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handling of funds potentially linked to money laundering.

From 2015 to 2020, Bangladeshi deposits in Swiss banks typically ranged between 480 million and 660 million francs. The latest spike is likely to draw renewed scrutiny.

Deposits linked to Bangladeshi nationals and entities in Swiss banks jumped 33 fold in 2024 from the previous year, when holdings had dropped to a record low of just 17.7 million francs.

The deposits declined sharply also in 2022, following a post-pandemic peak of 871 million francs in 2021 amid growing global scrutiny of illicit financial flows.

Last year, deposits from India and Pakistan declined: India’s deposits fell to 3,231.73 million Swiss francs and Pakistan’s dropped to 236.35 million francs.

A total of $234 billion was siphoned off from Bangladesh between 2009 and 2023, according to a white paper on the Bangladesh economy published in December 2024.

As per the report, the laundered money was sent to or routed primarily through the UAE, the UK, Canada, the US, Hong Kong, Malaysia, Singapore, and India, as well as a number of tax havens.

Swiss banks hold various types of accounts, including Nostro accounts of businesses, deposits from overseas Bangladeshis and possibly illegal money as well, said Mustafizur Rahman, distinguished fellow at the Centre for Policy Dialogue.

“Therefore, it cannot be specifically stated that the rise in deposits is due to an increase in laundered money. It is quite difficult to make such a claim, but Bangladesh Bank could request information from Swiss banks if it wished.”

India, for instance, has an agreement with them and can ask for lists at any time. In this way, big influential figures were once caught in the neighbouring country.

“Nowadays, Swiss banks are not as attractive for keeping illegal money. Instead, places like Dubai and Singapore are preferred, where shell companies are set up and funds are layered three or four times before reaching the ultimate beneficiary account.”

Recovering laundered money from abroad is extremely complex and difficult, he said.

Globally, the recovery rate is only about 2 percent.

“Even so, efforts must continue, as at the very least it keeps pressure on those involved,” he added.

Several factors may explain the surge, said Selim Raihan, executive director at South Asian Network on Economic Modelling.

Political and economic uncertainty following Bangladesh’s political transition, concerns over currency depreciation and efforts by wealthy individuals to diversify assets abroad likely encouraged the transfer of funds to foreign financial centres.

In addition, some deposit growth may reflect legitimate business activities, international trade settlements and the movement of assets by non-resident Bangladeshis.

“However, the sharp increase has also revived concerns about illicit financial flows, tax evasion, corruption, trade mis-invoicing and the laundering of proceeds from financial crimes,” said Raihan, also a professor at the University of Dhaka’s economics department.

Switzerland’s reputation for financial stability and strong wealth-management services continues to make it an attractive destination for overseas assets, he said.

To curb money laundering and the illegal transfer of wealth abroad, Bangladesh should strengthen the enforcement capacity of the financial intelligence and anti-corruption authorities, enhance scrutiny of politically exposed persons and improve monitoring of cross-border transactions, according to him.

Greater transparency in beneficial ownership, stricter oversight of trade invoicing and the wider use of digital tracking systems can help detect suspicious financial activities, Raihan said.

The government should also deepen cooperation with foreign jurisdictions, including Switzerland, to obtain information on undisclosed assets and recover illicit funds when necessary, he said.

“At the same time, improving governance, ensuring policy stability and creating a more attractive domestic investment environment would reduce incentives for capital flight and encourage individuals to keep their wealth within the country.”