Anti-money Laundering Regulations in Bangladesh 

Legal Definition of Money Laundering as Per Bangladesh Law:

Money Laundering is defined as the process by which proceeds from a criminal offence are disguised or attempted to disguise their illicit origins or activity of smuggling of money or property earned through legal or illegal means to foreign country. Furthermore, remitting or bringing the proceeds of crime into Bangladesh from a foreign country with the intention of hiding their illicit origin also falls into the category of money laundering. N.B. For further reference, please see ‘Money Laundering’ definition at the Clause 2(v) of the Money Laundering Prevention Act, 2012)

Act, which contains two main elements: purpose and a detailed explanation of the commission of this crime. This Act defines any attempt as “money laundering” when someone tries to do financial transactions in a way that avoids the Act’s reporting requirements.

Section 4(2) states that money laundering is punishable by imprisonment for a term of four to twelve years and a fine equal to twice the value of the asset, or BDT two million. In addition to this, section 4(3) allows the court to order the forfeiture of any assets associated with money laundering in favour of the state.

In brief, Under Bangladeshi law, money laundering is defined as the act of concealing or disguising the origins of money obtained through illegal activities, making it appear as if it came from legitimate sources. This process involves various financial transactions aimed at legitimizing funds that have been acquired unlawfully or through illegal transactions.

What is the legal framework to combat money laundering and terrorist financing in Bangladesh?
Acts
1. Money Laundering Prevention Act, 2012
2. Anti Terrorism Act, 2009

Related Acts
1. Mutual Legal Assistance on Criminal Matters Act, 2012
2. Anti Corruption Commission Act, 2004
3. The Customs Act, 1969
4. The Code of Criminal Procedure (CRPC) 1898
5. Penal Code 1860
6. Extradition Act, 1974

Rules
1. Money Laundering Prevention Rules, 2019
2. Anti Terrorism Rules, 2013
3. Mutual Legal Assistance on Criminal Matters Rules, 2012

Sample KYC & AML Check:

As part of the statutory requirements, LegalSeba maintains AML & KYC checks with all the Clients throughout the engagement and the professional journey of the firm. The Client duly provides consent that the Client will provide the following information as part of the Firm’s KYC/Anti Money Laundering Compliance Requirement as part of the Laws of the Land.

The KYC will include but is not limited to the following information.

Name and Address of the Money changer

1. Name of Customer :
2. Fathers Name :
3. Mothers Name :
4. Wife’s/Husband’s Name (if applicable) :
5. Date of Birth :
6. Occupation :
7. Permanent Address :
8. Mailing Address :
9. Source of Fund :
10. Purpose of Transaction/Business :
11. Type of Transaction (Sale/Buy) :
12. Exchangeable Currency :
13. Applied Exchange Rate :
14. Bank Details:
15. Passport no :
16. Name of Air Lines (if applicable) :
17. Country of Visit :
18. Date of Arrival/Departure (App.)

Grounds of Termination of Contract with LegalSeba:

Any violation of the below-mentioned conditions or exposure to any related circumstances will grant LegalSeba the right to terminate this contract and collaborate with relevant law enforcement agencies within the applicable jurisdiction in fulfillment of their legal responsibilities. Any violation of the aforementioned conditions or exposure to any related circumstances will grant LegalSeba the right to terminate any engagement contract and collaborate with relevant law enforcement agencies within the applicable jurisdiction in fulfillment of their legal disclosure responsibilities.

 Indicators of Suspicious Transaction/Activity will include the following which shall entitle LegalSeba to terminate the contract with immediate effect and report to the concerned enforcement agency as shall be applicable by the laws of the land.

