Bangladesh Bank suspends L/Cs to counter TBML and preserve foreign exchange

Bangladesh Bank has suspended 100 letters of credit (L/Cs) for over-invoicing, according to the central bank’s governor, Abdur Rouf Talukder.

The suspensions are part of the bank’s efforts to prevent trade-based money-laundering (TBML) via mis-invoicing and preserve foreign exchange reserves the governor says.

Price controls

Restricting the ability of importers and exporters to show lower or higher prices of products is the key to preventing TBML according to the governor, who was keen to point out that the suspended L/Cs could be used if they are amended to reflect true prices.

“We’re resorting to price control to make sure that imports and exports are carried out at accurate prices,” he told an audience at the Bangladesh Institute of Development Studies.

Over- and under-invoicing checks

The central bank is also checking for under-invoicing. The governor said one L/C for US$20,000 had been opened to import a Mercedes vehicle normally priced at around US$100,000 dollars. The remaining money was laundered he added.

Discrepancies between the price shown on an L/C and the market price are usually balanced out using illegal money exchange transfers the governor said.

Dollar crisis

In Bangladesh, since the decline of the Covid pandemic, the rate of opening and settling import L/Cs has overtaken exports and remittances combined.

This has contributed significantly to a decline in foreign currency reserves from US$48 billion in August last year to US$34 billion in November of this year.


Categories: Trade Based Financial crimes News

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