Illegal transactions by money exchangers deepening the dollar crisis

If the authorities do not take seriously the illegal and undocumented transactions of foreign currencies by money changers, no improvement will take place in arresting money laundering that is continuing unabated. Quoting an investigation by the Criminal Investigation Department (CID), a national daily reported that many registered and illegal money changers have been exchanging currencies without endorsement and trading in hundi.

Bangladesh is currently going through a dollar reserves crisis and illegal and undocumented transactions of foreign currencies are further deteriorating the dollar crisis scenario. It should be a cause of serious worry that CID investigators found that the actual volumes of foreign currencies transacted by money changers were many times more than the official amounts cited to the Bangladesh Bank every year.

There is this figure. The Bangladesh Financial Intelligence Unit with which the central bank is coordinating in this study reported that there was a 62.33 per cent increase in suspicious transactions and activities related to money laundering in 2021-22 over the previous financial year. This number is staggering and enforces the suspicion that during the ongoing economic crisis, people who hoarded money over the years are still sending the money out through the illegal channel as the government’s grip on power is loosening.

Reportedly, the CID in January conducted raids in different parts of Dhaka, busted five illegal money changing businesses and arrested 14 people. But the dishonest money exchangers have adopted a new tactic and they are helping people to launder money out of the country through registered money changers.

There are a total of 235 registered money exchange houses in Bangladesh and according to a CID officer on average illegal money changers exchanged Tk 70 to 75 lakh daily. This acutely impacted the dollar reserves as formal banking channels did not benefit from such illegal exchanges. To attract expatriate workers the money launderers, who are involved in hundi business, are paying more to them than the formal banking rate. Since these workers face trouble in converting their dollars when they return to the country, they go to the money changers.

At present, the government is getting increasingly cornered politically on the one hand and is grappling with the current economic crisis on the other hand. It is in such a desperate situation now that the Foreign Minister Abdul Momen yesterday said that the US visa sanction policy for Bangladesh will stop money laundering from the country.