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Govt to put caps on cash transactions to curb illegal money flow

  • Published at 12:28 pm September 29th, 2017
  • Last updated at 12:29 pm September 29th, 2017
Govt to put caps on cash transactions to curb illegal money flow
The government may tighten restrictions on cash transactions in banks in an effort to curb terror financing and money laundering in Bangladesh. According to sources, a report prepared by the central bank to this end is going to be tabled at the next meeting of the National Coordination Council on Combating Terrorist Financing. The possible caps on cash transactions in financial institutions are to be based on a fresh analysis of various issues related to the economy, the sources said. The report is likely to shed light on five aspects of the economy, including the availability and actual requirement of cash flow in Bangladesh, the relationship between cash flow and crime, the types of transactions and holdings by people and the steps taken for financial inclusion and its impact on cash flow. Meanwhile, Bangladesh Bank (BB) recently instructed all private banks of the country to install necessary equipment for conducting electronic money transactions for bank-to-bank dealings. The central bank fixed December 31 as deadline for the installations, with the aim of starting full-fledged electronic bank-to-bank transactions from the first day of next year, the instruction read. Financial Institutions Division Secretary Md Eunusur Rahman told the Dhaka Tribune that the government has already taken several initiatives for making transactions in banks and financial institutions cashless. "Our immediate approach is for banks and financial institutions to combat militant financing and money laundering by reducing cash transactions.” Furthermore, Finance Minister AMA Muhith, in his speech on the national budget this year, had put forth a plan to develop a cashless banking sector within the next couple of years. The Finance Minister earlier said the government wants to combat corruption and create good governance with a monetary system that does not involve cash transactions. BB Deputy Governor Abu Hena Md Razee Hassan, who is also the chief of the Bangladesh Financial Intelligence Unit (BFIU), said: “Whether there is any transaction using a check or any electronic transfer to the account, there is evidence of where the money is flowing into. On the other hand, it is difficult to trace if someone extracts cash and uses it illegally. Many countries in the world have imposed limits on cash transactions.” Exporters' Association of Bangladesh (EAB) President Abdus Salam Murshedi said: “There are many organisations where paying the monthly salaries of the workers involves a transaction of Tk10-20cr. Most of these workers still do not have a bank account. The owners may have to pay the money in installments if the limits on cash transactions are tightened.” “The government is well aware about the implication of such restrictions, that it may lead to labor unrest. Hopefully, this aspect will be kept in mind at the policy-making level,” he added. Under the existing rules, individuals and organizations can deposit or withdraw any amount of money from their account. But if the amount of cash in the transaction is more than Tk10lakh, the central bank has to report it to the BFIU. If there are any doubts about a transaction, it has to be similarly reported. According to BB, around 4% of the money deposited by the clients of 57 banks and around 20-25% of money floating outside the network of banks is in cash. As of May this year, the amount of cash in the country stood at Tk97,84,801cr while in May, 2016, it was Tk8,76,0936 cr. The trend of using non-cash transactions and settlements in daily life began in the 1990s, when electronic banking became popular.