QUESTIONARIES REGARDING

MONEY LAUNDERING

1. What do you mean by Money Laundering?

2. When i.e. what year it’s introduced in Bangladesh?
3. What is BCU?
4. What do you mean by CCU?
5. What is AML?
6. What is STR?
7. What is CTR? From what amount this Statement will prepare.
8. What is KYC? What detail mentions have
9. What is T.P Please describe
10. What is BAMLCO?
11. What is CAMLCO?
12. Do you know- What will be the punishment for money Laundering?
13. What is the function of BCU & CCU?
14. What is PEP’S?
15. On what reason(s) you can assess that a person is related with the activities of
money laundering
16. What is Anti Terrorist Act 2009?
17. What is the last circular of AML wing of Bangladesh Bank
 LECTURE SYNOPSIS

OVERVIEW OF FOREIGN EXCHANGE TRANSACTIONS-

Foreign Exchange- Import, Export & Remittance- AD License

1. FOREIGN EXCHANGE:
“Foreign Exchange refers to the process or mechanism by which the currency of
one country is converted into the currency of another country. A person living in
Dhaka can make a payment to another person in Chittagong in Taka. Where a
trader from Dhaka imports goods from a New York merchant, the payment
involves certain complications. The Dhaka man can pay in Taka, but Taka is of no
use to New York, as this is not the legal tender there. There must be some means
of changing Taka into U.S. Dollar. With the help of credit instruments (Drafts,
MT, TT etc.) the transfer of fund from one centre of the world to another and
change of currencies are effected by means of debit/credit entries through banking
accounts.

2. NECESSITY OF FOREIGN EXCHANGE:

No country is self sufficient in this world. Every one is more or less dependent on
another, for goods or services. People of one country is going to another country
for education, medical Treatment, service etc, one country Export Agricultural
commodities, another country Export’s industrial products. All these transaction
need Foreign currency which related to Foreign Exchange.

3. FOREIGN TRADE:
When the Trade takes place between two countries it is called foreign or
international trade. The trade may include both merchandise and services. If
foreign exchange means all the financial transactions in international markets the
Foreign trade is part of foreign exchange. While foreign exchange means foreign
currency, then it is the media of exchange in foreign trade.

4. FER. Act. 1947 (Act. No. VII of 1947) enacted on 11th March, 1947 in british
India- provides.
• Legal basis for regulating certain payments.
• Dealings in foreign exchange & securities.
• Import & export.

a. The Act was adapted in Pakistan & then in Bangladesh.

b. BB is responsible for administration of regulation under the Act.
 c. Basic regulations under the FER, Act are issued by govt. as well as by BB
in the form of notifications published in the Bangladesh Gazette.
d. ADs dealings in fex are required to bring the fex regulations to the notice
of their customers in their day-to-day dealings & to ensure compliance
with the regulations by such customers.
e. ADs must maintain adequate & proper record of all fex transactions and
furnish such particulars in the prescribed returns for submission to BB.
They should continue to preserve such records for a reasonable period for
ready reference as also for inspection by BB.

REGULATION’S FOR FOREIGN EXCHANGE:

Foreign Exchange transaction’s regulated and controlled by the following local and
international regulations:

• Foreign exchange regulation Act 1947.

• Guidelines for Foreign Exchange Transaction.
• Bangladesh Bank F.E. Circular.
• Current Export & Import Policy.- 2009-2012
• Public Notice issued by C.C.I.E.
• Instructions from different Ministry.
• Shariah principle.
ICC Estd:1919: International chamber of commerce has issued some publication’s:
a) UCPDC Publication: 600 –2007 (Uniform custom & practice for Documentary
credit)
b) URR: Publication: 725 (UNIFORM RULES FOR REIMBURSEMENT)
c) URC: Uniform Rules for collection. (722)
d) ICA: International court of Arbitrations.

AUTHORIZED DEALER & AUTHORISED MONEY CHANGER:

AUTHORIZED DEALER:
Authorized dealer means a Bank (branch) authorized by Bangladesh bank to deal in
Foreign Exchange under the FER Act. 1947.

