Bangladesh improves in countering money laundering, but still at high-risk

Bangladesh has demonstrated progress in tackling money laundering and terrorist financing risks since last year, but the country still remains at high risk, says a Swiss corruption watchdog, Basel Institute of Governance.

The country ranked 33rd among 110 countries on the Basel Anti-Money Laundering (AML) Index 2021, released on Monday.

But its money laundering risk score is much lower than the South Asian average of 6.15 this year.

Bangladesh has the lowest money laundering risk among four South Asian countries, followed by Pakistan, which ranked 28th globally with a risk score of 6, according to the Basel review.

The country's money laundering risk score dropped to 5.84 from last year's score of 5.88, while the global average score increased to 5.3 from 5.22.

Last year, the country was in 38th position among 141 countries while 45th in 2019 among 125 countries.

With a score of 6.51, Sri Lanka ranked 18th, and Bhutan in 21st position with a score of 6.24.

Sirajul Islam, spokesperson and executive director at the Bangladesh Bank, told The Business Standard, "The country's overall improvement in economic and social aspects has led to a progress in tackling the money laundering risk."

"It is very tough to be risk free but how much we can mitigate this risk will be counted as our progress," he added.

He further said, "We are very hopeful to progress more and will try to mitigate the risks gradually."

The 10th annual public edition of the index assessed money laundering and terrorist financing threats around the world and the capacity of jurisdictions' anti-money laundering and counter financing of terrorism measures to address their risks.

The index assessed risk scores based on 17 indicators under five domains - quality of anti-money laundering and counter financing of terrorism framework, corruption risk, financial transparency and standards, public transparency and accountability, legal and political risks. Where 0 indicates the lowest risk and 10 indicates the highest risk.

The report mentioned Bhutan, Pakistan and Sri Lanka face significant TF risks and demonstrate low effectiveness in relation to prevention and prosecution of TF offences.

Haiti, Democratic Republic of the Congo, and Mauritania have the highest risk of money laundering, while Andorra, Finland and Cook Island have the lowest risk.

According to a report published by the Global Financial Integrity (GFI), a US-based think-tank, in March last year, Bangladesh lost a staggering $7.53 billion a year between 2008 and 2017 to trade misinvoicing.

The report also said the average value of Bangladesh's trade misinvoicing was 17.95% of the country's total trade with 135 developing countries and all of its trading partners during the same period.

In another report titled the "Financial Secrecy Index 2020", Bangladesh has ranked 54th out of 133 nations based on the country's high secrecy over jurisdiction and offshore financial services. 

The position indicates how intensely Bangladesh's legal and financial systems allow wealthy individuals and criminals to hide and launder money, according to the study by Tax Justice Network.