The Role of Banking Sector in the Prevention of Money Laundering in Bangladesh

Part One Introduction 1. 0 INTRODUCTION Besides of improvement of Economic exercises, fiscal related wrongdoings are likewise expanding in both created and immature nations. Nearly in every nation unlawful exchange of cash has been expanded and these illicit cash has been likewise utilized on different criminal operations. Tax evasion process alludes to unlawful receipt or move of store starting with one spot then onto the next. This procedure includes the financial arrangement of the nation as well as non-banking system.Bangladesh is moving towards an open economy with a little charged segment by changing the budgetary and monetary approaches. Be that as it may, the illegal tax avoidance systems are making issue for a nation like Bangladesh. Bangladesh Bank as the Central bank of Bangladesh Supervise all the banking and non-banking money related exchanges in the interest of Bangladesh Government. Tax evasion process is an extraordinary deterrent to the execution of fiscal strategy e mbraced by Bangladesh bank to stable the economy of the country.To forestall illegal tax avoidance, tax evasion counteraction bill 2002 was passed in the National Assembly of Bangladesh on 5 April 2002 and Gazette Notification was made on 7 April 2002. What's more, Bangladesh Bank has been assigned to go about as the principle preventive organization. Illegal tax avoidance has genuine unfriendly impact on Economical, Political and Social state of a nation. It increments inconsistent dispersion of salary and accordingly, the work level, yield level of the nation, value security just as monetary turn of events and development can be hampered.So it is promptly required to forestall it. I trust it involves incredible open door for me to concentrate on this point, as Money laundering, is an indication and a facilitator of sorted out wrongdoing, and has pulled in expanding enthusiasm for our nation. Because of tax evasion process, attractive speculation of the nation is impossible, nation al pay decreases and financial development of the nation hampers. 1. Foundation of Money LaunderingThe mafia mobster Al Capone is regularly credited with authoring term â€Å"money laundering† in light of the fact that he utilized interests in coin-worked Laundromats to mask or â€Å"wash† the millions he produced using bootlegging and other unlawful undertakings during the Prohibition in the US-the restricting of mixed beverages in the twentieth century. It is additionally said that the term â€Å"laundering† is utilized in light of the fact that, years prior, the money continues (in U. S. dollars) from tranquilize deals were really washed with cleanser and water to seem old and worn. Launderers would then go to the Federal Reserve Bank and trade the â€Å"laundered† charges in for new bills.Along with the new bills came a took care of receipt, which served to help the â€Å"legitimate† starting point of the money. The trick was at last distinguis hed when somebody at the Fed understood that the sequential numbers on the bills showed that they ought not be as old and worn as they seemed, by all accounts, to be. The term first showed up in quite a while detailing the Watergate outrage in the US in 1973 and in legal/lawful challenge in the US in 1982. While the term â€Å"money laundering† was authored in the twentieth century, it has been continuing for a few thousand years.The history of illegal tax avoidance is joined with the historical backdrop of exchange and of banking. In 1986, the U. S. turned into the main nation on the planet to condemn the â€Å"laundering† of the returns of crime when it passed the U. S. illegal tax avoidance law. The silk street which researchers state previously turned into a genuine connection around 100 BC, ran for 12,000 kilometers and connected probably the best human advancements the world has ever observed †the Chinese, Mongolian, Indian, Persian, Greek, Byzantine, Mesopo tamian and Egyptian †moving merchandise, individuals, thoughts, religions and Money.Chinese creations like explosive and paper originally headed out to Europe as such. Alongside numerous different things, Syrian performers and aerialists, beauty care products, silver, gold, golden, ivory, covers, aroma and glass from Europe, Central Asia, Arabia and Africa headed out toward the east. It went on until the fifteenth century when newfound ocean courses to Asia opened up. Customary strategy for moving cash advanced before Western banking got set up in the locale ensuring early traders along the Silk Road against robbery.In antiquated China it was known as â€Å"fei qian† or â€Å"flying coins†. The framework spread all through the world †to other Asian areas, the Indian Subcontinent, the Middle East, eastern and southern Africa, Europe and North and South America †following migration designs. These customary cash move frameworks are called as Chop, Hawala, H undi, and so on 1970-The US Congress established the Bank Secrecy Act (BSA) in October 1970 after expanding reports of individuals bringing packs loaded with unlawfully †got money into banks for deposit.The BSA is basically an announcing and record-keeping rule. Albeit adamant infringement of its terms are a wrongdoing; it doesn't condemn illegal tax avoidance accordingly. BSA requires banks â€retain monetary subtleties, - report money exchanges over $ 10,000/ - . In this manner in 1986, the U. S. turned into the primary nation on the planet to condemn the â€Å"laundering† of the returns of crime. In this way brought in tax evasion a wrongdoing in its own right, and reinforced the BSA in a few regards, in particular by disallowing â€Å"structuring†. 