The following examples may be indicators of suspicious transactions or activities and call for submission of suspicious transaction report:

1. The customer is evasive or unwilling to provide a document (passport) when requested.
2. Customers use different identifications for different transactions.
3. Customers frequently visit non-cooperative countries/jurisdictions.
4. Customers exchange small denomination notes for large denomination notes, in large quantities.
5. Customers having relations with persons working abroad in illegal jobs/business.
6. Clients to LegalSeba come with the money which is not consistent with his known income/source of funds.
7. Clients give false information at any stage of the engagement process.
8. Persons who are the owners of a money changer come to change money to another money changer without any acceptable reason.
9. Persons directly or indirectly involved in Smuggling.
10. A person intends to do illegal business transactions
11. Information given in KYC is inconsistent with each other.
12. The person’s occupation is not consistent with his number of visits/number of transactions Source of funds does not cover his number of visit/number of transactions.
13. Doing a suspicious line of business which is not legally recognized or prohibited by the laws of the land.

What are the punishments for money laundering offences?

What are the stages of money laundering?

The money laundering cycle includes three distinct stages as follows:

The placement stage

The placement stage represents the initial entry of the “dirty cash” or proceeds of crime into the financial
system. Generally, this stage serves two purposes: (a) it relieves the criminal of holding and guarding large
amounts of bulky of cash; and (b) it places the money into the legitimate financial system. It is during the
placement stage that money launderers are the most vulnerable for being caught. This is due to the fact that
placing large amounts of money (cash) into the legitimate financial system may raise suspicions amongst
officials.

The placement of the proceeds of crime can be done in a number of ways. Some common methods include:
i. Loan repayment: Repayment of loans or credit cards with illegal proceeds;
ii. Currency smuggling: The physical movement of illegal currency or monetary instruments over the
border;
iii. Currency exchanges: Purchasing foreign money with illegal funds through foreign currency
exchanges;
iv. Blending funds: Using legitimate cash from legal business to mix dirty funds with the day’s
legitimate sales receipts;
v. Gambling: Purchase of gambling chips or placing bets on sporting events; etc.

The layering stage

After placement comes the layering stage (sometimes called as structuring). The layering stage is the most
complex and often entails the international movement of the funds. The primary purpose of this stage is to
separate the illicit money from its source. This is done by the sophisticated layering of financial transactions
that obscure the audit trail and break the link with the original crime.
During this stage, for example, the money launderers may begin by moving funds electronically from one
country to another, then divide them into investments placed in advanced financial options or overseas.

markets; constantly moving them to elude detection; each time, exploiting loopholes or discrepancies in
legislation and taking advantage of delays in judicial or police cooperation.

The integration stage

The final stage of the money laundering process is termed as the integration stage. In this stage the ill-gotten
money has been reverted from the criminal sources to be legitimate sources. Having been placed initially as
cash and layered through a number of financial transactions, the criminal proceeds are now fully integrated
into the financial system and can be used for any purpose.
There are many different ways in which the laundered money can be integrated back with the criminal;
however, the major objective at this stage is to reunite the money with the criminal in a manner that does not
draw attention and appears to result from a legitimate source. For example, the purchases of property, art
work, jewelry, or high-end automobiles are common ways for the launderer to enjoy their illegal profits
without drawing attention to legal authorities.

Money laundering predicate offences

Money laundering predicate offense is the underlying criminal activity that generated proceeds and when
laundered, results in the offense of money laundering. This includes:
a) corruption and bribery;
b) counterfeiting currency;
c) counterfeiting deeds and documents;
d) extortion;
e) fraud;
f) forgery;
g) illegal trade of firearms;
h) illegal trade in narcotic drugs, psychotropic substances and substances causing intoxication;
i) illegal trade in stolen and other goods;
j) kidnapping, illegal restraint and hostage taking;
k) murder, grievous physical injury;
l) trafficking of woman and children;
m) black marketing;
n) smuggling of domestic and foreign currency;
o) theft or robbery or dacoity or piracy or hijacking of aircraft;
p) মানব পাচার বা কোনো ব্যক্তি কৌশলে অন্য ব্যক্তিকে মিথ্যা আশ্বাস প্রদান করে কর্মসংস্থানের কল্পনা দেখিয়ে, কোনো অর্থ বা মূল্যবান দ্রব্য গ্রহণ করা বা লেনদেনের চেষ্টা করা।
q) dowry;
r) smuggling and offences related to customs and excise duties;
s) tax related offences;
t) infringement of intellectual property rights;
u) terrorism or financing in terrorist activity;
v) adulteration or the manufacture of goods through infringement of title;
w) offences relating to the environment;
x) sexual exploitation;
y) insider trading and market manipulation using price sensitive information relating to the capital
market in share transactions before it is published for general information to take advantage of the
market and attempting to manipulate the market for personal or institutional gain;
z) organized crime, and participation in organized criminal groups;
aa) racketeering; and
bb) any other offence declared as predicate offence by Bangladesh Financial Intelligence Unit (BFIU) with
the approval of the Government, by notification in the Official Gazette, for the purpose of this Act.

