Md. Zillur Rahaman: Hundi (illegal money transfer or exchange) is the main and much discussed medium of money laundering. Hundi traders are spreading like a net across the globe. They have the ability to transfer hundi money illegally from one end of the world to the other. Traders are smuggling money under the guise of import-export, showing higher prices of imported goods and lower prices of exported goods. The hundi money is being delivered to the address of their relatives as soon as the remittance money is deposited with the designated agent. There is no doubt that hundi and money laundering have a negative impact on the country’s economy. Many call it a cancer of an economy.
According to Global Financial Integrity (GFI), a Washington-based think tank, Hundi has recently become so active in various countries that it is delivering money to customers faster and faster than banking or any other medium. According to economists, hundi is a terrible means of money laundering, because in case of money laundering through import or export, different types of documents have to be displayed. As a result, the identity of the culprit is found at once. But in hundi, money is transacted mainly through agents, it is all about hundred percent on faith and no paperwork is done here. If money is smuggled in this process, it is very difficult to identify the traffickers.
In addition, the cost of transferring money through hundi is low, that’s why traffickers prefer hundi. Migrant workers are also sending remittances to the country with the help of hundi as there are many problems in sending money legally. Basically, those who are fleeing illegally and staying abroad are being forced to send remittances through hundi. According to a survey by the ILO, 40 percent of remittances sent by expatriates to the country come through banking channels. 30% comes directly through expatriates or their relatives in the form of cash and the remaining 30% comes through hundi.
Bangladesh is one of the 30 countries in the world in the list of money laundering through trade manipulation. Money flows out of Bangladesh through trade manipulation in two ways. One way is money laundering by mentioning higher prices in the paper when importing goods, another is to show lower prices on paper when exporting goods. As a result of showing lower prices during exports, a portion of the money that foreign buyers are paying remains abroad. Only that amount of money is coming to Bangladesh, the amount of money that is being shown, i.e, the price that has been mentioned in the papers. There are also instances where goods are imported and exported, but in reality empty containers or other goods have come and gone instead of products.
| ব্যাংক, ব্যাংকার, ব্যাংকিং, অর্থনীতি ও ফাইন্যান্স বিষয়ক গুরুত্বপূর্ণ খবর, প্রতিবেদন, বিশেষ কলাম, বিনিয়োগ/ লোন, ডেবিট কার্ড, ক্রেডিট কার্ড, ফিনটেক, ব্যাংকের নিয়োগ বিজ্ঞপ্তি ও বাংলাদেশ ব্যাংকের সার্কুলারগুলোর আপডেট পেতে আমাদের অফিসিয়াল ফেসবুক পেজ 'ব্যাংকিং নিউজ', ফেসবুক গ্রুপ 'ব্যাংকিং ইনফরমেশন', 'লিংকডইন', 'টেলিগ্রাম চ্যানেল', 'ইন্সটাগ্রাম', 'টুইটার', 'ইউটিউব', 'হোয়াটসঅ্যাপ চ্যানেল' এবং 'গুগল নিউজ'-এ যুক্ত হয়ে সাথে থাকুন। |
Due to the prevention of illegal hundi, the collection of remittances through legal channels has increased significantly in the recent past. The flow of legal remittances has increased more than at any time in the past. Expatriates are now much more aware and they are interested in sending remittances legally, avoiding illegal routes. Legally, remittances to banking channels have increased, not just increased, new records have been set.
This is of course a positive aspect and good news for the country’s economy. The agencies concerned of the government are always working to stop the money laundering through this hundi. There is no hundi information in the statistics of Bangladesh Bank. However, GFI is one of the organizations that look after the money laundering. According to their latest information, the amount of money laundering from our country has decreased. However, the declining rate of remittances in the country in recent months is worrying. Experts have cited the introduction of illegal channels of hundi, a decline in new foreign employment and the loss of jobs.
According to a GFI report, US$11.51 billion or Tk. 980 billion was smuggled from Bangladesh in 2015, Tk 728.72 billion in 2014 and Tk 763.61 billion in 2013. In all total, from 2005 to 2015, Tk. 7048.68 billion was smuggled from Bangladesh–which is almost equal to the two budgets of Bangladesh (2019-2020). On the other hand, GFI says that only in 2015, about US$6 billion was smuggled abroad from Bangladesh through trade manipulation. In Bangladeshi currency it is about Tk500 billion. It is mentioned in the report that this manipulation has been done during the import and export of goods in Bangladesh. Most money is smuggled from Bangladesh to Dubai, Malaysia, Singapore, Hong Kong and Thailand. Apart from this, questions have been raised for a long time about second homes in Canada, Australia and Malaysia.
According to a data of the Central Bank of Switzerland in 2019, the amount of money deposited by Bangladeshis in the banks there is Tk. 53.67 billion. However, the Bangladesh government does not have precise information about who kept the money in those banks. Not only deposited in Switzerland, but also in Singapore, Malaysia and Canada. When money is actually smuggled out of the country, the value of the dollar artificially rises and the country’s currency becomes unstable. According to bank officials and lawyers, it is difficult to bring money back into the country once it has been laundered.
In order to stop hundi in the country and money laundering, first of all we have to increase the investment opportunities in the budget and provide strict punishment for smuggling. As the main source of money laundering is black money, so the sources of black money must be stopped completely. In this case, the first step will be to prevent corruption. In addition, if evidence of money laundering and black money is found, strict punishment will have to be provided.
The banking system needs to be strengthened. The bureaucratic complexity needs to stop. Domestic investors need to be encouraged. Otherwise the risk of money laundering will remain. If the people of the country go abroad with money, the foreigners will not come. In this case, the savings facilities in the country should be increased. Depositors will have to increase the bank rate. Reducing interest rates on savings and deposits does not encourage people to keep money.
Moreover, the remittance incentive system should be kept running and monitoring needs to be intensified. The main reason people go to hundi is to get money quickly. Moreover, in order to develop the banking sector, good governance needs to be established and reformed in the banks. Banks need to increase customer service. If the cancer of economy, hundi, cannot be prevented, it will continue to hamper the economic development and progress of the country. For this, the authorities concerned have to take necessary measures.
Md. Zillur Rahaman is a Banker and Freelance Columnist.
