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Internship Report

on

Money Laundering as a Threat in the Banking Sector

of Bangladesh: A Study on the EXIM Bank Ltd, Garib-
e-Newaz Branch
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Internship Report

On

Money Laundering as a Threat in the Banking Sector of Bangladesh:

A Study on the EXIM Bank Ltd, Garib-e-Newaz Branch

Supervised By
Mohsina Akter
Assistant Professor
Department of Accounting & Information Systems
Jahangirnagar University

Submitted By
Khondakar Masum Aamin Sajib
ID: 2318
Batch: 2nd
Session: 2011-2012
Department of Accounting & Information Systems
Jahangirnagar University

Date of submission: 6th April 2017

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Letter of Transmittal

6th April, 2017

Mohsina Akter
Assistant Professor
Department of Accounting & Information Systems
Jahangirnagar University

Subject: Submission of Internship Report

Dear Mam,
It is a great pleasure for me to submit the Internship report on Money Laundering as a Threat in
the Banking Sector of Bangladesh: A Study on the EXIM Bank Ltd, Garib-e-Newaz Branch as
the fulfillment of partial requirement of the BBA program.

The report has been prepared in accordance with the guidelines that you have given me and also
my academic knowledge of B.B.A. I have worked in EXIM Bank closely and studied their
activities related to the topic of the report.

I have prepared this report with sincerity and serious efforts. If you need any further assistance in
clarification of this report, I shall gratefully respond when required.

Sincerely Yours

..
Khondakar Masum Aamin Sajib
ID: 2318
Batch: 2nd
Session: 2011-2012
Department of Accounting & Information Systems
Jahangirnagar University
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Certificate of Approval

This is to certify that Khondakar Masum Aamin Sajib, ID: 2318, is a student of Bachelor of
Business Administration (BBA), Department of Accounting & Information Systems,
Jahangirnagar University, has successfully completed his Internship report titled Money
Laundering as a Threat in the Banking Sector of Bangladesh: A Study on the EXIM Bank Ltd,
Garib-e-Newaz Branch under my whole hearted supervision as the partial requirement for the
fulfillment of BBA program.

He has tried his best to do this successfully, which is accepted in terms of quality and form. I wish
his success and prosperity.

..

Mohsina Akter

Assistant Professor

Department of Accounting & Information Systems

Jahangirnagar University
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Declaration

I, do hereby declare that the internship report entitled Money Laundering as a Threat in the
Banking Sector of Bangladesh: A Study on the EXIM Bank Ltd, Garib-e-Newaz Branch has
been prepared by me as a partial requirement for the fulfillment of the Bachelor of Business
Administration (BBA) Degree from the Department of Accounting & Information systems,
Jahangirnagar University. This report is prepared under the intensive supervision and guidance of
Mohsina Akter, Assistant Professor in the Dept. of Accounting & Information Systems,
Jahangirnagar University. This is my original work and has not been previously submitted to any
university/ college/ organization for any other academic degree or certificate.

I also confirm that, the report is only prepared for my academic requirement and not for any other
purposes.

..

Khondakar Masum Aamin Sajib,

ID: 2318

Batch: 2nd

Session: 2011-2012

Department of Accounting & Information Systems

Jahangirnagar University
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Acknowledgement

I begin by thanking the Almighty & my beloved parents for my successful completion of the
Internship Report, which is a significant part of the completion of BBA Program. Now I dont
want to miss the opportunity to thank those people who have given me constant support while
doing my internship program.

The successful completion of this Internship report has seen many helping hands, without which
this would have not been possible. I specially want to thank Mr. Mohammad Monirul Islam; Senior
Asst. Vice President of EXIM Bank Ltd., Garib-e-Newaz and Mr. Mehedi Hasan; In charge of
Investment Department of this Branch for their tremendous support, guidance and patience.
Without their kind supervision, preparing this report would have been very difficult. I am also
thankful to them for providing me all the relevant and available information to have a clear concept
on the subject especially Mr. Mr. Shahin Bhuiya; Probationary Officer.

Its a great pleasure to convey my heartiest gratitude and greetings to my honorable supervisor,
Mohsina Akter, Assistant Professor, Department of Accounting & Information Systems,
Jahangirnagar University. I deeply appreciate her cooperation, advice and guidance in preparing
this report.

I also express my warm gratitude and cordial thanks to some officials of EXIM Bank Limited,
Garib-e-Newaz branch who have given me the opportunity to work with them and help a lot by
providing important information and enabling me to prepare this report.
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Executive Summary

This report is based on my internship program and analysis of the Money Laundering activities of
EXIM Bank Ltd. In my internship period I have worked in EXIM Bank, Garib-e-Newaz branch at
Uttara. It was a great opportunity to gather experience and knowledge from different types of
banking operations. My faculty supervisor helped me to choose the topic- Money Laundering as
a Threat in the Banking Sector of Bangladesh: A Study on the EXIM Bank Ltd, Garib-e-Newaz
Branch.
This report contains mainly two parts- the Organizational part and the Project part. In the
organizational part, a brief overview of EXIM Bank has given. In the Project part, I have covered
efforts undertaken by judicial and regulatory agencies at national level seriously. Money
laundering is a criminal offence; bank should not provide any service to any criminals and assisting
a Money Launderer as it is a criminal offence too.
As the money laundering is getting more and more complicated, the Government of Bangladesh
enacted a law titled, Money Laundering Prevention Act 2012 and then which is very
comprehensive and valuable law. As the Central Bank mainly regulates this law, i.e. Bangladesh
Bank and all its schedule banks, they must be well comprehended on this law and well equipped
to implement it.
For the study, a number of secondary data has been collected from different sources, especially
from The EXIM Bank Limited, Garib-e-Newaz branch. According to those collected information
and with the light of Money Laundering prevention Act 2012, a standard prevention procedure has
been described in detail in this report. To overcome the limitations and to harvest maximum output
of the Anti-Money Laundering Act in Bangladesh some recommendations have been made in this
paper also. To ensure a consistence and uniform treatment in implementing the law all the banks
must work together in the Banking Industry.
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List of Abbreviations
ACC- Anti-Corruption Commission
AML- Anti Money Laundering
ATM- Automated Teller Machine
Bank A/C- Bank Account
BB- Bangladesh Bank
BAMLCO- Branch Anti-Money Laundering Compliance Officer
BFIU-Bangladesh Financial Intelligence Unit
CAMLCO- Chief Anti-money Laundering Compliance Officer
CCU- Central Compliance Unit
CDD- Customer Due Diligence
CFT- Cross File Transfer
CMB- Commercial Banking
CTRs - Cash Transaction Reports
E-Banking-Electronic-Banking
FATF- Financial Action Task Force
GB- General Banking
ICCD -Internal Control & Compliance Division
KYC- Know Your Customer
L/C- Letter of Credit
ML- Money Laundering
NBFI- Non-Bank Financial Institutions
NCC- National Coordination Committee
STR- Suspicious Transaction Report
TP- Transaction Profiling
UNODC - United Nation Office on Drug and Crime UNODC
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Table of Contents

Part-1 Introduction of the Report ..............................................................................................12

1.1 Introduction .................................................................................................................................... 12
1.2 Origin of the Report .............................................................................................................. 12
1.3 Objectives of the Report ....................................................................................................... 13
Primary Objective ........................................................................................................................ 13
Secondary Objective .................................................................................................................... 13
1.4 Scope of Study Objective............................................................................................................... 13
1.5 Methodology .................................................................................................................................. 13
1.6 Shortcomings of the Report ........................................................................................................... 13

Part-2 Overview of EXIM Bank .............................................................................................................. 15

2.1 History of EXIM Bank .................................................................................................................... 15
2.2 Logo of EXIM Bank ....................................................................................................................... 15
2.3 Slogan of EXIM Bank .................................................................................................................... 15
2.4 Vision ........................................................................................................................................... 16
2.5 Mission............................................................................................................................................ 16
2.6 Organizational Structure of EXIM Bank ........................................................................................ 17
2.7 Corporate Culture............................................................................................................................ 17
2.8 Corporate Social Responsibilities ................................................................................................... 18
2.9 Core Operational Area of EXIM Bank ........................................................................................... 18
2.10 Products & Services ...................................................................................................................... 18
2.11 S.W.O.T Analysis of EXIM Bank ................................................................................................ 20
2.12 Brief of EXIM Bank, Garib-e-Newaz Branch .............................................................................. 20
2.13 The Branch Structure of Employees ............................................................................................ 21
2.14 Departments .................................................................................................................................. 21
2.15 My Experience at Garib-e-Newaz Branch ................................................................................... 22
2.16 My Specific Job Responsibilities .................................................................................................. 22

