The Financial Action Task Force (FATF), a global body to combat money laundering and terror financing, has asked the government to scrap the existing money whitening facility offered to the country's stock investors.
The FATF has said Bangladesh may be identified as a "risky country" such as North Korea in global financial transaction if the government fails to drop the provision immediately
A plenary meeting of the FATF, held in Paris on October 27-28, made the recommendation against the facility, which has been offered by the government in the budget for the current fiscal in an effort to boost the flagging stock market.
A three-member delegation, headed by Deb Prasad Debnath, General Manager, Anti-Money Laundering Department, Bangladesh Bank, represented the country in the meeting.
"We faced strong criticism from FATF and its influential members from European countries for offering money whitening facility in the capital market," a delegation member, told the FE on Monday.
"The FATF has asked us to scrap the scheme to avert being listed as one of the risky countries in the world like North Korea for financial transaction," the delegation member added, requesting anonymity.
He said a high-level team of FATF would visit the country in November and discuss the issue with the government.
The FATF has decided to refer the controversial scheme to International Cooperation Review Group (ICRG), a specialised professional body under the global task-force, before "blacklisting" Bangladesh, a government official said.
The FATF later disclosed the outcome of the meeting in its report.
'The FATF heard a report on the voluntary tax compliance (VTC) programme in Bangladesh (which has been enacted since July 2011 and is currently scheduled to complete in June 2012), and its possible negative impacts on AML (Anti-Money Laundering)/CFT measures in the country," the report said.
"The FATF also heard an update from the APG on the reviews and actions that it has taken in relation to this issue," it said.
"As there are concerns about the potential impact of the VTC programme on the effective application of the FATF standards, the FATF decided to refer consideration of the VTC programme to the ICRG, in the context of its ongoing process concerning Bangladesh," the report, posted in its website, added.
In his budget speech, the finance minister said no question will be asked from any agencies including tax department if anybody invests his or her undisclosed money in the capital market paying a 10 per cent tax against the whitened amount.
But following strong reservation from the FATF, the government brought some amendments to the offer in August, empowering some agencies excepting the tax department to question or investigate the sources of undisclosed money.
However, the effort failed to cool the FATF concerns.
"We could not satisfy the FATF despite the changes in the original offer. It seems the FATF has taken a strong position against the existing facility on the money whitening offer," said a finance ministry official.
The FATF is an inter-governmental body whose purpose is to develop and promote policies, both at national and international levels, to combat money laundering and terror financing.
The Task Force is a "policy-making body" which works to generate the necessary political will to bring about national legislative and regulatory reforms, the official added.
Earlier, Financial Action Task Force (FATF) in a report in 2010 said Bangladesh is still non-compliant in at least 10 key areas in attaining international standard against money laundering and terror financing.
The government had formed a National Coordination Council, headed by Finance Minister AMA Muhith, to implement the recommendations of FATF to combat money laundering.
The government finalised an Action Plan early last year outlining measures to combat the money laundering as recommended by FATF and Asia Pacific Group (APG) on Money Laundering.
The major areas included in the action plan are bringing amendments to Anti Money Laundering Act 2009 and Terrorist Financing Act, 2009, including the issues of anti-money laundering and terror financing in the existing Extradition Act, enacting Mutual Legal Assistance Act and ratifying the UN Convention against Transnational Organised Crime (Palermo Convention) and ratifying the UN Security Council Resolutions, 1267 and 1373.
A senior official in the finance ministry said, the finance minister is concerned over the latest development.
He, however, said if the money-whitening facility is withdrawn, it could cause widespread dissatisfaction in the capital market, which the government cannot afford under the prevailing circumstances.
Source: thefinancialexpress-bd.com
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