Bangladesh must prove money laundering claims

Ahsan H Mansur: I came to London this time with several objectives. One of them is to repatriate the laundered money. Another objective is to discuss investment opportunities. The third reason is to talk about the technical support that we are receiving. There are two aspects to bringing back laundered money. One involves discussions with the British government. Agencies including National Crime Agency (NCA) and International Anti-Corruption Coordination Centre (IACCC) are in direct contact with us and are providing assistance. We had meetings with them, which were very constructive and necessary. We know what they are doing, as well as we have been given some hints on their future steps.

It is not appropriate for me to talk about it right now, it is their matter. They act based on evidence. The decision lies with the British government. However, we expect that the restrictions or sanctions on the sale or transfer of assets will be widened a little more. For example, former minister Saifuzzaman Chowdhury face partial sanctions, but we believe that full sanctions will possibly be imposed. Some other families may also fall under this sanction in the future. It all depends on the kind of information and requests we can provide. If they review everything and find there are sufficient evidence to present in court, only then will they proceed. That is, the process must go through the court. Judges must be convinced as to why we want the assets seized. They have seized assets so far because they have that level of evidence. They can do more in future with receiving more information. It is an ongoing process. So, the NCA’s seizure of assets also involves our role, and we are playing that role.

Of course, it is possible. The current seizure is just the first step. The primary responsibility now is to ensure the assets are not depleted or liquidated, and that is, these assets are not sold off and transferred elsewhere. That is the phase we are in now. And it does not have to happen only in London or the UK. We need to do this in other jurisdictions too. We can also proceed through the British government, because we have a mutual agreement with them. So, if the British government attaches assets in their country, they can also attach assets in other countries through mutual legal assistance.

We are taking steps in those countries too. We have gone to Singapore and held discussions. We have spoken with authorities in Dubai and visited there as well. We met with the Dubai Financial Intelligence Unit. Situation is a bit different now in the US because of a change in government. Before that, they were very supportive. After the new government took office, they themselves are in some turmoil and several organisations are not functioning. The US Treasury Department had shown us great interest. They were scheduled to visit Bangladesh in February, but that trip was later cancelled. No follow- happened after the new administration took office, and their internal administrative changes have not yet been completed. Many incumbent officials, who were appointed by the previous government, know they might not be in their positions a month from now. We are facing some difficulties there because of these uncertainties. We cannot progress smoothly in the US, but we are continuing discussions in other countries.

We have weaknesses in gathering evidence. This is not an easy task, because, in Bangladesh, we have never successfully repatriated assets by collaborating with the international community. So we lack experience. The investigative agencies we have do not work together. To address that, we have formed a joint investigation team. We told them to work together in the same room, share everything. We have four investigating bodies: Bangladesh Financial Intelligence Unit (BFIU), Criminal Investigation Department (CID), Anti-Corruption Commission (ACC), and National Board of Revenue’s (NBR) Central Intelligence Cell (CIC). Each operates independently. There is no habit of working together. We are trying to change that culture. Anyway, we do have weaknesses—it is no use denying it. We are also receiving technical assistance to overcome this. For example, the British government is giving us experienced personnel. These experts are sitting with our team and showing them how to document evidence—teaching them hands-on. We are receiving this support. The World Bank’s Stolen Asset Recovery (StAR) Initiative team is also helping us a lot. Overall, we have made significant progress. That is why we are seeing this change in the UK today.

Yes, we do have some information. Two things need to be done here. One is to identify individuals or families who have assets both inside and outside the country. The domestic assets are more or less under our control. We are working to prepare a list of those so that they cannot be sold off. That process is mostly done. For assets abroad, we will need help from legal firms. International law firms can trace those assets. The institutions in our country are not capable of asset tracing. They do not know who owns what assets where.

There are mainly two types of cases here: criminal and civil. You cannot settle a criminal case — it must go to the end. Maybe only 10 out of 100 cases will be criminal. Filing criminal cases abroad is very difficult and complicated. It requires a lot of evidence. But filing a civil case is easier. So we have to make realistic decisions. For each family or individual, we must evaluate whether we have enough legal evidence to file a criminal case. If not, we must go for civil litigation. Only experienced and internationally recognised lawyers can make that decision. We can consult with international experts in this process. Once the decision is made, we can proceed quickly.

Frankly speaking, perhaps 10–12 per cent of the cases will be criminal cases, and the rest will be civil. For example, if I ask how many such cases are currently active in the UK — it is around 80 from all over the world. If we try to file more than 10–15 cases from Bangladesh alone, will they accept them? No. They have already told us they cannot handle more than 8–10 cases from Bangladesh. So there is no point in overburdening them.

So, we must decide which cases to file as criminal and which as civil. Even in civil or criminal cases, there are two options: one is to take it to the end, and the other is to go for a settlement if the other party is willing. These are all matters of strategic decision-making. I must act realistically, because our goal is to recover the money. If we can do that, and the government can bring the money back, that is a good solution. Because what is the benefit of paying legal fees for years without results? If we do not make realistic decisions, it will only harm the country.