Part-3 An Overview of Money Laundering ........................................................................................... 23

3.1 A Brief History of Money Laundering.......................................................................................... 23
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3.2 History of Money Laundering Laws ............................................................................................. 23

3.3 Definition of Money Laundering ................................................................................................ 24
3.4 Why Money Laundering Is Done ................................................................................................. 25
3.5 Stages of Money Laundering ........................................................................................................ 25
Placemen Stage ............................................................................................................................. 25
Layering Stage .............................................................................................................................. 26
3.6 Effects of Money Laundering ...................................................................................................... 26

Part-4 Bangladesh and Money Laundering ........................................................................................... 29

4.1 Current Situation of Bangladesh Regarding Money Laundering .................................................. 29
4.1.1 Position of Bangladesh in Basel Anti-Money Laundering Index ............................................... 30
4.1.2 Position of Bangladesh in Basel AML Index from 2012-2015 .................................................. 30
4.2 Anti-Money Laundering Laws in Bangladesh ........................................................................... 31
4.2.1 Punishment for Money Laundering ............................................................................................ 31
4.3 Bangladesh Bank Regarding Money Laundering ......................................................................... 32
4.3.1 The Powers and Responsibilities of Bangladesh Bank .............................................................. 32
4.3.2 Initiatives Taken by Bangladesh Bank to Check Money Laundering ........................................ 33
4.3.3 Bangladesh Banks Anti-Money-Laundering Department ......................................................... 33
4.4 Roles of Banking Sector and Financial Institutions for Combating Money Laundering .............. 35
4.4.1 Senior Managements Commitment ........................................................................................... 35
4.4.2 Written Anti-Money Laundering Compliance Policy ................................................................ 36
4.4.3 Know Your Customer (KYC) .................................................................................................... 36

Part-5 Combating Money Laundering by EXIM Bank ........................................................................ 37

5.1 Anti- Money Laundering and Prevention Policy of EXIM Bank .................................................. 37
5.1.1 Written Anti-Money Laundering Compliance Policy of EXIM Bank ........................................ 37
5.1.2 Organizational Structure for Implementation of AML Program of EXIM Bank ....................... 38
5.2 General Information of EXIM Banks Money Laundering ......................................................... 38
5.3 Anti-money laundering Divisions of Exim bank & Their Authorities & Responsibilities ........... 39

5.3.1. Central Compliance Unit (CCU) of EXIM Bank ....................................................................... 39

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5.3.2 Authorities & Responsibilities of BAMLCO of EXIM Bank .................................................... 40

5.3.3 Authorities & Responsibilities of CAMLCO of EXIM Bank .................................................... 41
5.3.4 Authorities & Responsibilities of D-CAMLCO of EXIM Bank ................................................ 42
5.4 Procedures Followed by EXIM Bank Bangladesh to Prevent Money Laundering ....................... 43
5.4.1 Customer Acceptance Policy of EXIM Bank ............................................................................. 43
5.4.2 Know Your Customer (KYC) Program of EXIM Bank ............................................................ 44
5.4.3 Monitoring Transactions Process ............................................................................................... 45
5.4.4 Review of Monthly Exceptions Report ....................................................................................... 45
5.4.5 Cash Transaction Report (CTR) ................................................................................................ 45
5.4.6 Suspicious Transaction Report (STR) of EXIM Bank to BB .................................................... 46
5.4.7 Self-Assessment Reports & Independent Testing Procedures ................................................... 47
5.4.8 Training and awareness ............................................................................................................... 49
Other activities
5.4.9 Risk Assessment of the Customers of EXIM Bank ................................................................... 49
5.4.10 Transaction Profiling (TP) of EXIM Banks Customers .......................................................... 49
5.4.11 Time to Time Review and Update of KYC of EXIM Bank ..................................................... 49

Part-6 Recommendation and Conclusion ............................................................................................... 50

6.1 Recommendations for EXIM Bank Bangladesh ............................................................................ 50
6.2 Conclusions .................................................................................................................................... 50

Bibliography .............................................................................................................................................. 51
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Part-1
Introduction of the Report

1.1 Introduction
The Export Import Bank of Bangladesh is a Shariah Based Islamic Bank. Islamic law specifically
prohibits usury and the collection and payment of interest (called Riba in Islam). Generally,
Islamic law also prohibits trading in financial risk, which is seen as a form of gambling. Islamic
banking has the same purpose as conventional banking except that it operates in accordance with
the rules of Shariah.
Modern Banking is a result of evolutions driven by changing economic activities and lifestyles.
Entering a new millennium, banking needs have become more diverse and exotic than ever before.
After our independence from Pakistan, apart from the foreign Banks all the commercial Banks
were nationalized. In 1983, the government of Bangladesh gave permission to establish private
Banks in this country. After this regulation most of these nationalized commercial Banks were
shifted into the private sector. Many private Banks were established in this country. EXIM Bank
emerged as Islamic Bank on 1st July 2004.
The function of EXIM Bank is to do business following the shariah law of Islam. As a shariah
based in Bangladesh, EXIM Bank is trying hard to cope with the competition with other private
banks which are not conducted with the shariah based banking system. In this regard EXIM Bank
is doing well to manage their business.

1.2 Origin of the Report

As a requirement for the completion of the Bachelor of Business Administration of Jahangirnagar
University, all students have to complete a three months internship in a particular institution. Under
an academic supervisor, an internship report is compulsory to submit. For this I have an
opportunity to do internship in EXIM Bank Bangladesh, Garib-e-Newaz branch in investment
department. My internship was started at 02nd February, 2017. In this three months internship
period, Mrs. Mohsina Akter, Assistant Professor of Accounting & Information Systems,
Jahangirnagar University, was my academic supervisor and Mr. Mehedi Hasan, in charge of
Investment Department, EXIM Bank, Garib-e-Newaz branch was my on job supervisor. In this
report, I have tried my best to provide theoretical knowledge about money laundering, its effects
and prevention methods. I have also tried to give some recommendation with my limited
knowledge which I believe will be helpful.
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1.3 Objectives of the Report

There are two types of objectives associated with this report. They are:
Primary Objective
The primary objective is to gain theoretical and practical knowledge associated with money
laundering and its devastating effects on the economy.
Secondary Objective
The secondary objective is to give a short overview of EXIM Bank. Then give detail information
about what measures they follow to counter the devastating effects and risk associated with money
laundering. After that, make brief recommendations to identify the limitations of policy associated
with money laundering.

1.4 Scope of Study

Broadly, this study has covered one branch of a local bank working in Bangladesh about Anti
Money Laundering efforts. This study has been conducted at the EXIM Bank, Garib-e-Newaz
branch at Dhaka.

1.5 Methodology
The information gathered to make this report was from both primary sources and secondary
sources.
The Primary Sources
Interview of the personnel working in Anti-Money Laundering department.
Various documents found in internet related to money laundering.
Guidelines given by Bangladesh Bank to its scheduled institutions.

Secondary Sources
Annual Report of EXIM Bank
EXIM Banks website
Brochures of EXIM Bank
Other websites showing various report on EXIM Bank.

1.6 Shortcomings of the Report

To gather information related to money laundering, Ive faced some shortcomings to make this
report. Following are the shortcomings that Ive faced to collect data:
Since I have worked in the investment department of EXIM Bank, Garib-e-Newaz branch,
I have to manage time for myself to make this report. So I have some time limitation
problem to make this report.
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Money Laundering is a vast topic to cover in a report with only three months-time period.
Due to the organization confidentiality, relevant data and documents were difficult to
collect.
Quantitative data was also not available for this report.
Ive some experience constraints to make this report.
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Part-2
Overview of EXIM Bank

2.1 History of EXIM Bank

EXIM Bank or Export Import Bank Limited is Islamic Sharia based bank which was established
in 1999 with leadership of late. Mr. Shahjahan Kabir, Founder Chairman. A group of highly
qualified and successful entrepreneurs joined their hands with the founder chairman to make the
bank successful in business. After the demise of Mr. Shahjahan Kabir, Mr. Nazrul Islam
Mazumder who became the Honorable Chairman. He is also the chairman of Bangladesh
Association of Banks (BAB).
The Bank first starts was from 3rd August, 1999 with the name as Bengal Export Import Bank
Limited. On 16th November 1999, it was renamed as Export Import Bank of Bangladesh
Limited with Mr. Alamgir Kabir as the Founder Advisor and Mr. Mohammad Lakiotullah as the
Founder Managing Director respectively. In the year July 2004, the Bank has transformed all of
its conventional banking operation into Shariah Based Islami Banking.

