“Captured by evils” – combating black money, corruption and money laundering in Bangladesh. The dog must bark to keep predators away
| DOI | https://doi.org/10.1108/JMLC-06-2017-0020 |
| Date | 02 July 2018 |
| Published date | 02 July 2018 |
| Pages | 264-289 |
| Author | S.M. Solaiman |
| Subject Matter | Accounting & Finance,Financial risk/company failure,Financial compliance/regulation,Financial crime |
“Captured by evils”–combating
black money, corruption and
money laundering in Bangladesh
The dog must bark to keep predators away
S.M. Solaiman
University of Wollongong, Wollongong, Australia
Abstract
Purpose –The purpose of this paperis to demonstrate thatthe recurrent amnesties to black money holders
(BMHs) in Bangladeshhave not benefited the national economy, rather have increased corruption and money
laundering, and that offering further opportunity to whiten back money as recommended by the Anti-
CorruptionCommission of Bangladesh will do more harm than good.
Design/methodology/approach –This research relies on both primary and secondary materials
adoptingan archival analysis of the existing literature.
Findings –The major findings include the following: the recurrent amnesties to BMHs have damaging impacts
on corruption and money laundering in Bangladesh; the Anti-Corruption Commission of Bangladesh’s
recommendation to provide further opportunity to legalise black money is flawed, ill thought-out and misjudgement
of the futility of the amnesties offered to date; and the black money problem could be better addressed through
using educational, preventive and punitive measures that have been specificallyformulatedinthispaper.
Research limitations/implications –This research doesnot examine the flaws that may remain in the
provisions of existinglaws; rather it gives emphasis to the enforcement of the law in place.Legal flaws thus
can be a subjectmatter of another endeavour.
Practical implications –As implications, it is expected that this researchwill encourage the concerned
authorities in Bangladeshto stop offering amnesties to BMHs for good. Also, other countriesfacing a similar
problem can learn from the experienceof Bangladesh presented, and specific recommendations submitted,in
this paper, in dealingwith blackmoney, corruption and money laundering.
Social implications –It is expected that if therecommendations furnished in this paper are implemented,
corruption in, and money laundering from, Bangladesh will reduce. This reduction will facilitate ensuring
fairness in the society in many respects, deter criminal activities associated with black money and enable
honest taxpayersto buy their homes in a level-playing filed.
Originality/value –This paper presents original research in terms of analysis of materials and the
recommendationssubmitted to deal with corruption, blackmoney and money laundering.
Keywords Bangladesh, Corruption, Money Laundering, Black money
Paper type Research paper
Introduction
Black money, generallyproceeds of corruption and other illegal activities,has been a chronic
problem in Bangladesh for decades.Money is usually cleaned and sanitised (Chaikin, 2008),
but the way of earning or receiving it makesit black or white. Black money is defined by the
Bangladesh NationalBoard of Revenue (NBR) as being the money earned legally or illegally,
but not declared to the government agencies, thus its holders avoid paying tax (Waris and
Latif, 2013). This is an incomplete definition focused on taxation only and it largelyignores
the concept of inherent illegality in holding black money which is typically “amassed
JMLC
21,3
264
Journalof Money Laundering
Control
Vol.21 No. 3, 2018
pp. 264-289
© Emerald Publishing Limited
1368-5201
DOI 10.1108/JMLC-06-2017-0020
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1368-5201.htm
through immoral, improper and illegitimatemeans”(Waris and Latif, 2013). Black money is
more aptly defined, linkingwith corruption and other illegal activities, as the:
[...] money illegally obtained through political and/or bureaucratic corruption, bribery at all
levels of the government, semi-government, autonomous or semi-autonomous offices or
organisations, as well as money amassed by businesspeople through smuggling, black marketing,
shady deals, profiteering, money amassed by labour leaders, student leaders, through extortion –
and especially, money amassed by functionaries of the ruling government party and its various
organs, and their families, relatives and cronies (Waris and Latif, 2013).
Corruption is one of the ways of “grabbing”black money, which is laundered to hide its
origins. Thus, blackmoney, corruption and money laundering are interrelated.
Successive governments of Bangladesh have been allowingblack money holders (BMHs)
to whiten their “ill-gotten”money in different ways, such as investing in securities and real
estate markets, claiming that the whitening opportunity will help boost the national
economy. However, no credible evidence is available tosupport that the avowed objectiveof
boostingnational economy by granting amnestyto such wrongdoers has been ever achieved.
Contrarily,research demonstrates otherwisethat such opportunitiesto invest black money in
securities and real estate markets have witnessed no positive impacts on the markets
(Solaiman, 2016,2014). Instead, the opportunities have furthered corruption and facilitated
money laundering making the country world champion in corruption for consecutively five
years (2001-2005) in the yearly corruption perception index (CPI) of Transparency
International (TI), a German-based anti-corruption organisation (Staff Correspondent, 2005).
Taking advantageof such persistent amnesties, corruption graduallypermeates all levels of
society in the country. The situation is so intractable that the Chief Justice of Bangladesh
publicly pronounced that “if Tk 100 is allocatedfor any development purpose in the country,
Tk 40 is spent and Tk 60 is stolen”(Staff Reporter,2017a, 2017b).
All opposition political parties have always opposed such legalisation of illegal money,
and sometimes even finance ministershave openly admitted the unfairness in grantingsuch
amnesties. Nonetheless, the successive governments had succumbed to invisible pressures
at the time of drafting annual national budgets for decades.The debate about black money
is revived every year when members of civil societies, leading economists and various
organisations, such as Transparency International-Bangladesh (TIB) (FE Reporter, 2017),
sternly oppose this indemnity.This disapproval is voiced against the unjustifieddemand of
vested quarters organisedunder the banner of real estate business (FE Report,2017a,2017b)
and stock brokers during the pre-budgetparley that this opportunity be given to BMHs. The
case is somewhat differentthis year, in that the Anti-Corruption Commission of Bangladesh
(ACC) itself has formally suggested the government to give one more chance to BMHs to
whiten their black money “through purchasing land and apartments to discourage
corruption”(Uddin,2017a, 2017b).By contrast, previously the ACC along with the National
Human Rights Commission of Bangladesh intensely opposed such a discriminatory
treatment of BMHs by arguing that it contravenes the national constitution and
international obligations, as well as the laws governing anti-money laundering and
corruption, as discussedshortly below.
It is to be borne in mind that once corruption is tolerated in one area, the evil is likely to
spread out in all other areas of regulation in our society[1]. Thus, the ACC’s unusual solicitation
in favour of “predators”provides impetus for this paper. However, despite such disputed
advocacy by the ACC, it is commendable that its current chairman has already demonstrated
greater activism than his predecessors in combating corruption, and this has generated public
confidence to some extent that corrupt practices and resultant money laundering will gradually
reduce if the proactive moves continue to operate. Positive effects of the ACC’s proactivity are
Combating
corruption in
Bangladesh
265
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