Islami Bank was fined Tk1 lakh by the central bank on April 5, 2006 for violation of the Anti-Money Laundering Law in connection with an account linked to Jama’at-ul Mujahideen Bangladesh (JMB), a radical Islamist group banned on February 13, 2005.
According to the whistleblower website WikiLeaks, a US embassy cable dated April 6, 2006 says the fine followed an investigation of account documents, including a cheque book for an account at Islami Bank, found at the house in Sylhet where JMB leader Shayakh Abdur Rahman had been arrested.
The cable sent by then envoy Patricia A Butenis was published by WikiLeaks in August 2011 under the title “Bangladesh Bank fines Islami Bank Bangladesh for JMB related AML violations.”
The Islami Bank was previously fined in 2002 and 2004 for violations of the Anti-Money Laundering Law.
The Detective Branch of police earlier this month said they had identified four businessmen from Dhaka who were financing the revival of the JMB by procuring land and setting up training camps in Bandarban and Cox’s Bazar.
A Bangladesh Bank report stated that the checking account was opened in February 1999 in the name of Saidur Rahman but lay dormant until January 2006, when eight deposits totalling approximately Tk415,000 were wired to the account from its branches in Gazipur and Savar by a person who identified himself as Javed Khan. The funds were withdrawn from the account within a few weeks.
Saidur Rahman was the former ameer of Habiganj district unit Jamaat and is said to be the father of JMB’s information and technology section chief Shamim.
Documents also showed Saidur had accounts at the state-owned Rupali and Janata banks. The central bank review of those accounts revealed that the accounts were inactive and hence, it did not take any action against the two banks.
The cable says the BB action against Islami Bank was based on two violations of the law. First, the BB found that Islami Bank failed to adhere to the “know your customer” rule with respect to both the transfers of Javed and the account of Saidur, when he reactivated the account in early 2006. The BB also found that the large transactions into and out of a previously dormant account should have triggered a suspicious transaction report.
5 employees suspended
In the cable, the envoy also wrote to Washington that Islami Bank had moved swiftly to conduct its own investigation of the transactions.
According to then executive president Abdur Rakib, the bank had suspended five employees, including the three branch managers, and was investigating 15 other employees for their involvement.
The cable also mentions a comment of then Citibank Bangladesh CEO Mamun Rashid: “They [Islami Bank] accept responsibility for the mistakes, they have taken action, and they are appropriately nervous about the lapses this revealed.”