Bangladesh Bank would incorporate a provision in its corporate social responsibility policy now being prepared to prevent banks from diverting CSR funds to terrorist or militant financing.
A directive in this regard was issued during the third meeting of the Anti-Militant Financing Task Force at the home ministry last month.
The central bank also explained at the meeting as to why money from loan default compensation funds, especially of the Islamic banks, could not be used for CSR purposes.
The compensation funds are created from fines that banks collect when borrowers fail to pay their instalments in due time. At present, there is no binding umbrella policy governing the formation of CSR funds.
Earlier this month, as per directive from the task force, Bangladesh Bank Deputy General Manager Arif Hossain Khan wrote to the Home Ministry and the Bank and Financial Institutions Division, informing them about the suspected use of Islami Bank Bangladesh Limited’s CSR funds in militant financing.
Simultaneously, central bank General Manager Monoj Kumar Bhasusi sent another letter to the same recipients informing them about the decision to incorporate the possible use of CSR funds in militant financing in the proposed policy.
Bank Division Secretary M Aslam Alam told Dhaka Tribune: “The Home Ministry is now further investigating into a Bangladesh Bank report on the use of Islami Bank’s CSR fund in possible terrorist financing.”
He said: “The Home Ministry will find out how the persons who got money from the bank’s CSR fund were not supposed to get it.”
Sources in the Home Ministry said high officials of the Islami Bank took financial support from its CSR fund during the election-resistance movement in January and the agitation programmes centring Jamaat leader Kadar Mollah’s execution.
According to the ministry, the size of Islami Bank’s CSR fund has doubled over the last couple of years.
Meanwhile, the Bangladesh Bank has identified 10 suspicious accounts in several private commercial banks which could have been used for financing militant activities, including purchase of weapons and subversive activities.
According to the Bangladesh Financial Intelligence Unit (BFIU) of the central bank, those accounts belong to the Jhigatola branch of Dutch Bangla Bank Limited, the Dhanmondi branch of the Al-Arafah Islami Bank and the Shahjalal Islami Bank.
The BFIU revealed this information during the first meeting of the task force, led by Industries Minister Amir Hossain Amu, on September 11.Last month, the government asked the banks to make sure that their CSR funds are not used for militant or terrorist financing, officials have said.