990 †The Financial Crimes Enforcement Network (FinCEN) made by the US Treasury on April 25, at first to concentrate on the discovery of money related wrongdoings by offering systematic help to law authorizati on examinations. In 1994, the office would be given BSA administrative duties. 1992 †Annunzio-Wylie Money Laundering Act corrected the BSA in a few regards. Maybe generally significant, required any money related foundation, and its officials, chiefs, workers and operators, â€Å"to report any dubious exchange pertinent to a potential infringement of law or guideline. The Annunzio â€Wylie Act, require every single budgetary organization to set up, BSA consistence programs, yet additionally hostile to illegal tax avoidance programs. At the very least, the projects would be required to include: 1) The advancement of inward enemy of illegal tax avoidance strategies, systems and controls; 2) The assignment of a consistence official; 3) A progressing representative preparing 4) An autonomous review capacities to test the program. From the start U. S. A. has stepped up and tax evasion however now the vast majority of the nations of the world know about it. 2. Root of the ReportTh is Research Paper has been set up for the fractional satisfaction of Masters of Business Administration (MBA) Program. For this reason noteworthy instructor and administrator Mr. Md. Nazrul Islam, Head of the Department of Business Administration, Shahjalal University of Science and Technology, Sylhet requested to present a proposition. Subsequent to talking about with him about different issues of tax evasion I have presented a proposition on â€Å"The Role of Banking Sector in the Prevention of Money Laundering in Bangladesh † was submitted and afterward the last research paper is readied. 3.Objective of the Paper The goal of the exploration paper is to enable the understudies to be comfortable with how the hypothetical information acquired in the degree program can be applied by and by. For the most part examine is either issue recognizing or critical thinking device. The destinations of the investigation are as per the following: †1. To comprehend the hypothetical id eas of tax evasion. 2. To show the current situation of against illegal tax avoidance issues in Bangladesh. 3. To watch the arrangement advancement and support by Bangladesh Bank as a manager of against illegal tax avoidance exercises. 4.To make sense of center techniques that Bangladesh Bank embraces to regulate the counter illegal tax avoidance exercises. 5. To remark on the current framework and suggest for development. 1. 4 Methodology Certain strategies and procedures is used to gather information for this examination paper. This examination is for the most part dependent on observational just as hypothetical investigation. Gathered information and data is classified, prepared and examined fundamentally so as to make the report enlightening. Both essential and optional wellsprings of information are picked as successful methods for gathering information applicable for this paper. . To plan initial segment of the exploration paper optional sources were utilized. Productions and database inside Bangladesh Bank and others business bank helped me to get information about illegal tax avoidance and its anticipation. Different kinds of roundabout of Bangladesh Bank in regards to illegal tax avoidance exist in various business banks. This paper additionally required investigation of yearly report, arrangement related brochures, and administration rules, regulatory fliers and other related papers. To get more data, I have likewise gathered a few books about tax evasion and looked through site. 2.Interview of the work force from individuals inside these important associations was the essential strategy to gather essential information. Casual conversation with official associated with the arranging and control works in the different degrees of the Bangladesh Bank was required. To gather information and to dissect these appropriately I must be talked with eye to eye with bank authorities. . 5. Avocation of the Research To forestall tax evasion is extremely perplexing errand particularly in a nation like Bangladesh where the vast majority of the residents are ignorant and their financial terrible condition propelled them to include in illicit activities.This increments monetary hopelessness of the poor and amassed riches in the hands of 10% of the complete populace. The extension and size of illegal tax avoidance has expanded after some time and the way toward tending to the issue has become complex on account of the worldwide idea of the issue. So participation among the law authorizing offices, attention to the general individuals of the check