Bangladesh Bank governor sees banks’ failure to stop money laundering through imports

Abdur Rouf Talukder says the banks have failed to check the actual market price of imported goods in some cases

Bangladesh Bank Governor Abdur Rouf Talukder has suggested banks should share some responsibilities for over-invoicing, a process used by businesses to launder money through imports.

In over-invoicing, an importer shows a higher-than-actual price of goods and receives the extra money from the exporter abroad.

“Recently Bangladesh Bank noticed the country is losing hard-earned foreign currencies due to the opening of letters of credit for import through over-invoicing because of the failure of banks in checking actual market price of goods in some cases,” Rouf said.

Speaking at a workshop of managing directors and chief executives of banks and non-bank financial institutions in Dhaka on Tuesday, he also said the government was losing revenue to under-invoicing, in which an exporter shows lower-than-actual price of goods to evade taxes and smuggle money out.

Rouf pointed out Hundi, or illegal channels to send remittances, as another factor causing the country losses of foreign currencies.

He asked the MDs and CEOs of banks and NBFIs to be cautious to stop over- and under-invoicing. “But the imports of child food, wheat, sugar, lentil, cooking oil and staples should not be hampered.”

He also said the banks and their association should issue statements to cut down the risk of rumours creating a possible liquidity crisis.

Social media posts advising people to draw their deposits from banks prompted the central bank to issue a statement earlier this week reassuring depositors that their money in the banks is safe.