Navigating the shadows: exports and money laundering dynamics in Bangladesh
| Date | 29 August 2024 |
| Pages | 125-141 |
| DOI | https://doi.org/10.1108/JMLC-05-2024-0092 |
| Published date | 29 August 2024 |
| Author | Md Noor Uddin Milon,Habib Zafarullah,Tahmina Akter Poli |
Navigating the shadows: exports and
money laundering dynamics in
Bangladesh
Md Noor Uddin Milon
Department of Customs, National Board of Revenue, Government of Bangladesh,
Dhaka, Bangladesh
Habib Zafarullah
Department of Social and Philosophical Inquiry, University of New England,
Armidale, Australia, and
Tahmina Akter Poli
National Board of Revenue, Government of Bangladesh, Dhaka, Bangladesh
Abstract
Purpose –This study aims to analyzethe complex dynamics of money laundering (ML) in theexport sector
of developing countries, with a special focus on Bangladesh. It aims to uncover the strategies and tactics
money launderers useto exploit export transactions and understand the vulnerabilitiesthat exist in economies
where enforcementagencies neglect the export industry.
Design/methodology/approach –This study examines Bangladesh’s export sector ML using qualitative
methods.Customs officers, central bank officers, port authorities and selected exporters were interviewed semi-
structured. Document analysis of Bangladesh Bank orders, media and Customs Intelligence and Investigation
Directorate reports was also done. Qualitative data patterns were identified usingtheme analysis.
Findings –The study identifies the most vulnerable export commodities –readymade garments,
agricultural items and processed foods –as prime targets for ML. Key methods of laundering include
under-invoicing, over-invoicing, misdeclaration and fake documentation. The research highlights the
significant risk posed by the improper use of government financial incentives and introduces the “sample
shipment”method as a novel laundering tactic. The findings underscore the need for stronger oversight and
controls to mitigatethese risks.
Research limitations/implications –This research is limited by single-point data because ML is a
continual activity. The reliance on case studies from newspaper reports and online platforms introduces a
degree of selection biasand the chosen instances may not comprehensively represent the broader landscapeof
trade-basedML.
Declarations.
Ethics approval: Not required as the research was undertaken by individuals in their personal
capacity. Also, no experiment on humans/animals was undertaken.
Informed consent: Interviewees’consent was taken before conducting interviews.
Funding: The study was not funded by any organization.
Authors’contribution: Milon was the major contributor, did the initial research and interviewed
participants; Zafarullah did the theoretical/conceptual part and analyzed and interpreted the findings;
Poli, along with Milon, did the literature review and interviewed some participants.
Competing interests: There were no financial, non-financial or conflicting interests.
Availability of data and materials: Data for the research was obtained from published materials, the
Internet and personal communication and interviews.
Journal of Money
Laundering
Control
125
Journalof Money Laundering
Control
Vol.28 No. 1, 2025
pp. 125-141
© Emerald Publishing Limited
1368-5201
DOI 10.1108/JMLC-05-2024-0092
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/1368-5201.htm
Practical implications –The study provides several practicalrecommendations for policymakers and law
enforcement agencies to fortify the exportsector against exploitation by money launderers, ensuring greater
transparencyand accountability in international tradeoperations.
Social implications –By closing loopholes in the export sector, the research supports the Sustainable
DevelopmentGoals, particularly Goal 16.4, which aims to reduce illicit financial flows,thereby contributing to
poverty eradicationand economic stability in developing countries.
Originality/value –Original research results supported by technical analysis are presentedin this work. It
contributes to the body of knowledge by detailing the adaptivestrategies of money launderers and proposing
targetedrecommendations for enhancing the integrity of the export sector.
Keywords Bangladesh, Money laundering, Over-invoicing, Export-based laundering,
Sample shipment
Paper type Research paper
Introduction
Within the intricateweb of global commerce, veiled financial undertakings pose a substantial
danger to the economic equilibrium of developing nations (Ibrahim and Alagidede, 2018;
Stiglitz, 2012). The correlation between the two affects all facets of their economies and
impedes their capacity to attain sustainable development. The pervasive challenge that
emerges is primarily causedby the persistent practice of money laundering (ML), along with
tax evasion and trade-based misinvoicing. The historical narrative of criminal behavior
deeply intertwines these activities with the theoretical framework of rational choice theory
(RCT) (Gilmour, 2016;Paternoster and Simpson, 1993), which implies that individuals
make decisions by thoroughlyevaluating the costs and benefits to maximize their anticipated
satisfaction or usefulness (Becker, 1968). Within financial crime,this perspective posits that
people participate in criminal conductwhen they perceive that the possible advantages, such
as monetary profitorinfluence, outweigh anticipated drawbacks or associated costs, which
include the risk of detectionand punishment (Cornish and Clarke, 2014).
ML is an illicit practice that criminals engage in to conceal the dishonest origins of their
ill-gottengains, typically obtained throughcriminal activities likedrug trafficking, corruption,
or fraudulent schemes. Criminals may subsequently allocatecleansed funds toward bona fide
investments, opulent acquisitions or even financial backing for additional illegal enterprises
(Argentiero et al.,2008;Sharman, 2008). So, the complex relationship between the ideas of
RCT and theillegal practice of ML shows a long-lasting and complex connection, where the
careful weighingof pros and cons always shapes thearea of illegal financial activities.
Throughout history, ML has been closely associatedwith currency, suggesting that it has
existed alongside the use of money since its beginning (Argentiero et al.,2008). However,
the official classificationof ML as a criminal violation did not occuruntil 1986, when the US
Government enacted the Money Laundering Control Act, the first-ever law criminalizing
ML (Youngand Woodiwiss, 2021). This indicates a delayedunderstanding of its seriousness
worldwide (Sharman, 2008). Apartfrom its historical presence, the phenomenon reveals the
enduring nature of ML throughout historyand its ability to adjust to evolving economic and
legal circumstances. The adaptation is especially remarkable in the context of the modern
global financial system, where the complexity of financial crimes requires ongoing
watchfulness and creativeregulatory measures.
ML casts a significant presence in the global financial arena,ensnaring around 2% to 5%
of the world’s GDP, which amounts to a staggering US$800bn to US$2tn, in illegal
transactions every year (Brandt,2023;OECD, 2014;UNDP, 2011).The widespread problem
is particularly evident in developing nations, where the depletion of crucial resources
exacerbates economic weaknesses. Global Financial Integrity establishes a clear link
JMLC
28,1
126
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