Bangladesh Bank does not deal directly with the members of the public, the Foreign
Exchange Transactions are done by Authorized Dealer’s in accordance with guidelines
given by Bangladesh Bank. These Authorized dealers have generally been delegated the
following powers.

• To buy Foreign Exchange from the customers.

• To sell Foreign Exchange against Import authorized under IPO of the
country.
• To provide forward exchange covers in respect of eligible transaction.
• To sell Foreign Exchange for travel abroad at the prescribed quota.
Application for authorized Dealer License should be made to the General manager,
Foreign Exchange Policy Department, Bangladesh Bank with a declaration that
Guidelines for Core Risk Management pertaining to Treasury functions in Foreign
Exchange are already in place and all steps taken by the bank for Internal monitoring and
supervision of the branches for carrying out Foreign Exchange Transactions.

Pre-requisite of getting an A.D License:

i) Adequate manpower trained in Foreign Exchange.
ii) Prospect to attract reasonable volume of Foreign Exchange business in the
desired location.
iii) The applicant branch of the bank meticulously complies with the
instructions of the Bangladesh bank specially with regard to submission of
monthly/periodical returns.

AUTHORIZED MONEY CHANGER:

There are some personals or firms, authorized by Bangladesh Bank to deal in Foreign
Exchange with limited scope, are called authorized money changer.

Responsibility of Authorized Dealers :

It is very important for the Authorized dealers to familiarize themselves with the
underlying objectives of Exchange control regulation of the country. They should
carefully follow the instructions contained in the Guidelines for Foreign Exchange
Transactions issued by the Bangladesh Bank with amendments made from time to time.
They should meticulously follow the instructions given by Bangladesh Bank through
Foreign Exchange circulars, circular letters etc. Authorized Dealers should be careful in
scrutinizing applications received from the customers for the purpose of, say, import
payments, issue and certification of Export Forms, release of Foreign Exchange for
payments etc. to ensure correctness of information given in the applications.

ACTIVITIES OF FOREIGN EXCHANGE:

There are three kinds of Foreign Exchange transactions:

• Import
• Export &
• Remittance.
 A) IMPORT :
In almost all the countries of the world there is import trade control. In our country the
import goods is regulated by the Ministry of Commerce in terms of the import & Export
Control Act. 1950 (as adopted in Bangladesh) with import Policy orders and Public
Notices issued from time to time by the Chief controller of Imports & Exports (C.C. I &
E) while payments for these imports are regulated by Bangladesh Bank, Dhaka, through
its Foreign Exchange Policy Department. So, any one interested to carry import business
needs registration with the licensing authority ie. Chief Controller of imports & exports
and its Offices.

STEPS FOR OPENING LETTER OF CREDIT.

An importer desirous to have an import L/C limit must apply to the bank in prescribed
forms alongwith following information/particulars for sanction of L/C limit:
1. Full particulars of bank accounts with the designated bank or with any other
banks.
2. Types of business concern (Proprietorship, Partnership or limited company)
3. Historical back ground
4. Amount of L/C limit Required.
5. Terms of Repayment : a) Whether the import documents would be retired against
cash payment on first presentation (b) Whether post import finance is required in
the form of LTR or LIM for adjustment of liability of import bills.
6. Percentage of L/C margin to be offered.
7. Other security to be offered (if any).
8. Submission of requisite paper/documents for preparation of (Credit Risk Grading)
on the business concern.
9. Other liabilities of the importer with the bank as well as with other banks.
10. Undertaking for obtaining of CIB inquiry report from Bangladesh Bank.
11. Statement of Assets & Liabilities of the importer in bank’s prescribed format.
12. Declaration of source of fund & fund flow.
On receipt of above particulars, the import section of the bank will prepare a L/C limit
proposal and the same will be forwarded to Head Office duly recommended by the
Manager of the branch. In case of a new customer, the report would be requested from
the previous banker. An officer of the branch will visit the business site and factory site
of the customer and submit physical verification report on the business concern which
must accompany the limit proposal.