The bank has been placed on a state of the art centralized IT platform with two modern data centers
where world renowned core banking software TEMENOS T24 is running along with some
alternate delivery channels like ATMs and SMS banking. The Bank offers full range of Personal,
Corporate, International Trade, Foreign Exchange, Lease Finance and Capital Market Services.

2.2 Logo of EXIM Bank

2.3 Slogan of EXIM Bank

Together Towards Tomorrow
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2.4 Vision
The gist of EXIM bank vision is Together Towards Tomorrow'. Export Import Bank of
Bangladesh Limited believes in togetherness with its customers, in its March or the road to growth
and progress with services. To achieve the desired goal, there will be pursuit of excellence at all
stages with a climate of continuous improvement, because, in EXIM Bank, they believe, the line
of excellence is never ending. Bank's strategic plans and networking will strengthen its competitive
edge over others in rapidly changing competitive environments. Their personalized qualities
services to the customers with the trend of constant improvement will be cornerstone to achieve
their operational success.

2.5 Mission
The bank has checked out the following corporate objectives in order to ensure smooth
achievement of its goals-
To be the most caring and customer friendly and service oriented bank.
To create a technology base most efficient banking environment for its customers
To ensure ethics and transparency in ail levels
To ensure sustainable growth and establish full value of the honorable shareholders
Above all, to add effective contribution to the national economy.
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2.6 Organizational Structure of EXIM Bank

Management Hierarchy

Chairman
Board of Director
Managing Director
Deputy Managing Director
Executive Vice President
Senior Vice President
Vice President
Senior Assistant Vice President

Assistant Vice President

Senior Principal Officer
Principal Officer
Executive Officer
Management Trainee Officer
Junior Officer
Assistant Officer
Trainee Officer

2.7 Corporate Culture

EXIM Bank Ltd. is one of the most disciplined banks with a distinctive corporate culture. Here the
bank believes in shared meaning, shared understanding and shared sense making. Banks people
can see and understand events, activities, objects and situation in a distinctive way. They would
their manners and etiquette, character individuality to suit the purpose of the bank and the need of
the customers who are of paramount importance to the banks. The people in the banks see
themselves as a tight knit team that believes in working together for growth. The corporate culture
they belong has not been imposed; it has rather been achieved though their corporate conduct.
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2.8 Corporate Social Responsibilities

At least 2% of EXIM Banks annual profit of every year is put aside to conduct Corporate Social
Responsibilities (CSR) activities. The mainstream CSR activities that are carried out through this
foundation are:
Healthcare service.
Scholarship program for brilliant poor student
Education Promotion Scheme
Helping people affected by natural calamities
Helping people in slum areas
Donation to educational institutions to setup computer lab
Beautification of Dhaka City

2.9 Core Operational Area of EXIM Bank

As an uncompromising Islamic bank in Bangladesh, EXIM Bank extended all Islamic banking
services including wide range of saving and investment products, foreign exchange and ancillary
services. The investment portfolio of the bank comprises of diversified areas of business and
industry sectors. The bank has given importance to acquire quality assets and is committed to retain
good customers through customer relationship management and financial counseling.

2.10 Products & Services

Retail Banking
Corporate Banking
SME Banking
Agro Banking
Remittance
Investment Products
Bank's investment port-folio are:
Retail/Consumers investment.
Micro enterprise investment.
Small and Medium Enterprise investment.
Large and Corporate investment.
Syndicate investment.
Investments
Corporate Finance
Industrial Finance
Project Finance
Syndicate Investment
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Modes of Investments

Murabaha
Bai Muazzal
Izara Bil Baia
Wazirat Bil Wakala
Quard
Local Documentary Bill Purchased
Foreign Documentary Bill Purchased
Musharaka Documentary Bills (MDB)/LDBP

Remittance
From UK through Exim Exchange Company (UK) Ltd.
Cilenco Fast Cash.
Western Union Money Transfer.
ELDDORADO Money Transfer

L/C Products
EXIM Bank offers L/C facilities to its importers / exporters through establishment of
correspondent relations and Nostro Accounts with leading banks all over the world.

Other Products
VISA Islamic Card
Debit and Credit card
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2.11 S.W.O.T Analysis of EXIM Bank

Strengths Weaknesses

Global product strengths Inadequate physical presence

Transparency No huge marketing campaign
Strong control environment Not very experienced in the banking
Customer awareness sector
Strong image locally Too much presence of the regional
customer awareness authorities
Senior local management with local
market experience
Strong control environment
Transparency

Opportunities Threats

Fund source is cheaper Increased competition from private banks

Growing of alternate banking channel e.g. Slowdown of global economy
ATMs Weak legal structure
Growing upper middle class and upper Governmental encouragement and
class population approval towards setting up new private
New innovative products can be brought to banks.
Bangladesh
Overall improvement in the banking sector
Unexplored Global Relationship
Underexplored MFI and NBFI sectors

2.12 Brief of EXIM Bank, Garib-e-Newaz Branch

Among fifty-nine branches of EXIM Bank Ltd., Garib-e-Newaz Branch is one of the most
successful branches in all aspects. From the very beginning, this branch is contributing a lot to the
bank. A brief of EXIM Bank Garib-e-Newaz Branch is given below:

Manager: Mr. Mohammad Monirul Islam; Senior Asst. Vice President

Operation Manager: Mr. Md. Mahmudul Hasan; VAPLOM

Investment in charge: Mr. Mehedi Hasan; SPO

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Foreign Exchange in Charge: Mr. Shahin Bhuiya; PO

Cash in charge: Mr. Md. Jahid Hasan; SO

General Banking in Charge: Mrs. Rabeya Khatun; FAVP

Total Number of employees: 22

2.13 The Branch Structure of employees in This Branch is as given below:

Senior Assistant Vice President

Assistant Vice President

Senior Vice Principal

Principal Officer

Executive Officer

Officer

Trainee Officer

Junior Officer

2.14 Departments
EXIM Bank, Garib-e-Newaz Branch has three main departments. These are:

General Banking Department;

Investment Department; &
Foreign Exchange Department.
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2.15 My Experience at Garib-e-Newaz Branch

It was a great opportunity for me to work in EXIM Bank Bangladesh Limited which is one of
the most successful bank in Bangladesh as an intern. In my first month, I was placed in the
investment department of Garib-e-Newaz branch under a very dynamic and enthusiastic Mr.
Mehedi Hasan sir. The main office is situated at Gulshan Avenue, Dhaka-1212 and my branch is
situated at Uttara Dhaka at Garib-e-Newaz road. My department works for managing investment
to ensure that the most eligible persons get the proper loan and other facilities.
I joined the branch on 02nd January, 2017. At my first day, I was introduced to Mr. Mehedi Hasan
sir by Mrs. Rabeya. He discussed with me my responsibilities in this department. On this day, I
was also introduced to all the officers working in this branch.
I also worked in General Banking department with Mrs. Lubana Tabassum who is also a very good
person to work with. It was beautiful three months and I enjoyed every moments of my working
hours. During my stay in the office as an intern I never got bored. The friendly and modernized
environment of this branch made my stay enjoyable.

