75pc of money laundering is trade-based: BIBM study

Trade-based money laundering is responsible for around 75 percent of the funds siphoned off from Bangladesh, a study finds.

Most of the funds are laundered through false import and export declarations, according to the findings of the study conducted using data from the National Board of Revenue (NBR).

The findings of the study, conducted by the Bangladesh Institute of Bank Management (BIBM), were presented at a roundtable at the BIBM in Dhaka today.

The study, titled "Enforcement Status of the Standards to Prevent Trade-Based Money Laundering", was prepared using responses from officials of 37 banks and was compiled by three BIBM faculty members, two officials from private banks, and one representative from the Bangladesh Financial Intelligence Unit.

Earlier, following the amendment of the Money Laundering Prevention (Amendment) Act, 2015, the Customs Intelligence and Investigation Directorate investigated 95 money laundering cases and found that all were trade-based, according to the study.

During a keynote presentation, Shah Md Ahsan Habib, professor (selection grade) at BIBM, explained the key reasons why criminals prefer trade channels for money laundering.

Chief among them was the ability to move large volumes of funds — far more than possible through other means, he said.

Speaking as the chief guest, Bangladesh Bank Deputy Governor Nurun Nahar said money laundering also takes place through under-invoicing in imports and exports, which falls under trade financing.

In many cases, the transactions appear legitimate on the surface, but hidden manipulation lies beneath.

"A 2024 white paper estimated annual trade-related outflows from Bangladesh at $16 billion, equivalent to 3.4 percent of the GDP — more than the nation's total yearly health budget."

"These losses, often facilitated through over- or under-invoicing and phantom shipments, erode the country's foreign exchange reserves, reduce customs revenue, and inflate the cost of doing business," reads the report.