Government must address issues to stop use of hundi for capital flight

The Criminal Investigation Department’s estimate that around 750 billion taka is laundered annually from Bangladesh through hundi, an informal financial instrument used in trade and credit transactions, run by a number of agents of mobile financial services, is extremely worrying. The law enforcement agency based its estimate on the money that 16 people the agency arrested laundered in four months. In total, those arrested laundered 207 million taka in four months and law enforcement estimates that there are around 5,000 mobile financial agents involved in the business who could launder 250 billion taka over the period, i.e. 750 billion taka per year. A senior Criminal Investigations Department official claims that the mobile financial services agents in question are additionally involved in illegal transactions such as online gambling and cryptocurrency trading. Based on the information provided by the Financial Intelligence Unit, the Criminal Investigation Department arrested the officers – in possession of 1 million Tk in cash, digital currency worth 35 million Tk and others accessories – during raids on places in Dhaka and Chattogram. Three cases were also filed with police in Mohammadpur and Khilgaon in Dhaka and Kotwali in Chattrogram.

Law enforcement says one group collects money from expatriates and another group pays the amount in local currency to mobile financial service agents in Bangladesh so the money can be sent to individual customers of mobile financial services. The statement of the case filed with Chattogram Kotwali Police suggests the trade came to light due to a suspicious number of transactions used to send a huge sum of money to the families of the migrant workers. This all appears to have been a failure on the part of law enforcement to stop illegal use of mobile financial services. Now that the issues have been exposed, it is expected that law enforcement and other authorities will get to the source of the trade, investigate the cases without interference, hold those responsible accountable and fire them. before the court of law to effectively stop the recurrence of such transactions and the drying up of the economy. But it looks like the government has a few more procedural issues to deal with. The government should simplify the process of sending money by migrant or expatriate workers. The government must provide facilities for expatriates and migrant workers to be interested in sending money home through the banking channel. The government may also need to consider cases of undocumented migrant workers who cannot use the banking channel to send money home.

The government and law enforcement must therefore trace all mobile financial service agents involved in the hundi trade and hold them accountable to stop the illicit flight of capital through an important financial transaction instrument. The government must also address procedural shortcomings, if any, that may have forced migrant workers to use illegal channels to send money home.