2.16 My Specific Job Responsibilities

2.16.1 Investment Department
As an internee in this department, my main job was to assist the officers- Mr. Mehedi Hasan and
Mr. Rassel Hussain who deals with the investment procedures. My responsibilities was:
To fill up the forms of the people who are keen to take loan;
To maintain the clients form;
To check the other form like their bank opening form;
To verify the form if there is any kind of error and if found report to the concerned officer;
To update the form like if the transaction between the bank and the client is over and vice-
versa;
2.16.2 General Banking
Apart from investment department I also assist Mrs. Rabeya Khatun and Mrs. Nadira Yeasmin, to
fill account opening form. In this department my job responsibilities were:

To maintain the account opening register;

To fill up the account opening form correctly;
To attested the Photocopies;
To send the check requisition form every day;
To issue the pay orders;
To balance the pay order books;
To judge the checks at a glance;
To receive the checks and classify it either for same day clearing or normal clearing.
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Part-3
An Overview of Money Laundering

3.1 A Brief History of Money Laundering

No one can be really sure when money laundering first began. However, it can be said that it has
been going on for several thousand years. In China, merchants some 2000 years before Christ
would hide their wealth from rulers who would simply take it off them and banish them. In addition
to hiding it, they would move it and invest it in businesses in remote provinces or even outside
China. In this way, the offshore industry was born, and so was tax evasion. And so were the
principles of money laundering - to hide, move and invest wealth to which someone else has a
claim.
Over a period of thousands of years, people have used money laundering techniques to move
money resulting from crime - but also often to hide and move it out of reach of. Many minorities
in countries down the ages and around the world have taken steps to preserve wealth from rulers,
both unelected and elected, who have targeted them simply because of their beliefs or color. It is
happening even today.
In the USA, prohibition and a restriction on gambling made large amounts of cash for those
prepared to break the embargoes the most important fact about that time was that it caused a
dramatic increase in financial crime. Sanctions busting was a financial crime because for every
offence committed, the criminal immediately received cash in his hand. Thus it created an
immediate problem over what to do with that money. Opening a cash business was the obvious
thing to do. Laundries were a suitable business, and so goes rumor - the term "money laundering"
was invented. This may or may not be true.

3.2 History of Money Laundering Laws

The United States of America was the first to enact laws against money laundering. The Money
Laundering Control Act of 1986 was first enacted by the congress and made it as a federal crime.
This law prohibits individuals from engaging in a financial transaction with proceeds that were
generated from certain specific crimes, known as specified unlawful activities (SUAs).
Additionally, the law requires that an individual specifically intend in making the transaction to
conceal the source, ownership or control of the funds. There is no minimum threshold of money,
nor is there the requirement that the transaction succeed in actually disguising the money.
Moreover, a financial transaction has been broadly defined, and need not involve a financial
institution, or even a business. Merely passing money from one person to another, so long as it is
done with the intent to disguise the source, ownership, location or control of the money, has been
deemed a financial transaction under the law.
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Section 1957 prohibits spending in excess of $10,000 derived from an SUA, regardless of whether
the individual wishes to disguise it. This carries a lesser penalty than money laundering, and unlike
the money laundering statute, requires that the money pass through a financial institution.

3.3 Definition of Money Laundering

Money Laundering is the process of transforming or converting cash, or other property that is
derived from illegal activity, so as to give it the appearance of having been obtained from a
legitimate source.
Section 2 (v) of Money Laundering Prevention Act (MLPA), 2012 of Bangladesh defines money
laundering as follows:

Money Laundering means

Knowingly moving, converting, or transferring proceeds of crime or property involved in an

offence for the following purposes:-

(1) Concealing or disguising the illicit nature, source, location, ownership or control of the
proceeds of crime; or

(2) Assisting any person involved in the commission of the predicate offence to evade the
legal consequences of such offence;

ii. Smuggling money or property earned through legal or illegal means to a foreign country;

iii. Knowingly transferring or remitting the proceeds of crime to a foreign country or remitting
or bringing them into Bangladesh from a foreign country with the intention of hiding or
disguising its illegal source; or

iv. Concluding or attempting to conclude financial transactions in such a manner so as to

reporting requirement under this Act may be avoided;

v. Converting or moving or transferring property with the intention to instigate or assist for
committing a predicate offence;

vi. Acquiring, possessing or using any property, knowing that such property is the proceeds of
a predicate offence;

vii. Performing such activities so as to the illegal source of the proceeds of crime may be
concealed or disguised;

viii. Participating in, associating with, conspiring, attempting, abetting, instigating or

counseling to commit any offences mentioned above.
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3.4 Why Money Laundering Is Done-

Money laundering is done basically for three reasons:

Since money is the lifeblood of an organization, it covers operating expenses, replenishes

inventories, purchase the services of corrupt officials to escape detection. Moreover, the criminals
want to lead an extravagant lifestyle. To spend money in these ways, the criminals must make the
illegal money legitimate.

The trail of illegal money can be used by the investigators to incriminate the criminals. In order to
evade this situation they hide the source of their wealth or alternatively disguise ownership or
control to ensure that illicit proceeds are not used to prosecute them.

The proceeds gained by doing illegal business can be targeted of investigation and led to seizure.
In order to avoid the ill-gotten gains being investigated and seizure, criminals must hide their
existence and make the proceeds legitimate.

3.5 Stages of Money Laundering

There is no single method of laundering money. Methods can be:

Purchase and resale of a luxury item to passing money through a complex international
web of legitimate businesses and shell companies.

There are a number of crimes where the initial proceeds usually take the form of cash that
needs to enter the financial system by some means. Bribery, extortion, robbery and street
level purchases of drugs are almost always made with cash. The methods of achieving this
are limited only by the ingenuity of the launderer and these methods have become
increasingly sophisticated.

Despite the variety of methods employed, money laundering is not a single act but a process
Of accomplishing in three basic stages which are as follows:

3.5.1 Placemen Stage

This is the initial stage of money laundering where the proceeds from the illegal activities are
introduced in the financial sectors. The funds that are intended to enter the financial sectors mainly
done through the different bank accounts. This stage mainly involves:

To avoid suspicion, the deposited money is mixed with the clean money. Then they are
converted the cash into purchasing money market instruments, securities or fixed deposits
or readily recoverable debt.
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The large deposited amount is broken up into many smaller amounts so that the tellers do
not raise any suspicion. This process is called Surfing.

3.5.2 Layering Stage

This is the stage of making it hard for the law-enforcing agencies to trace and uncover the
laundering activities. It is stage of separating the proceeds of criminal activity from their source
through the use of layers of financial transactions to disguise the origin of the funds, disrupt any
audit trail, and provide anonymity.
In this stage launderers want to move funds around, changing both the form of the funds and their
location in order to make it harder for law enforcement authorities to identify the dirty money.
This stage usually involves:

Using the fund for purchasing or selling investment instruments.

Transferring the fund through a series of accounts at various banks across the globe or
across jurisdiction.

Using cash deposits as collateral security in support of legitimate transactions.

Resale of purchased goods/assets and the proceeds moved elsewhere.

3.6 Effects of Money Laundering

Money Laundering has bad effects on the total economy of a country. It not only hampers the
economic stability but also distorts the way of life. The effects of money laundering are given
below:

3.6.1 Social Costs

There are significant social costs and risks associated with money laundering. Money laundering
is a process vital to making crime worthwhile. It allows drug traffickers, smugglers, and other
criminals to expand their operations. This drives up the cost of government due to the need for
increased law enforcement and health care expenditures to combat the serious consequences that
result.

Among its other negative socioeconomic effects, money laundering transfers economic power to
criminals. In extreme cases, it can virtually take-over the legitimate government. Overall, money
laundering presents the world community with a complex and dynamic challenge.
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3.6.2 Economic Effects of Money Laundering

As the threat of money laundering is increasing day by day, the countries especially the developing
countries are becoming more and more cautious about it. But the launderers are also becoming
more innovative to counter the anti-money laundering activities of the countries. As a result the
developing countries like Bangladesh are exposed to greater risk and become target of the
launderers. But due to weak regulatory authorities the launderers are able to penetrate not only the
economy but also the financial sectors.

3.6.2.1 Undermining the Legitimate Private Sector

The private sector of a country is one of the most affected sector by money laundering activities.
Shell companies or front companies are the main culprit of money laundering. They mix the
proceeds of illicit activities with legal funds so that they can hide the illegal proceeds. The legal
businesses draw their capital from the financial market. But the shell companies do not need to
draw such market rather they have access to illegal funds that they can subsidize for their products
and services. But the legal companies cannot subsidize like the shell companies. It makes hard for
the legal companies to do business against these shell companies. As a result it results negative
macroeconomic effects.

3.6.2.2 Undermining the Integrity of Financial Markets

Money Laundering can result the financial markets in liquidity problem. After having a large sum
of money suddenly the money vanishes without given prior notice through wire transfer. This
undermines the integrity of financial markets.

3.6.2.3 Loss of Control of Economic Policy

For the purpose of budgeting of some countries which are emerging can harm the budget for the
government by lowering it, which results in loss of control of economic policy of the government.
Money laundering also affect the currencies and interest rates of the country because the launderers
reinvest the money where they are highly unlikely to get caught.
Money laundering can also misallocate the resources which can lead to changes in demand of
money and changes of capital flow. In short, it leads to loss of policy control and make it hard to
accomplish sound economic policy.

