Bangladesh has retained its position as a country free of risk of money laundering and terror financing, assuaging the nerves of the government that feared the country might be demoted.
The seal of approval for Bangladesh's efforts to battle money laundering and terror financing came at the 19th annual general meeting of the Asia/Pacific Group on Money Laundering, the regional watchdog, held on August 7 in the US.
Earlier in 2016, the APG sent a draft assessment of the country's efforts to the central bank's Bangladesh Financial Intelligence Unit, which leads the country's efforts against money laundering and terror financing.
The assessment contained Bangladesh's performance in 11 areas: it was marked substantial in one indicator, moderate in five, and low in the remaining five.
This prompted the BFIU to send letters to the home ministry and the banking division, informing them about the impending risk of being rebranded as a risky country.
If a country is re-labelled as a "risky nation", it may have an adverse impact on its foreign direct investment.
Local firms may also find it difficult to borrow from abroad and the interest rate on external borrowing may also go up, according to experts.
At the time, the BFIU said Bangladesh would have to improve its rating in two indicators related to effectiveness of legal
and institutional framework from "moderate" to "substantial" by July to avoid demotion.
The latest APG report showed Bangladesh's rating is substantial in three areas, moderate in four and low in four. Bangladesh is ahead of Sri Lanka in this ranking.
Among the ratings proposed by the assessment team of the APG, Bangladesh improved its ranking in two out of 11 indicators officially known as "immediate outcomes', which proved enough to keep the nation's status as a risk-free nation, the central bank said in a statement.
Some APG member countries and international organisations proposed to reduce ratings for Bangladesh in four areas, but their demands were not considered in the August meeting.
The APG also compared Bangladesh's existing laws and institutional framework in light of the 40 indicators of the Financial Action Task Force on Money Laundering, the global watchdog.
It found that Bangladesh is 'partially compliant' in 14 indicators, 'compliant' in six and 'largely compliant' in 20.
The country was not found non-compliant in any of the indicators, Bangladesh Bank said.
In case of 'compliant' indicators, Bangladesh is ahead of even Norway and Sri Lanka. It fared better than Sri Lanka, Norway and Australia in the 'largely compliant'indicators.
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Between October 11 and 21 last year, legal experts came from New Zealand and Brunei Darussalam, financial experts from China, Indonesia and Cambodia, law enforcement expert from India and two experts from the APG secretariat called in to Bangladesh for onsite appraisal.
The team conducted a series of meetings with government authorities and representatives from the private sector, which allowed the assessors to gain a detailed understanding of the framework and effectiveness of Bangladesh's AML/CFT regime.
During the visit, the team could not get a clear idea of which government agency led the probes in lawsuits over money laundering and terror financ-
ing, said the APG in its website.
After the team left, the government resolved the issue and reformed laws.
The Anti-Corruption Commission was given the responsibility to probe corruption issues and the Criminal Investigation Department of police to investigate money laundering issues, officials said. At its meeting with Bangladesh officials in October last year, the APG team raised questions about recent major irregularities in the financial sector such as the scams at BASIC and Sonali banks as well as sluggish pace in investigation.
Dhaka has formulated a national risk assessment report on how to fight money laundering and terror financing and prepared National Strategy Paper 2015-17. In 2002, Bangladesh
became the first country in South Asia to promulgate the Money Laundering Prevention Act in line with the recommendations from the FATE
The APG is an autonomous and collaborative international organisation founded in 1997 in Thailand with 41 members and a number of international and regional observers. Bangladesh is a founding member of the APG.
Some of the key international organisations which participate with, and support, the efforts of the APG in the region include the FATF, the International Monetary Fund, the World Bank, the OECD, the United Nations Office on Drugs and Crime, the Asian Development Bank and the Egmont Group of Financial Intelligence Units.