The Bangladesh Bank (BB, central bank) has detected what it describes as gross violations in foreign exchange transactions in a trade-based money laundering (TBML) scheme.

The scheme allegedly involves the textiles arm of Beximco Group, one of Bangladesh’s largest private sector conglomerates.

TBML scheme

According to the central bank, the TBML scheme involves the opening of letters of credit (L/Cs) with loans from banks and the transfer of money abroad to a supposed exporter.

But importers appear not to have submitted bills of entry, the document that proves that goods actually enter the country, which suggests that while cash was channelled abroad, no goods entered Bangladesh.

Warnings ignored

According BB, the scheme has seen at least US$1 billion channelled abroad and while several firms are said to be involved, several cases relate to one company, Beximco Fashions.

The scheme also involves Janata Bank. According to the central bank, it served five warning notices about Beximco on Janata Bank between January 2017 and April 2018.

Guidelines ignored

But state-run Janata Bank paid no heed to BB’s warnings and continued to provide L/C facilities to Beximco, which the central bank says violated banking regulations.

Janata Bank also continued to make advance payments against the L/Cs despite having overdue bills of entry, which is strictly prohibited under the BB’s foreign exchange guidelines.