3.6.2.4 Economic Distortion and Instability

Money launderers main objective is to protect their illegal profits not to earn profits. Thats why
they invest their proceeds in such businesses that are not economically favorable. Moreover,
money laundering transfer the fund from sound businesses to low quality businesses. As a result,
28 | P a g e

economic growth of the country suffers. When the money launderers finds out that the businesses
do not suit them, they simply abandon the businesses and t seriously damage the economy.

3.6.2.5 Loss of Revenue

Money laundering decreases government tax revenue and therefore indirectly harms honest
taxpayers. It also makes government tax collection more difficult. This loss of revenue generally
means higher tax rates.

3.6.2.6 Hampers the Privatization Efforts

Money laundering intimidates many countries efforts to reform their economies through
privatization. While privatization initiatives are often economically beneficial, they can also serve
as a vehicle to launder funds.

3.6.2.7 Reputation Risk

There will be greater reputation risk if a nation or an institution is convicted of associating with
money laundering activities. The negative reputation will bar the organization or the country
associated with such activities the opportunity to enter globally and gain sustainable growth. This
can result in diminished development and economic growth. Once a countrys reputation is
damaged, reviving is very difficult and requires significant government resources to address that
could be prevented with proper anti-money-laundering controls.
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Part-4
Bangladesh and Money Laundering

4.1 Current Situation of Bangladesh Regarding Money Laundering

Bangladesh has retained its position as a country free risk of money laundering and terror
financing, assuaging the nerves of the government that feared the country might be demoted.

4.1.1 Position of Bangladesh in Basel Anti-Money Laundering Index

Based in Switzerland, the Basel Institute of Governance has published the AML index since 2012,
measuring the risks of money laundering and terrorist financing of countries based on publicly
available sources.
Bangladesh holds a better position among South Asian countries regarding risk of money
laundering and terrorist financing. Bangladesh has also improved its ranking two steps globally.
Among six South Asian countries, Bangladesh has been placed 5th after India, according to the
Basel Anti-Money Laundering (AML) Index 2016 developed by the Basel Institute on
Governance.
In the fifth edition of the AML index 2016 that covered 149 countries, Bangladesh has ranked 54th
with its score at 6.40 followed by India with 5.69 (78th position).
In the Basel AML Index 2015, Bangladesh ranked 52nd with its score at 6.43 among 152 countries.
Besides, Finland is the lowest risked country, followed by Lithuania and Estonia.

Meanwhile, outflow of dirty money from Bangladesh marked a phenomenal rise in recent years
despite various steps to help curb such acts by the government and the country's central bank.
Between 2004 and 2013, illicit funds amounting to $55.87 billion fled out from the country to
different destinations, mostly tax havens, according to the latest available reports of the Global
Financial Integrity (GFI). Funds held directly by Bangladeshi individuals and entities with banks
in Switzerland stood at around US$ 545 in 2014.
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4.1.2 Position of Bangladesh in Basel AML Index from 2012-2015

Year Rank Points

2012 47th 6.28

2013 54th 6.34

2014 57th 6.38

2015 52nd 6.43

60

50

40

30

20

10

0
2012 2013 2014 2015

Rank

2015

2014

2013

2012

6.22 6.24 6.26 6.28 6.3 6.32 6.34 6.36 6.38 6.4

Points
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4.2 Anti-Money Laundering Laws in Bangladesh

The National Parliament of Bangladesh passed the Act on Money Laundering titled Money
Laundering Prevention Act 2002 on 7th April, 2002. Before that there was no such act in
Bangladesh to check money laundering issues.
Then the Money Laundering Prevention Act 2002 repealed and the Money Laundering
Prevention Act 2009 enacted on 25th February 2009.
In 2012 the Money Laundering Prevention Act 2009 repealed and the Money Laundering
Prevention Act 2012 enacted on 20th February, 2012. The President gave his consent and the law
came into effect on March 03, 2012.
By the enactment of this law Bangladesh Bank was given all powers and responsibility to control
and prevent Money Laundering through all scheduled banks in the country. The first step taken by
the government in preventing Money Laundering was by passing the law in 2002. Before this law
there was no legal procedure or policies in determining Money Laundering activities in
Bangladesh.
The summary of Money Laundering Act 2012 is given below:

4.2.1 Punishment for Money Laundering

The Money Laundering Act, 2012 deemed money laundering as an offence and cited several
punishments. They are as follows:

(i) For the purposes of this Act, money laundering shall be deemed to be an offence.

(ii) Any person who commits or abets or conspires to commit the offence of money
laundering, shall be punished with imprisonment for a term of at least 4(four) years but
not exceeding 12(twelve) years and, in addition to that, a fine equivalent to the twice
of the value of the property involved in the offence or taka 10(ten) lacks, whichever is
greater.

(iii) In addition to any fine or punishment, the court may pass an order to forfeit the property
of the convicted person in favor of the State which directly or indirectly involved in or
related with money laundering or any predicate offence.

(iv) Any entity which commits an offence under this section shall be punished with a fine
of not less than twice of the value of the property or taka 20(twenty) lacks, whichever
is greater and in addition to this the registration of the said entity shall be liable to be
cancelled.

(v) It shall not be a prerequisite to charge or punish for money laundering to be convicted
or sentenced for any predicate offence.
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(vi) Punishment for Violation of an Order for Freezing or Attachment

Any person who violates a freezing or attachment order issued under this Act
Shall be punished with imprisonment for a term not exceeding (three) years
Or with a fine equivalent to the value of the property subject to freeze or attachment,
Or with both.

(vii) Punishment for Divulging Information

No person shall, with an ill motive, divulge any information relating to the
Investigation or any other related information to any person, organization or
News media.

4.3 Bangladesh Bank Regarding Money Laundering

Bangladesh Bank is the sole organization to conduct operations against money laundering. The
Bangladesh Money Laundering Prevention Act 2012 has given the Bangladesh Bank the supreme
power to direct all the scheduled banks in Bangladesh to follow the rules and regulations of the
law.

4.3.1 The Powers and Responsibilities of Bangladesh Bank

The Bangladesh Money Laundering Act provides Bangladesh Bank board responsibility for
prevention of Money Laundering and wide-range of powers to take adequate and proper measures
to restrain Money Laundering, simplify its detection, monitor its incidence, make and enforce rules
and to act as the prosecuting agency for breaches of the Act. In summary, the responsibilities and
powers of Bangladesh Bank are:

To examine all the Money Laundering offenses.

To supervise and monitor the activities of banks, financial institutions, non-financial

institutions and other institutions engaged in financial activities.

To summon reports relating to Money Laundering form banks, financial institutions, non-
financial institutions and other institutions engaged in financial activities, analyze such
reports and take appropriate actions.

To provide training to employees of banks, financial institutions and other institutions

engaged in financial activities on prevention of Money Laundering.

To authorize any person to enter into any premises for conducting investigations into
Money Laundering offenses.
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Persons authorized by Bangladesh Bank to investigate offenses can exercise the same
powers as the Officer in Charge of Police Station can exercise under the Code of Criminal
Procedure.

To do all other acts in attaining the objectives of the Act.

The Courts will not accept any offense under the Act for trial unless a complaint is lodged
by Bangladesh Bank or any person authorized by Bangladesh Bank in this behalf.

4.3.2 Initiatives Taken by Bangladesh Bank to Check Money Laundering

After the initiation of Money Laundering Act in Bangladesh by Bangladesh Government,

Bangladesh Bank formed two task forces to monitor money laundering. They are:

Central Task Force; and

Regional Task Force

Central Task Force

In every month, this task force conduct a meeting to discuss issues that are very important; make
decision about issues that are critical and also make guidelines to check money laundering.

Regional Task Force

The Central Body involves:

members of Ministry of Finance;
Home Law, Foreign Affairs, Commerce, and NBR (Income Tax);
Bureau of Anti-corruption, Special Branch of Police, Customs; and
Securities and Exchange Commission, 15 Bank representatives.

The Regional Task Force Body involves five members. Their tasks are to investigate the Money
Laundering cases reported to Bangladesh Bank and other Anti-Money Laundering issues.

