The Swiss Bank money laundering debate

Bangladeshi funds in Swiss banks have increased by 20% in the past 12 months according to a report by the Swiss National Bank (SNB). The ‘Banks in Switzerland 2016’ report estimates that Bangladeshi nationals have deposited over Tk1,000cr in various Swiss banks over the last year. The total deposited amount in Swiss banks from Bangladesh stood at Tk4,730cr in 2015, which increased to Tk5,685cr in 2016. Bangladesh Bank recently claimed that the money in Swiss banks was “national property” instead of money privately laundered - a common practice in the past. “The increase in transactions between Swiss and Bangladeshi banks is a sign of increased cooperation, but it has instead been used as fodder for criticism,” said Deb Prasad Debnath, general manager of the Bangladesh Financial Intelligence Unit. “There is no possibility for a Bangladeshi individual to open an account there. All of the money is part of regular bank-to-bank business.” Deb Prasad Debnath said the report shows an increase in trade and commerce between the banks, reflecting an increase in letters of credit (L/C) and transactions. “Therefore, businesses between Bangladeshi and Swiss banks have increased by 20% in the last year,” he said.

Here is the full version of the report published by the Swiss National Bank

Previously, Finance Minister AMA Muhith had assured the parliament that the Swiss Bank money laundering issue had been inflated, and the figures published in news media were an estimation of the country’s legal transactions with Swiss banks. “Switzerland’s banking system is highly advanced. Just like our neighbours, our trade transactions take place through the Swiss banking system as well,” the finance minister said in parliament on Tuesday. “After analysing the reports from 2013, 2014, 2015 and 2016, we have noted that because of trade, our transactions with Swiss banks have increased. The Swiss banks loaned us a total of Tk1,823cr in 2016 and they owe us Tk5,560cr.” However, Khandaker Ibrahim Khaled, former deputy governor of the Bangladesh Bank, said the information published in the media was the total of the amount of money held under the name of Bangladeshi nationals. He insisted that the issue at hand was not bank-to-bank transactions, and that the money held in the accounts was in fact money laundered by Bangladeshis despite opposing claims from the Bangladesh Bank. “Most of the money in the Swiss banks are deposits from Bangladesh. It is a possibility that some of the money may be owned by Bangladeshis living there, or in other countries around the world,” he said. The report published by the SNB included financial deposit data from all countries in the world since 2007. Since 2012, the amount of money deposited in Swiss banks from Bangladesh has increased steadily each year. In 2009 the total deposited amount was Tk1,281cr, and in 2012 the total was Tk1,961cr.

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Research from Washington-based Global Financial Integrity (GFI) claimed that $9.11bn had been laundered from Bangladesh in 2014 alone, equalling Tk72,872cr. The ‘Illicit Financial Flows (IFFs) to and from Developing Countries: 2005-2014’ report by the GFI said money laundering primarily happens through undercharging and overcharging invoices for imports and exports. The total amount of money laundered from Bangladesh in the last 10 years was Tk6,50,000cr. According to data from the Centre for Policy Dialogue (CPD), 85-90% of money laundering took place through international trade. In most cases, invoices for imports were overcharged to send money abroad. Offshore companies are another means of money laundering identified by the CPD. The Panama Papers have identified 50 Bangladeshi nationals and five institutions that have established offshore companies abroad to launder money while evading taxes.  This story was first published on the Bangla Tribune