Eight banks fined under money laundering act

Eight banks in Bangladesh, including the Islami Bank, have been fined for not keeping client affidavits and also for not informing authorities of suspicious transactions in time.

They have been slapped with fines from Tk 200,000 to Tk 2 million under the law to prevent money laundering, Md Mahfuzur Rahman, deputy head of Bangladesh Financial Intelligence Unit, told bdnews24.com.

Bangladesh Bank can impose fines from Tk 50,000 to 2.5 million for the violation of laws to prevent money laundering .

“Banks are liable for keeping accurate and full affidavits of their clients. It is a central bank order to do so. The banks have recently been fined for not following BFIU’s directions properly,” said Rahman, also executive director of the Bangladesh Bank.

Islami Bank and Premier Bank Limited have been penalised with the largest fine, Tk 2 million.

BRAC Bank must pay Tk 500,000, Mercantile Bank Tk 400,000 while Dutch-Bangla Bank, Southeast Bank and Janata Bank must pay up Tk 200,000.

Bangladesh Investment Finance Corporation, a financial institute, has also been fined Tk 100,000.

Bangladesh Bank spokesperson Mahfuzur Rahman said that in 2002, the central bank instructed all banks to update KYC (Know Your Customer) forms of their accounts and set a deadline until 2010 for that.

Later the time was extended until 2012.

"Bangladesh Bank officials still found several accounts (in the banks) without any KYC. Some of those accounts were found dotted with suspicious transactions and the banks did not inform the BFIU of those transactions. That's why they have been penalised," the central bank official told bdnews24.com.

Meanwhile, the banks after 12 years have now geared up for the updating works, inserting advertisements in newspapers, through the Association of Bankers Bangladesh (ABB), seeking information from their clients.

They are asking clients to submit their recent photographs, copies of National ID and utility bills within 30 days. The banks, through those advertisements, also warn that failing to provide the documents will lead to suspension of customers' banking services like transactions, debit cards and online banking.

"Updating client information is a regulatory requirement and it's for all banks. That's why we went for a joint advertisement," ABB President and Eastern Bank Managing Director Ali Reza Iftekhar told bdnews24.com.

The 2013 Annual Report of Bangladesh Bank says, in the 2011-12 fiscal, a bank was penalised as it had not disclose information about suspicious transactions. Another 22 banks were fined for not complying with the regulations prescribed in the laws to prevent money laundering and terrorism.

According to central bank officials, there are allegations against the Islami Bank Bangladesh Ltd of terror-financing. Earlier, it was found that the banks clients include some people, who were under the suspicious people's list of the UN. The bank had 'concealed' that information from the Bangladesh Bank.

The bank has been also blamed in a US Senate Committee report for money laundering and terror-financing. Since 2010, the central bank has appointed an observer for Islami Bank.

(The sixth paragraph of this report has been corrected. State-owned Janata Bank, not Uttara Bank, has been fined Tk 200,000 by the Bangladesh Bank)