Governor takes credit for reining in dollar volatility

Bangladesh Bank Governor Abdur Rouf Talukder said since taking charge two years ago, he has successfully controlled the dollar price at the kerb market, and for the last couple of months, remittance inflows have been better than before.

"When I joined the Bangladesh Bank in July 2022, the country was facing enormous problems with reserves and the economy was under pressure," he said while inaugurating a training course, titled 'Smart Investigation Model for CID Officers.'

"What I started with was fighting trade-based money laundering," the governor said during the event held at the headquarters of the Criminal Investigation Department on Monday. Additional Inspector General of Police Mohammad Ali Miah, who heads the CID, presided over the session.

In trade-based money laundering, money is syphoned off to another country through over-invoicing. Those who import fix a consignment price and open letters of credit for $150, which is actually $100 in real price. By such over-invoicing, they launder $50 per consignment, he elaborated.

The governor said cash-dollar-based money laundering constitutes only a small fraction of the total money laundering amount. Individuals who travel abroad engage in laundering relatively small sums using cash dollars.

"After assuming office at the central bank in August 2022, we initiated joint operations against money changers, which expanded significantly with the assistance of CID and National Security Intelligence.

"In late 2022 and preceding 2023, money changers unlawfully inflated the dollar price, and we successfully lowered it to a minimum rate," he concluded. 

Abdur Rouf Talukder said the total trade volume of money changers per year is not more than $45-50 million, whereas approximately $270 billion is transacted through the banking channel. The volume handled by money changers pales in comparison with that of the banking channel.

"However, rules and regulations do play a significant role here. When the price rises in the kerb market, it affects the entire cycle. Expatriates notice that they are not receiving the same amount through the banking channel, so they wait for the rates to improve.

"This delay in remittance transfers can disrupt the flow, and we had to intervene to control the situation," he explained.

The governor highlighted the point that over the past couple of months, the country's reserves have been increasing, the dollar price has stabilised, remittance inflows are on the rise, and exports are also increasing.

"We've also made significant strides in controlling over-invoicing. Previously, no bank used to verify the price of LCs, but over the last two years, we've successfully minimised over-invoicing. Banks now exercise caution and thoroughly check the LC prices. I can confidently say that we have managed to reduce over-invoicing by up to 90%," he added.

He emphasised that nowadays, technology-based crimes occur at a much higher rate than manual theft, robbery, and other traditional crimes. For instance, in 2016, a $101 million heist occurred within just 5-6 hours.

"If criminals had to physically steal from the Bangladesh Bank's vault, they would have needed eight gigantic trucks to transport all the money. However, they managed to steal it with just a few clicks. This highlights the importance of being vigilant against cybercrime," he cautioned.

The governor highlighted that hundi is one of the biggest challenges of the present time, adding that the Bangladesh Financial Intelligence Unit (BFIU) teams are tirelessly working to curb illegal hundi transactions.

"Every day, the Bangladesh Bank's BFIU team suspends or closes 100-200 mobile banking accounts due to suspected transactions. Sometimes, we also halt their transactions, and after thorough scrutiny, we resume some of these accounts," he continued.

"We've also instructed the BFIU chief to broaden the body's focus, rather than solely addressing exposed crimes like hundi, which have already occurred," he said.

He said, "It's crucial to intervene when money laundering is in progress. Currently, we're leveraging artificial intelligence to detect and prevent money laundering in real-time."

For instance, when suspicious activities, such as transactions from 200 mobile banking accounts from a single bank late at night occur, it's indicative of potential money laundering. By implementing AI in these cases, we can thwart crime before it happens, explained the central bank governor.

He also urged CID officials to prioritise combating illegal online gambling and cryptocurrency, as cryptocurrency transactions are prohibited by Bangladeshi laws.

Abdur Rouf Talukder emphasised the Bangladesh Bank's commitment to eradicating money laundering, stating, "We even work at midnight to tackle money laundering. Whenever we receive a tip-off, we promptly share information with the CID chief and take action to prevent money laundering."