4.3.3 Bangladesh Banks Anti-Money-Laundering Department

To take severe actions against money laundering activities in Bangladesh, Bangladesh Bank
established an Anti-Money-Laundering department in Bangladesh Banks Headquarter. It is called
Bangladesh Financial Intelligence Unit (BFIU).
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Bangladesh Financial Intelligence Unit (BFIU)

BFIU was established in June 2002, in Bangladesh Bank named as 'Anti Money Laundering
Department'. To enforce and ensure the operational independence of FIU, Anti Money Laundering
Department has been transformed as the Bangladesh Financial Intelligence Unit (BFIU) in 25
January, 2012 under the provision of Money Laundering Prevention Act, 2012 and has been
bestowed with operational independence. The main objective of the BFIU is to establish an
effective system for prevention of money laundering, combating financing of terrorism.

Functions & Responsibilities of BFIU

Bangladesh Financial Intelligence Unit (BFIU) is the central agency of Bangladesh responsible
for:

Receiving Suspicious Transaction/Activity Reports (STRs/SARs) from the reporting

organizations and Cash Transaction Reports (CTRs) from banks, complaints from different
sources, analyze the same and disseminate ML/TF related cases to respective investigating
authority for further action.

Maintaining a database of all STRs/SARs and CTRs and related information.

Issuing necessary directives, circulars, circular letters and Guidance Notes from time to
time for reporting organizations to combat money laundering and terrorist financing
activities.

Enforcing compliance of the respective Acts and rules/regulations/directives issued by this

unit through on-site and off-site supervision of the reporting organizations.

Monitoring the implementation of United Nations Security Council Resolutions (UNSCR)

including UNSCR 1267 and its successors, UNSCR 1373 and UN Security Council
Resolutions related to proliferation of weapons of mass destruction and its financing.

Imparting training for the officials of the reporting organizations, investigating authorities,
prosecutors, regulatory agencies and other related organizations or institutions.

Cooperating and work together with various international organizations including FATF,
APG, World Bank, Egmont group, United Nation Office on Drug and Crime (UNODC)
etc. regarding AML/CFT issues.

Performing the secretarial job for National Coordination Committee (NCC) on AML/CFT,
Working Committee (WC) and take necessary steps to implement the decisions taken in
the NCC, WC.

Working as the secretariat of Inter Agency task Force for Stolen Asset Recovery (SAR).
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Performing activities related with the Central Task Force on preventing ML and illegal
Hundi activities and monitoring the implementation of the decisions of the meeting.

Arranging regular meeting with Anti-Corruption Commission (ACC), police and other law
enforcement authorities and monitor the implementation of the decisions.

Creating public awareness.

Carrying out other related functions to prevent money laundering and combat financing of
terrorism and proliferation of weapons of mass destruction.

4.4 Roles of Banking Sector and Financial Institutions for Combating Money Laundering

Bangladesh Bank provides all the necessary directions to the financial institutions for combating
Money laundering. So all the financial institutions must follow the rules and regulations given by
Bangladesh Bank. According to Bangladesh Bank circular for anti-money laundering activities,
all institute must have:

4.4.1 Senior Managements Commitment

To resist the criminals from using the facilities of money laundering, the most significant
component is the commitment of senior management which includes the chief executive
officer and the board of directors.

The senior management of the institution must send the signal to the officers and their sub-
ordinates that they not only care about the profit, marketing and customer service but also
they care about the reputation of the institute. To be successful about the anti-money-
laundering initiatives, they must communicate clearly with their employees on an annual
basis giving a statement from the chief executive officer. Such a statement should show
the strong commitment of the institution and its senior management to comply with all laws
and regulations designed to combat money laundering.

The statement of compliance policy of the institute must include:

A statement that all employees are required to comply with applicable laws and
regulations and corporate ethical standards.

A statement that all activities carried on by the financial institution must comply
with applicable governing laws and regulations.

A statement complying with rules and regulations is the responsibility of each

individual in the financial institution in the normal course of their assignments. It
is the responsibility of the individual to become familiar with the rules and
regulations that relate to his or her assignment. Ignorance of the rules and
regulations is no excuse for noncompliance.
36 | P a g e

The statement should direct staff to a compliance officer or other knowledgeable

individuals when there is a question regarding compliance matters.

A statement that employees will be held accountable for carrying out their
compliance responsibilities.

4.4.2 Written Anti-Money Laundering Compliance Policy

The Board of Directors of each bank and other financial institution must develop and
maintain an anti-money-laundering compliance policy that ensures and monitors
compliance with the Act. Such a compliance policy must be written, approved by the board
of directors, and noted as such in the board meeting minutes.

The written anti-money-laundering compliance policy should establish clear

responsibilities and accountabilities within their organizations to ensure that policies,
procedures, and controls are introduced and maintained.

Procedures should address its Know Your Customer (KYC) policy and identification
procedures before opening new accounts, monitoring existing accounts for unusual or
suspicious activities.

The anti- money laundering policies should be reviewed regularly and updated as necessary
at least annually.

4.4.3 Know Your Customer (KYC)

The KYC program or known as Know Your Customer is a major requirement for complying
with regulations regarding Money Laundering which simply involves the process to know their
clients.
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Part-5
Combating Money Laundering by EXIM Bank

5.1 Anti- Money Laundering and Prevention Policy of EXIM Bank

In order to follow the guidelines and anti-money laundering policy given by Bangladesh Bank and
to comply with the money laundering prevention act 2012, EXIM Bank of Bangladesh has
identified money laundering as one of the core risk of the bank. This is why EXIM Bank is doing
all the efforts to combat money laundering. As per the guidelines provided by Bangladesh Bank,
EXIM Bank has established an independent Anti-Money Laundering Division which is led by a
Deputy Managing Director as Chief Anti-Money Laundering Compliance Officer with sufficient
authority to implement the Anti-Money Laundering policies. The Deputy Managing Director
report directly to the senior Management & the Board of Directors. In addition to this, he is also
reporting to managing director for his responsibility, co-ordinates. He also monitors day to day
compliance with money laundering laws, rules & regulation. EXIM Bank has also a written Anti-
Money Laundering policy suggested by Bangladesh Bank to control the money laundering and
resist terrorist financing.

5.1.1 Written Anti-Money Laundering Compliance Policy of EXIM Bank

The Board of Directors of each bank and other financial institution must develop and
maintain an anti-money-laundering compliance policy that ensures and monitors
compliance with the Act. Such a compliance policy must be written, approved by the
board of directors, and noted as such in the board meeting minutes.

The written anti-money-laundering compliance policy should establish clear

responsibilities and accountabilities within their organizations to ensure that policies,
procedures, and controls are introduced and maintained.

Procedures should address its Know Your Customer (KYC) policy and identification
procedures before opening new accounts, monitoring existing accounts for unusual or
suspicious activities.

The anti- money laundering policies should be reviewed regularly and updated as
necessary at least annually.
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5.1.2 Organizational Structure for Implementation of AML Program of EXIM Bank

MD & CEO CCU

CAMLCO

DCAMLC Relationshi
O p Manager

SAVP AVP
Operation
Manager
SPO PO EO Officer
(IT) Deposit In
Manager
charge

Investment BAMLCO
Remittance
In charge In charge

Foreign Exchange A/C Opening

In charge Officer

Officer (IT)

5.2 General Information of EXIM Banks Money Laundering:

When the branch finds out any suspicious account transaction the reporting procedures of AML of
EXIM Bank are as the given flowchart:

Branch Report

Anti-Money Laundering
Division
Central Compliance Unit
(CCU)
Managing Director and
CEO

The Board Risk Management

Committee (Monthly &
Quarterly basis)
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In that flowchart the duty officer of the branch (BAMLCO) reports to The Head of Anti-Money
Laundering Division (Deputy CAMLCO). Then he reports it to the CCU. CCU then reports all
activities to Deputy Managing Director & CEO. The key issues/ summary of AML reports are
also placed to the Board Risk Management Committee quarterly or as and when its meeting takes
place.

5.3 Anti-money laundering Divisions of Exim bank & Their Authorities & Responsibilities:

5.3.1. Central Compliance Unit (CCU) of EXIM Bank

In order to keep the banking sector free from money laundering and also to be effective to the
compliance of all existing acts, rules and guidelines issued by BFIU time to time, EXIM Bank has
established Central Compliance Unit which is monitored by the Managing Director or the Chief
Executive Officer of the bank.

Authorities & Responsibilities of CCU:

Authorities:

The senior management will give the following authorities to CCU:

Appointment of BAMLCO and assign their specific job responsibilities;

Requisition of human resources and logistic supports for CCU;
Make suggestion or administrative sanction for non-compliance by the employees.

