Regulators and policymakers are much more comfortable with letter of credit (L/C) than open account transactions when it comes to managing growing concerns with trade-based money laundering (TBML), according to the director of training at the Bangladesh Institute of Bank Management (BIBM).
Professor Shah Md Ahsan Habib argues that global concerns over TBML indicate several reasons why L/Cs should be extensively used.
Demonstration of trust
The professor maintains that stakeholders in international trade transactions should take heed of global trends, particularly a lack of trust between different parties and countries.
He says that bankers and traders in Bangladesh need to demonstrate a robust and transparent approach to business, and believes the widespread use of L/Cs would help underpin the reputation and integrity of the country’s international banking and trade operations.
The most recent BIBM trade review clearly reveals the widespread use of L/Cs in Bangladesh already.
In 2015, L/Cs were used for around 90 per cent of total import and about 60 per cent of export transactions.
According to Habib, the widespread use L/Cs in Bangladesh is largely a product of explicit and implicit restrictions in the country’s regulatory environment.
Categories: Trade Based Financial crimes News