What is Structuring?
Structuring is a method of transaction where the transaction is done in such a
manner that is intended to avoid the reporting requirement of the Regulators.

What is smuggling of money or property?
In the Money Laundering Prevention Act, 2012; smuggling of money has been defined as-
1. Transfer or holding money or property outside the country breaching the existing regulation and laws of the country;
2. Refrain from repatriating the money or property from abroad in which the country has interest or was due to be repatriated;
3. Not bringing the actual due into the country from foreign country or paying to a foreign country in excess of the actual dues.

What is proliferation financing?
“Proliferation financing” refers to the act of providing funds or financial services which are used, in whole or in part, for the manufacture, acquisition, possession, development, export, trans-shipment, brokering, transport, transfer, stockpiling or use of nuclear, chemical or biological weapons and their means of delivery and related materials (including both technologies and dual-use goods used for non-legitimate purposes), in contravention of national laws or, where applicable, international obligations. (Source: UNSCR 1540)

What are the predicate offences?
Predicate offences mean the offences described in 2(cc) of Money Laundering Prevention Act, 2012, by committing which within or outside the country, the money or property derived from is laundered or attempted to be laundered. Currently, 27 offences have been included as predicate offences in the Money Laundering Prevention Act, 2012.

Which agencies investigate money laundering offences?
As per the provisions of Money Laundering Prevention Act, 2012, the following agencies have been empowered to investigate money laundering offences:

1. Criminal Investigation Department (CID), Bangladesh Police 2. Anti Corruption commission (ACC)
3. Department of Narcotics Control (DNC)
4. National Board of Revenue (NBR)
5. Directorate of Environment
6. Bangladesh Securities and Exchange Commission (BSEC)

As per the attached list-1 of the Schedule of Money Laundering Prevention Rules, 2019; the investigative agencies investigate money laundering derived from respective predicate offences, i.e which falls under their respective jurisdiction:

What happens to the ceased assets?

According to Section 12 of the Money Laundering Prevention Act, 2012, no court shall take cognizance of any offense without the approval of the Bangladesh Financial Intelligence Unit (BFIU). This provision limits the court’s jurisdiction in handling money laundering cases. Additionally, the sub-section of this section stipulates that any investigation report regarding a violation of this Act must be submitted to the BFIU for prior approval, thereby granting the BFIU extensive authority.

Section 14 addresses the freezing of assets involved in money laundering following any reporting by the reporting agency. Under this Act, the investigative agency is endowed with significant power; upon a formal request to the court, the court may issue an order to freeze any property connected to a money laundering charge.

Section 24 establishes the BFIU to exercise the authority vested under Section 23. The government has provided the BFIU with operational independence to enable it to conduct independent investigations of financial crimes.

Who/which are the Reporting Organizations of BFIU?
As per clause 2(w) of Money Laundering Prevention Act, 2012; the followings are the Reporting Organizations (ROs) of BFIU:
1. Bank
2. Financial institution
3. Insurer
4. Money changer
5. Any company or institution which remits or transfers money or money value 6. Any other institution carrying out its business with the approval of Bangladesh
Bank
7. Stock dealer and stockbroker, Portfolio manager and merchant banker, Securities
custodian, Asset manager
8. Non-profit organization, Non-government organization, Cooperative society
9. Real estate developer
10. Dealer in precious metals or stones
11. Trust and company service provider
12. Lawyer, notary, other legal professional and accountant
13. Any other institution which Bangladesh Bank may, from time to time, notify with
the approval of the Government