What are the steps that can be taken to reduce the flight of money out of Bangladesh?

The flight of money out of Bangladesh can reduce the country’s foreign exchange reserves and weaken the formal financial system. Therefore, effective monitoring, stronger regulation, and better investment opportunities are needed to control such activities.

Steps to be taken

(1) Strengthening Price Verification: Banks should verify import and export prices against international market prices and relevant reference values. This can help detect under-invoicing and over-invoicing.

(2) Strengthening AML/CFT Measures: Banks should improve KYC, CDD and TBML monitoring. This will help identify suspicious trade and financial transactions.

(3) Improving Information Sharing: Banks, Bangladesh Bank, BFIU and NBR Customs should share relevant information. This can help identify unusual trade and financial transactions.

(4) Making Formal Channels Attractive: Formal remittance and banking channels should be made faster, cheaper and more convenient. This can reduce the use of informal channels such as hundi.

(5) Improving Investment Opportunities: A better domestic investment environment and attractive returns can encourage people to invest their money within the country instead of moving it abroad.

(6) Strengthening International Cooperation: Bangladesh should cooperate with international authorities to trace and recover illegally transferred funds.

(7) Strengthening Bank Supervision: Regular inspection and audit of banks should be conducted. Banks should also be held accountable when they fail to detect obvious mispricing or suspicious transactions.