Practical application of anti-money laundering requirements in Bangladesh. An insight into the disparity between anti-money laundering methods and their effectiveness based on resources and infrastructure

Author:Syed Alamin Ahmed
Position:Nottingham Law School, Nottingham Trent University, Nottingham, UK
Pages:428-450
SUMMARY

Purpose This paper aims to provide an insight into anti-money laundering (AML) regulations in light of the global AML framework. Specific analysis is drawn using a case study of Bangladesh - the national financial culture within the country is carefully examined to establish the extent to which it is conducive to adopting such frameworks. Particular focus is placed on customer due... (see full summary)

 
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Practical application
of anti-money laundering
requirements in Bangladesh
An insight into the disparity between
anti-money laundering methods and their
effectiveness based on
resources and infrastructure
Syed Alamin Ahmed
Nottingham Law School, Nottingham Trent University, Nottingham, UK
Abstract
Purpose This paper aims to provide an insightinto anti-money laundering (AML) regulations in light of
the global AML framework. Specic analysis is drawn using a case study of Bangladesh the national
nancial culture within the country is carefullyexamined to establish the extent to which it is conducive to
adopting such frameworks.Particular focus is placed on customer due diligence requirements,and the unique
challenges posed by alternativeremittance systems. The paper evaluates the impact of globalisation as well
as the correlationbetween developments based on resources available to the respectivestate.
Design/methodology/approach The research has primarily been conducted through the usage of
relevant websites (reports compiled by national and international agencies) and journal articles in electronic
format. References have been made to studies and works carried out by authors on the global AML framework.
Findings The internal structural developmentof Bangladesh must be enhanced and the various social
and economicissues must be overcome before a practical AML frameworkcan be successfully implemented.
Research limitations/implications The lack of published works on AML in Bangladesh is a
shortcoming, and more work on this subject is encouraged. The absence of specic AML reports on
Bangladeshhas resulted in some informed assumptions basedon other developing countries.
Practical implications The research provides a deep insightinto the global AML framework, how it
can be applied to developing countries like Bangladesh and the drawbacks of implementing a universal
frameworkdomestically.
Originality/value The study provides aninnovative analysis, examining aspects of AML regulationin
Bangladeshwhich have not previously been effectively studied.
Keywords Bangladesh, Developing countries, Customer due diligence, Money laundering,
Alternative remittance systems, Global AML framework
Paper type Research paper
Nomenclature
AML = Anti-Money Laundering;
AMLO = Anti-Money Laundering Ofcer;
APG = Asia/Pacic Group on Money Laundering;
JMLC
20,4
428
Journalof Money Laundering
Control
Vol.20 No. 4, 2017
pp. 428-450
© Emerald Publishing Limited
1368-5201
DOI 10.1108/JMLC-09-2016-0042
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1368-5201.htm
ARS = Alternative Remittance System;
BFIU = Bangladesh Financial Intelligence Unit;
CAMLCO = Chief Anti-Money Laundering Compliance Ofcer;
CDD = Customer Due Diligence;
CFT = Combating Financing of Terrorism;
CTR = Cash Transaction Report;
FATF = Financial Action Task Force;
IMF = International Monetary Fund;
KYC = Know Your Customer;
MER = Mutual Evaluation Report; and
STR = Suspicious Transaction Report.
Introduction
Money laundering is the process by which dirtymoney is cleaned. This laundryis
usually achievedby a three-step process,which incorporates the following:
(1) Placement: this is the initial entry of the dirty money into the nancial system.
This is the stage at which money launderers are most vulnerable, as moving large
sums of cash can catch the eyes of ofcials.
(2) Layering: this often involves sophisticated international transfer of funds, and the
purchase of investment products. The funds are constantly moved to disguise
where they have been derived from and to avoid detection.
(3) Integration: this is when the funds are returned to the launderer through an
authentic nancial institute. By this stage, the money has been thoroughly cleaned.
This is a simplied overviewof what can sometimes be a very lengthy and complex process.
There is scope for variation and overlapat each of these stages. The purpose of this study is
to examine the global measurestaken by authorities to minimise money laundering through
implementing aneffective anti-money laundering (AML) framework.
Over the past century, signicantefforts have been made to tackle money laundering.To
this extent, intergovernmental organisations, like the Financial Action Task Force (FATF)
have been set up. There is a global AML framework which countries are expected to
implement domestically. However, some countries have not been able to enforce the
regulations as well as others. Itis evident that developed countriesare far better equipped in
dealing with money laundering than developing countries, which have fewer resources
available to them to tackle this growing phenomenon. This is further compounded by high
levels of corruption in a number of developing countries. Also, sometimes the lack of
political will to reign in wholesale abuse of AML regulations causes far greater damage to
the economy than some countries are willing to acknowledge or accept. One particular
example is Bangladesh. Thiscountry will be the focus of the present discourse.
The responsibility to regulate and superviseAML initiatives in Bangladesh lies with the
Bangladesh Bank. The primary organisation to deal with money laundering in Bangladesh
was the Financial Intelligence Unit (FIU), which was set up in June 2002 as part of
Bangladesh Bank, and was named the AML Department. On 25 January 2012, the FIU was
transformed into the BangladeshFinancial Intelligence Unit (BFIU) by provisionscontained
within the Money Laundering Prevention Act 2012 (Rahman, 2012). The BFIU operates
independently, yet still within the remit of Bangladesh Bank which is the central bank of
Bangladesh.
Anti-money
laundering
requirements
429

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