Suspicious transactions, activities up 62% in FY22

The number of Suspicious Transaction Reports (STR) and Suspicious Activity Reports (SAR) – submitted by stakeholders such as banks and non-bank financial institutions – rose by 62.33 per cent in FY22 when compared year-on-year.

A Bangladesh Financial Intelligence Unit (BFIU) annual report showed on Monday that the number of STRs and SARs was 8,571 last FY, a significant rise from 5,280 reported in FY21. BFIU unveiled the report at a press conference held at the Bangladesh Bank board room on Monday.

The last FY’s figure includes 107 reports related to virtual currency and 244 related to e-commerce involving 29 suspected entities. The BFIU has already prepared 84 financial intelligence reports based on STRs and SARs, and 52 of those reports are on e-commerce firms.

So far, 30 reports have been submitted to the High Court. Besides, fifty-six of the total eighty-four reports are for fraudulent financial activities.

Regarding the increase in suspicious transactions, Head of BFIU Md Masud Biswas said, “The suspicious transactions increased during the last financial year because our unit has scaled up operations, our staff is now more efficient, and the financial institutions are more alert.

“Besides, suspicious transactions have increased due to a rise in the numbers of e-commerce platforms and expansion of digital commerce since the Covid-19 pandemic hit Bangladesh.”

The overall cash transactions in the country’s financial sector rose to Tk 21.11 lakh crore in FY22, compared to Tk 14.44 lakh crore posted in FY21.

On the matter, Biswas said, “During the Covid-19 pandemic, the government was implementing a number of incentive packages, and this is why cash transactions increased.”

According to the BFIU report, during the last financial year, Bangladesh made 103 requests to the foreign financial intelligence units, while the country received 26 requests by those units.

To mitigate the risk of money laundering through virtual currency, the report recommended that the financial sector stakeholders maintain KYC (know your customer), monitor internet banking and mobile banking app based transactions, increase the expertise of BFIU officials and form a vigilance team.

On August 27, 2020, the BFIU froze 67 accounts over suspicious transactions shortly before scams started hitting the sector. But the BFIU could not extend its freeze without further action by law enforcement agencies, the report mentions.

‘Laundered money recovery very difficult’

The BFIU does not have information about how much money has been laundered from Bangladesh till date, BFIU chief Masud Biswas told the media, adding that most of the capital flight took place through trade-based money laundering.

He continued, “The amount money laundering committed through over invoicing has dropped due to the heightened vigilance of the central bank. I am optimistic that under-invoicing will also come down in the coming days.”

One of the biggest reasons behind the on-going USD crisis is the capital flight, and journalists asked the BFIU chief what the unit has been doing on the money laundering issue, and if there are any plans to bring the money home.

In response to this query, the BFIU chief said, “The process of bringing back laundered money is very difficult, and asset recovery from another country is a hassle. This is why so many countries are focusing on tax recovery, instead of asset recovery.

“There are various global studies on the repatriation of laundered money. Usually, only one per cent of the laundered money can be recovered. So we have to put more emphasis towards tax recovery.”

Present at the press brief, BFIU Additional Director Kamal Hossain said, “From the next year, direct information will be available about Bangladeshi persons who have accounts in Swiss banks.

“This facility will be available as Switzerland has amended the relevant laws.”

At the event, the BFIU pointed out that the unit does not use their authority to serve political purposes. The BFIU has facilitated cancellation of thousands of mobile financial service (MFS) agent accounts over their involvement in hundi – an illegal cross-border transaction system.

The BFIU is also investigating illegal activities of money changers who are taking advantage of the ongoing USD crisis.