Central bankers in Bangladesh are concerned that letters of credit (L/Cs) are being used to facilitate illicit fund flows (IFFs) out of the country.
These concerns contrast with Pakistan’s view that L/Cs are not a focus in its anti-money laundering or counter terrorist financing efforts (Trade Based Financial Crimes, 18 January 2016).
Capital equipment imports
Senior officials at Bangladesh Bank (BB) are specifically concerned that capital equipment imports are being used in the IFFs.
Responding to a question on capital flight at the launch of BB’s January monetary policy statement, the bank’s governor, Atiur Rahman, said capital machinery imports rose significantly at the end of 2015.
But he then raised the question whether this increase actually signalled that money is being siphoned out of the country via L/C transactions.
The bank’s deputy governor, Abu Hena Mohd Razee Hassan, said BB had no specific data on the capital flight.
He did however say that the central bank will be monitoring capital machinery imports more closely to determine whether IFFs are being facilitated by L/C transactions.
Categories: Trade Based Financial crimes News