The credit management committee of Head office of a Commercial Bank will pass their
opinion regarding sanction or decline of the proposal. In case of a large loan/limit they
will obtain necessary approval from the Board of Directors of the Bank.

Upon receipt of Head Office approval/sanction of L/C limit, the branch will obtain
importer’s acceptance on the terms and conditions of proposed limit as mentioned by
Head Office.
The importer usually submit the following papers/documents of the bank with request to
open L/C against their sanctioned limit:

• Letter of credit application Form (CF-7)

• Indent/proforma invoice
• Valid IRC (Import Registration Certificate)
• LCAF (Letter of Credit Authorization Form)
• IMP-Form (Import Form)
• Insurance cover note as per bank’s clause with money receipt.
• Income tax paid certificate & VAT Reg. Certificate.
• Membership certificate from respective Chamber of Commerce.
The L/C Application Form (CF.7)

The L/C application Form is an agreement between the importer and the bank. This Form
is to be stamped under stamp Act. in force in Bangladesh and now it is Tk.150.00. The
application form must be completed/filled in and signed by the importer before opening
of L/C.

Confidential report of Beneficiary of L/C:

According to Exchange Control regulation bankers are required to obtain satisfactory

credit report of the beneficiary of L/C before opening the same, if the value of L/C
exceeds Tk.10.00 lac (incase of an indent) and Tk.5 lac (incase of Proforma invoice)

Advising of L/C through Airmail/Courier service

L/C must be typed in printed format of an individual bank. After typing, L/C should
again be checked up by two signatory (s) and would be dispatched under their full
signature bearing their signature number. No L/C to be mailed to India except SWIFT.

Advising of L/C by SWIFT:

In international Trade issuance of L/C by SWIFT is preferred by all. If any importer

desires L/C to be transmitted by SWIFT that can be done. In that case the full text of the
L/C to be transmitted by SWIFT to the advising bank abroad. L/C covering value more
than US$5,000/- or equivalent should be sent through SWIFT.

Lodgment and retirement of documents:

On receipt of the shipping documents from the negotiating bank, L/C opening bank
should carefully examine these to ensure that they complied with the terms of the credit.

If the documents are found in order and are acceptable to the importer, the bank lodges
the bill in PAD (Payment Against Documents) by converting the foreign currency
representing the bill amount and foreign correspondents charges into Taka and will ask
the importer to retire the bill by sending a cost memo indicating the amounts payable by
him under different heads.
Export:
Export is an important factor in boosting up Export of our Country. Instructions have
therefore been issued by Bangladesh Bank to all Commercial Banks from time to time to
make adequate Export credit available to the exporters to enable them to meet their
foreign sale commitments.
Before going to our main discussion, we like to highlight on “Export Mechanism” in
brief.

What is Export?

Export means earning of Foreign exchange, complying existing Exchange regulation,

against delivery of locally produced/imported raw materials with added values to foreign
countries.

REGISTRATION OF EXPORTERS:

Parties/firms desirous of performing export trade are required to obtain export

registration certificate (ERC) from the office of the chief controller of Imports and
Export, Govt. of the peoples, Republic of Bangladesh.

Intending Bangladeshi Exporters are required to apply to the CCI & E authority in the
prescribed from alongwith the following documents.

• Nationality and assets certificate of the proprietor/partners/Directors.

• Regd. Partnership Deed in case of Partnership concerns, Memorandum and
Articles of Association and incorporation certificate in case of limited
Company.
• Bank’s solvency.
• Income tax certificate (TIN)
• Valid Trade License.

PROCEDURE FOR EXPORT:

It is needless to mention here that banks are shouldering the risk of a huge volume of
import and export liability on behalf of their customers by allowing them:
• Export credit
• To import Garments raw materials on Deferred payments basis and
• Giving opportunity to repay the aforesaid liability from the related
export proceeds.

