Finance Minister Kamal blames money laundering for record trade deficit

He urges expatriates to send money through official channels to contribute to the economy

Published : 3 August 2022, 04:14 PM
Updated : 3 August 2022, 04:14 PM

Finance Minister AHM Mustafa Kamal thinks money laundering through over-invoicing of fraudulent imports is a key reason for Bangladesh’s widening trade deficit over the past few months.

After a meeting of the Cabinet Committee on Government Purchase on Wednesday, Kamal called on everyone to refrain from such acts for the future of the country and the coming generations.

Kamal said it is easy guesswork that the import and export sectors are subject to corruption to some degree.

“Or else why will exports not surpass imports? We bring in raw materials, process them and then send them abroad. If the processing cost is added to the raw materials for exporting, it can’t be less than import expenditure,” the minister explained.

“That’s why we think that imports and exports are not being evaluated correctly. So we’ve taken the responsibility [to fix this]. We’ve instructed different regulators and they are taking action so that imports and exports are done honestly and responsibly.”

Kamal asked everyone to import and export goods with “genuine intentions” and to ensure the correct pricing and amount of products to mitigate the growing trade deficit.

Superficial costs and amount of goods can only mean that the goal is to launder money out of the country, he added. “We must stop this. Everyone has to get involved with the government [to do that].”

Kamal brought up expatriates relying on Hundi, or illegal channels of money transfer, for remittances despite government incentives to send money through proper channels.

“It’s because money arrives through Hundi. We’re discouraging it. I’ve no idea how much is being transferred through Hundi but a study I did earlier showed it’s close to the same amount as we receive through the official channels.”

“I think the proportion is still the same.”

Official channels to send money to native country are prioritised worldwide and Prime Minister Sheikh Hasina has asked all to do the same, he said.

“The [remitted] money will still be [expatriates’] money and they’ll be able to use it at any time. But sending money through Hundi will cause issues when it's time to spend it and give rise to questions about its source.”

Kamal said that money sent through Hundi is “black money”. As it cannot be sourced, the money cannot be factored into the economy.

“If the income tax authorities question [the legality of the money, the owners] won’t have answers.”

Toufique Imrose Khalidi
Editor-in-Chief and Publisher