Responsibilities:

The main responsibilities of CCU of EXIM Bank are:

Undertake organizational strategy and program regarding internal control policies and
procedures to prevent money laundering and ensure the coordination, implementation and
review of the same in the Bank.

Evaluate overall monitoring process and observe changes of rules/regulations and

directives of BFIU and international standards that require revision/up gradation and
adaptation.

Ensure maintenance of regular liaison with BFIU, Bangladesh Bank, External & Internal
Auditors and other Law enforcing agencies through CAMLCO/DCAMLCO.

Ensure that the Banks AML & CFT policies and Risk Assessment & Risk Management
Guidelines under risk based approach are completed and updated.
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Monitor performance of the BAMLCO in the branch level to ensure AML/CFT

compliance.

Monitor whether instruction circulars issued by it to the branches regarding the procedure
of transaction monitoring and internal control mechanism to prevent Money Laundering
and Terrorist financing are being followed.

Monitor/evaluate Independent Testing Procedure to be conducted at least half yearly by

the banks ICCD.

Monitor/evaluate effectiveness of Self-Assessment procedure on half yearly basis.

Will submit a report on the strategy undertaken, implementation status of the same to the
Managing Director & CEO on half yearly basis for onward submission with specific
recommendation to the Board of Directors.

Undertake required measures to submit any information, report and/or documents to BFIU,
Bangladesh Bank and/or any authority in respect of ML, TF & PF.

Oversee any other issue that may arise from time to time regarding ML, TF & PF.

5.3.2 Authorities & Responsibilities of BAMLCO of EXIM Bank

Authorities:

BAMLCO will arrange AML & CFT meeting with other concerned important officials of the
branch quarterly and will also take effective measures on the following matters after reviewing the
compliance of the existing acts, rules and regulations:

Know Your Customer,

Transaction monitoring,
Identifying and reporting of Suspicious Transactions,
Record keeping,
Training.

Responsibilities:

For preventing ML in the branch, the BAMLCO will perform the following responsibilities:

Ensuring that the KYC of all customers have done properly and for the new customer KYC
is being done properly;

Ensuring that the UN Security Council and domestic sanction list checked properly before
opening of account and while making any international transaction;
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Keeping information of dormant accounts and take proper measures so that any
withdrawal from these accounts shall not be allowed without compliance of BFIU's
instruction;

Reviewing cash transaction to find out any structuring;

Reviewing of CTR to find out STR/SAR;

Ensuring the checking of UN sanction list before making any foreign transaction;

Ensuring that all the employees of the branch are well aware and capable to identify any
unusual transaction or any attempt of unusual transaction;

Compiling self-assessment of the branch regularly and arrange quarterly meeting regularly;

Accumulating the training records of branch officials and take initiatives including
reporting to CCU, HR and training academy;

Ensuring all the required information and document are submitted properly to CCU and
any freeze order or stop payment order are implemented properly;

Ensuring that the branch is maintaining AML & CFT files properly and record keeping is
done as per the requirements of chapter 13 of this guidelines;

Ensuring that corrective actions have taken by the branch to address the deficiency
identified by the BFIU or BB.

5.3.3 Authorities & Responsibilities of CAMLCO of EXIM Bank

Authorities:

CAMLCO must have sufficient authority to implement and enforce corporate wide AML policy,
procedure & measure and will report directly to the MD & CEO and the Board of Directors. The
authorities must include at least the followings:

Exercise the authorities of the CCU as Head of the unit;

Able to act on his own authority;

Take no permission or consultation from/with the MD & CEO before submission of

STR/SAR and any document or information to BFIU;

Maintain the confidentiality of STR/SAR and any document or information required by

laws and instructions by BFIU;
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Have access to any information of the bank;

Ensure the competency.

Responsibilities:

CAMLCO is responsible for overall oversight of the banks compliance with the regulatory
requirements on systems and controls against money laundering. Few of the responsibilities are:

Take all the responsibilities of CCU as Head of the unit;

Ensure overall AML&CFT compliance of the bank;

Oversee the submission of STR/SAR or any document or information to BFIU in time;

Maintain the day-to-day operation of the banks AML&CFT compliance;

Held liable to MD & CEO or Board of Directors for proper functioning of CCU;

Review and update ML & TF risk assessment & management of the bank;

Ensure that corrective actions have taken by the bank to address the deficiency identified
by the BFIU or BB;

Oversee all other issues that may arise from time to time regarding ML, TF & PF.

5.3.4 Authorities & Responsibilities of D-CAMLCO of EXIM Bank

The authorities & responsibilities of DCAMLCO are the same as the authorities & responsibilities
of CAMLCO but he must discharge his authorities and responsibilities under command, control &
supervision of CAMLCO. Moreover, he will act as Current Charge in absence of CAMLCO.
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5.4 Procedures Followed by EXIM Bank Bangladesh to Prevent Money Laundering

Customer Acceptance Policy

Know Your Customer (KYC) Procedure

Monitoring Transactions

Review of Monthly Exceptions Report

Cash Transaction Report (CTR)

Suspicious Transaction Reporting (STR)

Self-Assessment

Independent Testing Procedure by ICCD

Keeping of Records

Training & Awareness

Training and Awareness

5.4.1 Customer Acceptance Policy of EXIM Bank

EXIM Bank Ltd. First accept their customer by maintaining several policy. The general
requirements of customer acceptance policy are:

No account will be opened or operated by violating AML laws and rules;

No account or business relationship will be opened or operated that does not permit by
shariah compliance;
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No account is opened in anonymous or fictitious or account only with numbers;

No online account can be opened without physical presence of the customer;

Customers must to be categorized into low & high risks ones for identified risks in terms
of the nature of business activity, location of the customer and his clients, mode of
payments, volume of turnover, social and financial status, etc.;

Government owned companies, regulators and statutory bodies etc. In such cases, only the
basic requirements of CDD are to be met.

There are also acceptance policy for many other categorized customer like individual customer;
pordanshin customer; Influential Persons; Chief Executive of any International Organization or
any top level official etc. The acceptance policy varies from the nature of the customer

5.4.2 Know Your Customer (KYC) Program of EXIM Bank

As per the direction of Bangladesh Bank, EXIM Bank Bangladesh has adopted Customer
Acceptance Policy so that they can prevent the Bank from being used by money launderers, ensure
the Sharia compliance and identify the customers who are likely to pose a higher than average risk.
Know Your Customer (KYC) is the approach that EXIM Bank follow to depict the customers who
are highly likely to launder money or conduct other illicit activities. It is a very unique program
conducted by EXIM Bank which helps the bank to acquaint the customer and ensures that the
customer is not involved any illicit business. It is the fundamental part of controlling money
laundering activities for the Banks internal control. This procedure reduces the risk of accounts
being for money laundering and also helps to identify any suspicious transactions. It also helps to
identify the bank against any kind of fraudulent activities and other reputation risks.

The KYC form contains customer identification but for the necessity and the risk associated with
the account it can also more in detailed information to submit. If the customer is asked by the
officials about the detailed information relating to the bank account, as per the rules and laws, the
customer has to show or give the necessary information asked by the officials like the information
of wealth.

EXIM Banks KYC Policy and Procedures

Since KYC means to know the customer physically and financially, it is essential to
accumulate complete and accurate information about the prospective customer. Here,
Complete means the combination of all information relating to the customer to verify the
identity and accurate means those information that have been verified.

Before establishing any kind of financial relationship with the customer, all branches and
head office must gather complete and accurate KYC information.
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Considering the risk associated with the customer, all branches or the concerned Head
Office Division can collect additional information about the KYC.

All branches and Head Office Division are required to maintain the requirements of
customer acceptance policy.

5.4.3 Monitoring Transactions Process

The Transaction monitoring process of EXIIM Bank is to monitor the transaction of the customers
and find out any kind of discrepancy related to the bank account. The process are:

The account officer or any other designated officer(s) reviews the transaction of the accounts for
the previous months to identify any discrepancies with the customers Transaction profile. For
future reference such review is documented in daily account review register.

No. of monthly deposits: declared in TP vs. actual transactions

Maximum amount per deposits: declared in TP vs. actual transactions

Total monthly deposits: declared in TP vs. actual transaction

No. of monthly withdrawals: declared in TP vs. actual transactions

Maximum amount per withdrawals: declared in TP vs. actual transactions

Total monthly withdrawals: declared in TP vs. actual transactions

Geographical origin/destination

5.4.4 Review of Monthly Exceptions Report

Branch AML Compliance Committee reviews the monthly Exceptions Report in their monthly
meetings. If BAMLCO thinks it is necessary than they discuss the matter with customers. If they
are not satisfied with the customer clarification then the issue is reported as a Suspicious
Transaction Report to the branch AML Compliance Officer (BAMLCO).

