THE move by the Bangladesh Bank (BB) to get the cooperation of the country's scheduled banks to detect cases of possible money laundering is welcome. The central bank is hardly satisfied by the response of the scheduled banks on this matter in line with the Anti-Money Laundering Act. A report in this paper late last week drew the attention to the record of only 18 out of the 48 commercial banks that have so far submitted reports of suspicious transactions to the concerned department of the Bangladesh Bank.
The activities of the scheduled banks in this regard may be left a lot desired in the judgement of the Bangladesh Bank. However, some banks may have a different story here to tell. It could be that the banks that did not report suspicious transactions might not have handled such cases and, therefore, did not have anything to report. Or, it could be that the suspicious transactions were mainly limited to the 18 banks that did submit reports on the same. However, the banks which did not have suspicious transactions should have sent nil report to put their records straight.
Now the central bank will have to exercise its discretion in launching investigations carefully so that the scheduled banks are not subjected to unnecessary hassles. It must not jump to conclusions but must engage in rigorous monitoring activities in accordance with the provisions of the relevant law so that all scheduled banks start feeling that there would be no escape from accountability for illegal transactions. These actions should be taken in a rational manner very carefully so they do not adversely impact on the banks' relations with their clients. Indeed, the freedom to deposit money in banks and to withdraw the same at will is at the heart of the banks' relationship with their clients. If these relations are hampered or injured in any way, then the same would, at one point, tell negatively on the banks' deposit bases as the harassed customers would then avoid keeping their funds in banks and others may start taking a cue from such behaviour. In fact, in a number of cases relating to the suspicious transactions that were reported by the banks to the BB were investigated and found innocent. But the banks' clients in these cases were reportedly harassed and felt indignant. Money is put in the banks largely by businessmen and they need to frequently withdraw big amounts. The facility for the fastest withdrawal and dispatch of big sums of money are the basis of the umbilical relationship between the banks and the businesses. If this basic mode of bank-businesses functioning gets unnecessarily disrupted from a freeze on movements of money and delay in investigation processes, then the same would complicate and make both banking and business operations difficult. Thus, there is a point in the banks' management wanting that the BB ought not to stir up uneasiness in normal banking operations from extra zealous or excessive pursuit of the money laundering laws. However, this must not be interpreted as a pleading for any laxity in dealing with genuine cases of money laundering. That should never be the case.
What the BB can really do to good effect -- without disrupting banking activities while also securing its objective -- is to train up banks' management extensively on how to improve their capabilities to know the bonafides of their clients more thoroughly. Knowing the clients well and their backgrounds are part of normal banking exercises anyway. So, the banks are already in possession of considerable information about their clients. If they should be knowing more, then BB should train up banks' management in these areas so that they can learn more. In that case, the banks on their own will be able to exercise their discretionary powers with greater effectiveness and report only the those transactions that match a certain criterion of the law while leaving the greatest number of proper transactions completely unaffected.