Role of financial intelligence unit (FIU) in anti-money laundering quest. Comparison between FIUs of Bangladesh and India
| Pages | 931-947 |
| Published date | 04 April 2020 |
| Date | 04 April 2020 |
| DOI | https://doi.org/10.1108/JMLC-01-2020-0003 |
| Author | Shirin Sultana |
| Subject Matter | Accounting & Finance,Financial risk/company failure,Financial compliance/regulation,Financial crime |
Role of financial intelligence
unit (FIU) in anti-money
laundering quest
Comparison between FIUs of
Bangladesh and India
Shirin Sultana
Department of Law, Faculty of Law, University of Dhaka, Dhaka, Bangladesh
Abstract
Purpose –The purpose of this paperis to examine the effectiveness of the Financial IntelligenceUnit (FIU)
of Bangladesh and Indiain efforts of combatingmoney laundering by these countries through a comparative
assessmentof several aspects of both FIUs.
Design/methodology/approach –The two FIUs are compared by using a “multiple case design”
method of assessment.The framework for assessment was developed followingthe earlier models developed
by scholars and recommendations of international institutions working on money laundering. Publicly
available informationfrom the respective websites of FIUs and annual reports has been used to completethe
study.
Findings –The study has found thatFIUs of both countries have improved significantly in fulfillingtheir
mandates. There are several commonalities and differences between the two agencies. Despite showing
improvement in several respects, both countries need to address certain basic deficiencies of the existing
frameworkto make the agencies more effective.
Originality/value –It is supposed that this study will assist both countries to transform their existing
FIUs to robustagencies in anti-money laundering efforts by takingcare of the weaknesses identified here. It is
hoped that the present study will encourage similar studies regarding the problematic areas of FIUs of
Bangladeshand India as identified and in respect of FIUs of other countries.
Keywords India, Bangladesh, Financial crimes, Money laundering, Financial intelligence unit
Paper type Research paper
1. Introduction
The creation of the Financial IntelligenceUnit (FIU) has become an integral part of the anti-
money laundering strategy of any country. FIU is the national agency established by
countries to act as co-coordinator in their anti-money laundering and combating the
financing of terrorism (AML/CFT) endeavors. FIUs are simply defined as agencies for
receiving and analyzing reports involving suspicious financial transactions and
disseminating the resultant financial intelligence to regulatory agencies for further actions
(IMF/WB, 2004). Although producing and disseminating financial intelligence is the
common purpose of every FIU, the overall functioning of FIUs varies considerably from
country to country. On the basis of these wide varieties, FIUs are categorized into four
groups, i.e. the administrative-type FIU, the law-enforcement-type FIU, the judicial- or
prosecutorial-type FIU and the mixed or hybrid- type FIU (IMF/WB, 2004). The
establishment of FIUs though started in the early 1990s, the number increased after the
formation of Egmont Group in 1995, an international informal network of FIUs (IMF/WB,
Role of
financial
intelligence
unit
931
Journalof Money Laundering
Control
Vol.23 No. 4, 2020
pp. 931-947
© Emerald Publishing Limited
1368-5201
DOI 10.1108/JMLC-01-2020-0003
The current issue and full text archive of this journal is available on Emerald Insight at:
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2004). Establishment of an FIU is also strongly encouraged under the United Nations
Convention against Corruption 2000, known as Merida Convention and the United Nations
Convention against Transnational Organized Crime 2003, known as Palermo Convention
(Merida Convention, articles 14(1) (b) and 58 and Palermo Convention, article 7). Again, an
FIU must be established and must perform its core functions for a country to comply with
the FATF recommendations as findingof non-compliance pursuant to its mutual evaluation
report (MER) process can have serious negative ramifications for any country, including
reputational damage and adverse economic consequences such as limiting external
financing options and hamperingforeign investment (Marcus, 2019).
Among the South Asian countries, Bangladesh enacted the anti-money laundering
legislation in 2002 as the pioneer country and established a department named “Anti-Money
Laundering Department (AMLD)”akin to FIU. Then in 2007, a wing named FIU was formed
within the AMLD, but it was the year 2012, when FIU in Bangladesh got the proper shape and
named as Bangladesh Financial Intelligence Unit (BFIU). Since then BFIU is functional in
Bangladesh as the national agency responsible for the collection, analysis and dissemination of
information regarding suspicious transactions and potential money laundering offenses.
Though BFIU has been working for more than 12 years starting from 2007, assessment of
BFIU’s activities has not been made in any scholarly study except very few. Two evaluations
of 2009 and 2016 concerning Bangladesh’s overall AML/CFT initiatives conducted by Asia/
Pacific Group on Money Laundering (APG) though remarked on the functioning of BFIU (APG
Mutual Evaluation Report, 2009 and 2016), those are not adequate to assess the overall
effectiveness of BFIU. Another study made by Kanak (2016) was intended for examining
BFIU’s effectiveness in combating money laundering and terrorist financing, but it did not
evaluate the functioning of BFIU comprehensively. So, the present study is an attempt to
bridge this literature gap on a comprehensive assessment of BFIU’s functioning.
To assess the functioning of BFIU, the present study has adopted the “multiple case design”
(comparative assessment between/among countries) method advocated by Simwayi and
Haseed (2011) instead of focusing on one country known as “singlecasedesign”method. In a
single-case design, there remain concerns of repetition and generalization of findings, whereas
findings of multiple case design are compelling and robust (Simwayi and Haseed, 2011). For
comparative assessment, the functioning of BFIU has been compared with FIU of India (FIU-
IND) as both FIUs were created in nearer times. Apart from the context of Bangladesh, the
present study will be contributing to fulfill literature gap from Indian context too as
comparative assessment of Indian FIU named FIU-IND with other jurisdictions is not made yet
except that of Sathye and Patel (2007). But the study (Sathye and Patel, 2007) which compared
FIU-IND with that of Australian FIU (AUSTRAC) was made when Indian FIU was in its
maiden stage, being established in 2004. So, the present study will be an important contribution
from both countries’contexts (Bangladeshi and Indian context).
The present paper is arranged in the following order: Section 2 highlights the evolution
stage of FIUs of both countries; Section 3 focuses on the framework used for comparative
assessment of FIUs; Section 4 comparatively evaluates the FIUs of Bangladesh and India
using the framework developed in Section 3; Section 5 summarizes the findings of
comparative assessment;and Section 6 concludes.
2. Establishment of Financial Intelligence Units in Bangladesh and India
2.1 Financial Intelligence Unit in Bangladesh
The journey of FIU in Bangladesh started in June 2002 when a department named “Anti-
Money Laundering Department (AMLD)”was established within the central bank of
Bangladesh (Bangladesh Bank) to exercise the power and to shoulder the responsibilities
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