Published in the Dhaka Tribune on 9, July 2017
Experts say that transparency in source of earning money, political will to stop corruption and ensuring investment-friendly environment and bringing money launderers into justice must be ensured to prevent illegal capital flights out of the country. Dhaka Tribune’s Ibrahim Hoosain Ovi talked to the experts about a recent report on illegal capital flights and Bangladeshi deposits to Swiss banks
Md Shafiul Islam Mohiuddin
It is an allegation that capital flight is being taken place illegally through under-invoicing in export and over-invoicing in import. The government has separate wings to monitor export and import, and they are responsible for this.
If the authorities concerned find any irregularities or corruption in export or import, they should take stern actions. In this regard, the government has to ensure proper investigation and scrutiny.
On the other hand, it’s not true that all the money deposited in foreign banks are kept by the Bangladeshis. There are a good number of Bangladeshi people who live abroad and are doing business there. They also keep their money in the banks assuming it safe.
I do not agree with the swipe comment that the business people are making all the illegal capital flights or deposits in Swiss National Bank. It is quite impossible to deposit a huge amount of money to foreign banks by a businessman as they do not have enough money to siphon off.
Without having proper documents, we should not make any swipe comment about the business people, bureaucrats or any group about the capital flights.
While taking findings of a report into the consideration, we should think about methodology and process of making of that report and its credibility. The report is not a sermon from the bible.
To stop the capital flight, the government should ensure investment-friendly environment and the tax system and structure should be eased and the rate should be lowered.
Above all, the National Board of Revenue and Bangladesh Bank need to strengthen their monitoring systems to curb the illegal capital flights.
Honestly speaking, as a businessman and business leader, I can tell that no one wants to send his/her hardly-earned money to another country. It may only happen when any one feels insecure in home country. But the businesspeople always try to expand his/her business and make investments instead of depositing to another country’s banking system.
Khondaker Golam Moazzem
Research Director, Centre for Policy Dialogue
Illegal capital flight and deposits to Swiss banks continue to rise. In the Panama Papers leak, names of some political and corporate leaders were revealed although we saw no steps were taken later to stop the illegal flight of capital out of the country. As a result, the money launderers feel easy about the matter.
If we look into recent trend of illegal capital flights in India and Pakistan, it shows downward trend. This is because of their governments’ internal initiatives taken to curb money laundering. But in Bangladesh there is no visible improvement due to lack of the long-term government policy on the issue.
Firstly, the government will have to find out the sources of big and dubious transactions. Secondly, transparency should be ensured in the pricing of imported and exported goods to stop misinvoicing in trade. Thirdly, monitoring on foreign exchange dealers should be strengthened to be learned how much currencies they trade everyday.
In attaining theses goals, all the authority concerned have to be included with the Bangladesh Bank Money laundering cell.
By establishing relationship with international organisations, Bangladesh government has to collect information about the laundered money. And then all the people connected with the misdeed should be brought under the book.
Besides, the government can consider allowing business people to invest in foreign countries on the condition that the profits must be repatriated to Bangladesh in a transparent procedure.
M Hafizuddin Khan
Trustee Member, TIB
The lion share of money deposited to Swiss National Bank and illegal capital flights are considered as black and earned in illicit way.
But the government is not much aware of that and is not active about the siphoned-off money and its sources. Political parties do not pay heed to the issues of corruption.
If we look into our neighboring countries like India and Pakistan, they have been able to reduce illegal capital flights by strengthening policy and monitoring.
If Bangladesh government wants to stop illegal capital flight, at first, it will have to establish the rule of law in the country. The process of the government procurement and awarding contracts of job in development projects should be transparent.
To stop black money, Bangladesh needs to prevent corruption and all the sectors have to be freed from illegal transactions.
However, it is very important to ask about the source of funds when it is being invested or transferred to any bank. As the regulator of all financial institutions, Bangladesh Bank should take the lead in this matter.
On the other hand, the regulatory frame is not enough to curb amassing of wealth through illegal means while the existing rules are weaker and not implemented effectively.
Political stability and peaceful transition of power through neutral elections is very important. If political volatility exists in the country, the people may resort to capital flight.
Executive Director, Bangladesh Bank
Not only the Bangladeshis living at home but also those who live, run business and work in foreign countries are participating in illegal capital flights or having deposits to Swiss banks. The non-resident Bangladeshis are leading the Bangladeshi depositors in terms of share of deposits in Swiss banks. The money comes as profits of their business.
However, illegal capital flight from Bangladesh is done through misinvoicing in export and import of goods.
According to the Global Financial Integrity (GFI) report, an average of 87% of global illicit financial outflows over the 2005-14 period were due to the fraudulent misinvoicing of trade.
As a regulatory body of financial institutions, Bangladesh Bank is working very hard with other authorities concerned to stop illegal capital flight. The process of collecting information about the illegal capital flight and their senders. Bangladesh government is trying hard to sign a MoU to get information about the money laundering by the Bangladeshi people.
Bangladesh Bank is seeking information from the Swiss National Bank management about the Bangladeshi deposits there.