FROM PAGE B1

BIBM warns that Bangladesh’s banking system remains largely decentralised in handling trade finance.

Roughly one-third of banks continue to route trade-related operations through branch-level or siloed systems, rather than adopting a centralised model, increasing the risk of oversight failures. In contrast, countries like Singapore and Finland use centralised processing, which allows better enforcement, clearer accountability and stronger audit trails, the report says.

Though banks are required to conduct risk-based Know Your Customer (KYC) checks for all letters of credit (LCs) and export financing, as per BFIU’s 2019 guidelines, real-time credit checks and customer verification often fall short in practice, it states, adding that relationship managers are tasked with verifying details using Credit Information Bureau (CIB) data, but oversight remains inconsistent.

The research team was led by Shah Md Ahsan Habib, professor (selection grade) at BIBM, with contributions from Tofayel Ahmed, Anila Ali, Shah Alam Kazi, Md Mahmudur Rahman, and ATM Nesarul Hoque.

Other team members are Tofayel Ahmed, assistant professor of BIBM; Anila Ali, assistant professor of BIBM; Shah Alam Kazi, joint director of BFIU; Md Mahmudur Rahman, DMD of Islami Bank Bangladesh; and ATM Nesarul Hoque, executive vice president of Mutual Trust Bank.

The paper recommends the establishment of a Trade Transparency Unit combining customs and BFIU data, publishing a public beneficial ownership register, and expanding KYC/AML duties to freight and warehouse operators.

It also calls for building an automated, analytics-driven compliance culture backed by strong institutional incentives and penalties for non-compliance.

In a country heavily reliant on exports and foreign credit lines, reining in trade-based money laundering is not optional—it is a fiscal and strategic necessity, the BIBM report notes.

Without urgent reform, it says, Bangladesh risks not only massive revenue losses but also falling behind in global anti-money laundering benchmarks, inviting greylisting and higher transaction costs for its legitimate trade.