It is not realistic to say money laundering will stop completely. But I believe it has significantly decreased — especially the kind of laundering that used to happen with state patronage. The large-scale corruption has stopped. Why am I saying this? Look at our remittance inflow. Because money laundering has reduced, remittances have increased. It is not that our brothers abroad are suddenly sending 30 per cent more. Their salaries have not increased that much. They are sending the usual amount. Earlier, a large part of their income would leave the country as laundered money. For example, they would send money to their village home, but the money would go from Dubai to New York through hundi, or stay in Dubai or move to London. Now that is happening less or not at all. That is why remittances have soared. The rise in remittances indicates a drop in money laundering. It does not stop entirely, but it has decreased. It will never be fully eliminated — that is unrealistic. Some people will still take their money out. We cannot prevent it. Let me explain why and how. Suppose someone is parents have died, and they want to sell their inherited property. They will want to take the money with them. Perhaps, they live in London. That is not illicit money. But there is no legal way in Bangladesh for them to take this. So technically, that becomes money laundering. We cannot really stop that. There is no point in pretending otherwise.

First, we must identify the sources of money laundering. One major source is corruption within the state system—political corruption. We know how much corruption has happened this way. There is no guarantee it will not happen in the future—it very well might. The second source is administrative corruption. Bribery is widespread. Whether it is someone in the police, the civil service, or a sub-registrar in the land ministry; many of them have made millions and are still doing so. Where does this money go? A large portion is spent on their children’s education abroad. Again, when our children go abroad and their parents pass away, they sell the land here and take the money abroad. We need to find a way to prevent this. You cannot stop it just by passing laws. You must first stop political corruption to end it. For that, a system of accountability must be established. Good governance must be introduced—something the current government is taking steps partially. The next government must continue this effort. The current government is not in a position to do it fully. Also, the responsibility to eliminate the structural weaknesses and corruption in the administration lies with the government. Now whether the next government will take things in a better direction or a worse one remains to be seen.

The next issue is an even bigger challenge. If the state cannot ensure the security of my wealth, my life, and my job, then why would my children stay here? They may study here, but they will not find jobs. So wherever they go, their wealth will follow them. The fact is: wealth always follows the owner of wealth. You cannot stop this with laws. Instead, if I can bring back the owners of wealth, their wealth will also return. We face many challenges—political, administrative, social, and economic. We need to create jobs, an investment-conducive environment, as well as to ensure property security. If I buy land and someone else takes it over, why would I invest here? I would rather invest abroad. Unless we fix these things, any claim of stopping money laundering would be false.

The economy faces many challenges. When this government came to power—or when I took over as governor—I identified two or three major challenges. One is to reduce inflation. Second is to stabilise the exchange rate. These two are interconnected. If the exchange rate is unstable or there is depreciation, inflation will skyrocket. That also erodes confidence in the economy. If the exchange rate remains stable, trust is maintained. Instability leads to lack of confidence. Third, I must also increase foreign exchange reserves. That builds confidence, stabilises the exchange rate, and helps lower inflation. These three are interrelated, and I have to address all of these challenges.

Now, what have we achieved? I think we have achieved quite a lot. When I took over, the official exchange rate was around Tk 118 to Tk 120 per dollar. Now it is Tk 123—a modest rise. Have reserves fallen? No—they have increased, and I expect them to rise significantly in the coming days. What about inflation—has it gone up or down? Perhaps it has not dropped as much as I had hoped. It is still at 9.05 per cent. I expected it to come down to 7–8 per cent, but it has not reached that level yet. It will, eventually. Food inflation was 14.5 per cent, and it has now dropped to 8.5 per cent. How much does it fall? Six per cent. That is progress. Non-food inflation has also decreased. It was at 12 per cent, and now it is around 9.5 per cent. Since food prices are dropping, non-food prices will drop as well.

We have left the exchange rate to the market. Has there been any volatility? No. People’s trust is coming back. What is our economic performance? Has our export not increased? Yes, it has risen by about 10 per cent, which is excellent under current global conditions. A 10 per cent growth is significant. Our remittances have increased by almost 30 per cent. That means we have gained a lot of resources. We have received an additional $7 billion in remittances, compared to previous year. We are getting an extra $5 billion from exports. So that is $12 billion more in our hands. That is a lot. If we can maintain this trend, we will not have to depend on others.

I believe we have made achievements. When Pakistan signed a deal with the International Monetary Fund (IMF) and floated its exchange rate, their currency shot up to over 360 per dollar. Later it fell to 284, and now it is at 280. But we acted on our own terms. The IMF pressured me to liberalise the exchange rate. But we did not do it immediately. We waited six, seven, eight months, because the situation needed to improve. It was like jumping into fire. When I would entire into a fire, I must have an extinguisher in hand. And, that is stability. You need to build people’s confidence first. I took eight months to build that confidence. Now the market is stable. I have not sold a single dollar. The exchange rate has not changed either.

If the IMF had forced me to float the exchange rate six months ago, it might have gone to Tk 150 per dollar, which many feared. But I did not do that. I told them, we will do it until I am confident the exchange rate will remain stable. Once we were confident, we made the move. That is why the liberalisation of the exchange rate in Bangladesh happened at the right time. There has been no turbulence—which even the IMF could not believe. A month has passed since, and now they agree: the exchange rate is market-based and the market is stable.