5.4.5 Cash Transaction Report (CTR)

Cash Transaction Report (CTR) is mandatory for all the banks of Bangladesh to report to BB about
the cash transaction of the banks customers. To follow the directions of Bangladesh Bank, EXIM
Bank, Garib-e-Newaz branch sends CTR to the CCU of EXIM Bank in every month. By using
FIU reporting system software provided by BB, every cash transaction is sent to the CCU. And
then CCU sends the report to the Anti-Money Laundering Department of BB.
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5.4.6 Suspicious Transaction Report (STR) of EXIM Bank to BB

Suspicious Transaction Report (STR) is the report of the customer of the bank that has to be sent
to the Bangladesh Bank. The transaction is held as a suspicious in nature if the transaction amounts
is started from 700001 and is reported to the Bangladesh Bank immediately through CCU of EXIM
Bank. After analyzing the transaction weather it is legal or illegal by BB and if found illegal, then
they take legal actions against the transaction.
At the time of determining whether a customer's transaction may be suspicious, a branch considers
the following questions:

Is the size of the transaction consistent with the normal activities of the customer?

Is the transaction rational in the context of the customer's business or personal activities?

Has the pattern of transactions conducted by the customer changed?

Where the transaction is international in nature, does the customer have any obvious reason
for conducting business with the other country involved?

Recognition of Suspicious Transaction Report (STR) of EXIM Bank

Recognition is started by identifying unusual transaction and activity and such unusual
transaction may be unusual in terms of complexity of transaction, nature of transaction, volume
of transaction, time of transaction etc.

Generally the detection of something unusual may be sourced as follows: Comparing the KYC
profile and transaction profile based on given transaction & actual transaction, if any
inconsistency is found and there is no reasonable explanation;

By monitoring customer transactions on monthly basis.

By using red flag indicator.

Procedures of Suspicious Transaction Report (STR) of EXIM Bank:

Identification of Suspicious Transaction

Exim Bank has been using software based Transaction Monitoring system where some specialized
feature on that software which can help branch officials to detect unusual transactions or activities.
Branch have an adequate software based information system which alert appropriate branch
officials and management to find out unusual/suspicious transaction/activity. Training of staff in
the identification of unusual/suspicious activity is an ongoing activity of the bank.
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Evaluation Suspicious Transaction

This evaluation part is conducted at branch level and Central Compliance Unit (CCU). After
identification of STR/SAR at branch level, BAMLCO evaluate the transaction/activity to identify
suspicion by interviewing the customer or through any other means. If BAMLCO is not satisfied,
he forward the report to CCU. After receiving report from branch, CCU check the sufficiency of
the required documents. Every stages of evaluation, Branch keep records with proper manner.

Disclosure Suspicious Transaction

In this final stage branch submit STR/SAR to BFIU through CCU if the transaction still looks
suspicious.

5.4.7 Self-Assessment Reports & Independent Testing Procedures

For preventing money laundering and reviewing the Self-Assessment report from Branch and
proper judgment of Independent Testing Procedures, adequate manpower are allocated to Internal
Control & Compliance Division (ICCD) which have sufficient knowledge regarding AML related
existing Laws, Rules, Instructions of BFIU and self-policy of the bank.
The self-assessment reporting system that EXIM Bank follows which is provided by BFIU are
given below:
Exim bank conducts the Self-Assessment to evaluate on a half yearly basis;

Before finalizing the evaluation report, all the branches of EXIM Bank hold a meeting presided
over by the Branch Relationship Manager with all concerned officials of the branch;

All Questionnaires answer of Self-Assessment relating to Branches Present Status and

Recommendations are accurate and relevant;

In that meeting, there is always a discussion on the branch evaluation report; if the identified
problems according that report are possible to solve at the branch level, then necessary actions
should be taken without any delay to finalize it;

In the subsequent quarterly AML/CFT Meetings at the branch, the progress of the related
matters are discussed;

After end of every half year, the branch evaluation report along with the measures taken by the
branch in this regard and adopted recommendations regarding the issue are submitted to the
Internal Control & Compliance Division and the Central Compliance Unit of Head Office
within the 15th of the next month.
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5.4.8 Training and awareness

In accordance with the law and ordinance it is the duty of Bangladesh Bank to provide training
and arrange seminars for the officers and the staffs of banks.
Since banks themselves have also responsibilities under the Ordinance in relation to identification,
reporting and retention of records, EXIM Bank ensures that its staffs are adequately trained to
discharge their responsibilities. The appropriate measures to make its employees aware of:

Policies and procedures to prevent money laundering and for identification, record keeping
and internal reporting,

Legal requirements, and

Provide employees with training in recognition and handling of suspicious transactions.

Other activities followed by EXIM Bank are:

5.4.9 Risk Assessment of the Customers of EXIM Bank

EXIM Bank has also adopted Risk Based Approach where before opening an account, risk is
estimated related to the customers occupation. Account cannot be opened without assessing the
risk. The Risk is categorized into low risk, moderate risk and high risk. The account officer open
the account and put the information on the account form. The risk is evaluated by analyzing:
Customer's Profession/Nature of the Business.
Net Worth of Customer.
Nature of Account.
Monthly expected amount of Transaction of the Account Holder.
Monthly expected Number of Transactions.
Monthly expected amount of Cash Transaction
Monthly expected Number of Cash Transaction.
The risk scoring of less than 14 indicates "Low Risk" and equal or more than 14 indicates "High
Risk".

5.4.10 Transaction Profiling (TP) of EXIM Banks Customers

Transaction Profiling is also an important requirement for EXIM Bank, Garib-e-Newaz branch, to
comply with the regulations. It gives them the idea of the number of transaction that a customer
will conduct in a month. The form contains information like:
Nature of the profession of the customer
Source of Funds
Cash Deposit and Withdrawal by the customer per month along with expected volume.
Cheque Deposit and Withdrawal per month along with expected volume.
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Inward and Outward Remittance per month along with expected volume.
Demand Draft, Telegraphic Transfers and Payment Order per month along with expected
volume.

There is no obligation that the above information has to be accurate but it is imperative that if the
above information is not accurate then they must be revised for upgrade.

5.4.11 Time to Time Review and Update of KYC of EXIM Bank

After opening the account of the customer using KYC, the process does not stop. The information
accumulated must be reviewed and updated for the correctness and appropriateness. Exim Bank,
Garib-e-Newaz branch review and update the information of the customers. The guidelines that
the branch follows are as follows:
Takes necessary measures to review and update the KYC of the low risk customers in every
two years & high risk customers in every year.

Updates the changes in any information on the KYC as soon as they get to be informed.
Moreover, update KYC information anytime if there is any particular necessity realized.

Depending on the updated information, the risks associated with these accounts are
assessed again without any delay.

Any subsequent change to the customers name, address, or employment details is recorded
as part of the CDD process.

Collects the announcement of customer about the Transaction Profile of customer account
in the specified form.
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Part-6
Recommendations and Conclusions
6.1 Recommendations for EXIM Bank Bangladesh

The techniques of Money laundering is becoming more sophisticated day by day. As a financial
institution, EXIM Bank also in a threatening position by money laundering. To avoid this problem,
EXIM Bank should follow some steps like:

They should follow the automation process so that the effectiveness of the work increases.

They should maintain a very close relationship with Bangladesh Bank and its other
institution like BFIU to ensure that they get time to time directions from them

They should establish a regular training program so that they can be more efficient in their
work and get acquainted with more sophisticated techniques.

If possible train their officers in abroad to get acquaintance with other officers in the world
so that they can share their experiences.

They should be harder on following rules and guidelines given by Bangladesh Bank and
impose more penalties on the staff if they fail to follow the statutory obligations of Laws.

6.2 Conclusions

Money laundering is like a curse to the financial institution because it greatly distorts the reputation
of the organization and also it hampers the money flow in the country that hampers the business
institution to collect their capital. As a result, the economic growth of a country like the emerging
countries is greatly hampered. Since money laundering is a crime and it brings illicit money flow
in the economy, associated with it terrorism also get sponsored which threatens the security of a
country and put it in a country reputation risk. To avoid this situation all the people in this country
should execute their duty sincerely and honestly.
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