Bank
response time should be 3 working day for achieving a faster procedure.
Cash transaction report send to the Bangladesh Bank in monthly basis, it should be
changed. The spending procedure should be done in a weekly basis.
Agent banking and mobile banking creating a bunch of money laundering opportunity so
this system should be drag into a high observation module.
A long time account freezing because of BIFU investigation can harm the long term
relation between the client and bank. So there should be a new regulation to give a small
opportunity to transaction money by Bangladesh Bank.
The self- assessment procedure takes a long time which is six month can slow down the
self-judgement policy. It can be done in every month that’s why it can make the worker
more motivated.
A go AML should be appointed for all time in office hour.
BDBL is one of the prime development financing institutions in Bangladesh to accelerate the
pace of industrialization of the country. It plays significant role in the industrial development of
Bangladesh. As a finance institution it has both strength and weakness. Though it is said, that the
contribution to prevention of money laundering and terrorist financing of BDBL is below the
expectation only 3.2 rating given by Bangladesh Bank , at present BDBL has taken so many
steps for the prevention of money laundering and terrorist financing. And BDBL is working with
Bangladesh Bank now a days. It can be hoped that it is not a long time when BDBL will fully
successful to do its duty to prevent of money laundering and terrorist financing by developing its
current issues.
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ACRONYMS
A
A/C Accounts
AML Anti-Money Laundering
ATF Anti- Terrorist Financing
AMLP Anti-Money Laundering policy
AMLD Anti -Money Laundering Division
B
BB Bangladesh Bank
BAMLCO Branch Anti-Money Laundering compliance officer
C
CSO Customer service officer
CBL City Bank Limited
CAMLCO Chief Anti-Money Laundering Compliance Officer
F
FATF Financial Action Task Force
I
IGSA Interpol General Secretariat Assembly
ITP independent Testing Procedure
ICCD Internal Control and Compliance Division
J
JMLSG Joint Money Laundering Sterling Group
K
KYC Know Your Customer
M
ML Money Laundering
MTO Management Trainee Officer
MoF Ministry of Finance
N
NCC National Coordination Committee
57. 57
P
PEPs Politically Exposed Persons
PEPs Politically Exposed Persons
R
RO Relationship Officer
S
SRT Suspicious Transaction Report
T
TP Transaction Profile
TMP Transaction Monitoring Process
TT Telegraphic Transfer
58. 58
REFERENCES
Annual report of Bangladesh development bank limited – 2013, 2014
Bangladesh bank – 2013
Bangladesh Bank’s Guide line to prevent Anti- money Laundering
Anti- Money Laundering Act Published in 2009 by Bangladesh Bank.
Anti- money laundering Act-2009
Anti-money laundering ordinance-2009
Money Laundering Prevention Act, 2012
Walker, j. and Unger, B. (2009), ‘Measuring global money laundering: The Walker
Gravity Model’, Review of Law and Economics, 5(2), and 821-53.
BDBL Internal Source
http://www.bdbl.com.bd
http://www.bb.org.db/