The whole thing is done through different stages which are underlined below :
STAGE ONE
• Accepting of master export letter of credits and keeping the same into
banks lien.
• Fixing up the import entitlement
• Opening of Back to Back letter of credit on deferred payment basis for
procurement of garments raw materials.
• Fixation of customer’s liability based on the individual L/C’s
• Advising of letter of credits and related amendments.

STAGE TWO
• Receiving of import documents against BB L/C(s)
• Scrutiny of documents with the L/C terms and obtaining acceptances from
the customers.
• Fixation of maturity and providing banks acceptance to the negotiating
banks.
• Shifting of customers liability from the letter of credit to the accepted bill.
• Disbursement of packing credit
• Purchasing/Discounting of Inland bills.

STAGE THREE
• Issuance/certification of EXP forms. (Export Form)
• Receiving of Export documents.
• Negotiation of export documents by retaining proportionate foreign
currency amount to meet their import commitment and disbursement of the
balance amount equiv. in Taka.
• Export proceeds realization.

PACKING CREDIT:
Packing credit is an advance granted by a bank to an Exporter to meet the cost upto the
packing of goods for export to overseas buyer. This is usually done in pre-shipment
stage. So it is also called the pre-shipment advance. The purpose of the loan is for
purchase of raw materials or finished goods or manufacturing processing, Packing
transporting upto warehousing/port of shipment etc. for export.

Disposal of Export Forms.

EXP forms are to be quadruplicate. In all cases the forms will be completed and signed
by the exporter or his authorized representative.

After completing the “EXP” forms, the exporter should submit it to the authorized dealer
for certification.
Before certifying any Export Forms, authorized dealers must ensure that the
firm/company is duly registered with the office of the CCI & E.
Authorized dealers shall not certify “EXP” forms unless they have satisfied themselves
with regard to the arrangements made for realisation of export proceeds of the goods
covered by the relative export forms, where necessary they should make inquires
regarding credentials of importers/consignee through their correspondent.

Authorized dealers must be ensured that the arrangements have been made for receipt of
documents of title to goods like bills of lading. Airway bill etc. by them.

After the form is certified by the authorized dealer, it should be submitted to customs
authority alongwith the shipping bill at the time of shipment. The customs authority after
filling the portion relating to them and affixing their seal and signature thereon will
return the duplicate, triplicate and quadruplicate copies to the exporter/his authorized
agent. The original copy will be forwarded by the customs authority to the Bangladesh
Bank.

The exporter must submit all the remaining copies of the EXP forms to the authorized
dealers.

Duplicate “EXP” form to be submitted to Bangladesh Bank within 14 days from the date
of shipment of goods. The exporter and the bank is to do their best to repatriate the
export proceeds within 4 (four) month form the date of shipment. Bank will submit the
triplicate copy of “EXP” form to Bangladesh Bank alongwith monthly return after
realization of export proceeds. So, it is suggested to maintain a due date dairy to peruse
the individual case properly.
FOREIGN REMITTANCE: INWARD & OUTWARD

REMITTANCE:
Remittance represents transfer of fund from one place to another through
official channel.

Foreign Remittance:
Foreign remittance means remittance of foreign currencies from one place/person
to another place/person.
In broad sense foreign remittances include all sale and purchase of foreign
currencies on account of Import, Export, Travel and other purposes.
However, specifically Foreign Remittance means sale and purchase of foreign
currencies for the purposes other than export and import.
All foreign remittances are grouped into two broad categories and guided by the
Foreign Exchange. Regulation Act, 1947 and guidelines for Foreign Exchange
Transactions of Bangladesh Bank. They are-
• Foreign Inward Remittance
• Foreign Outward Remittance.

Foreign Inward Remittance:

Remittance of foreign currency being received in the Country from abroad is
called inward foreign remittance.
The remittance of foreign currencies which we are receiving from abroad against
which the authorized dealers making payment in local currency to the beneficiaries
may be termed as Inward remittance.

Purposes of Inward Remittances;

• Family maintenance
• Indenting commission
• Recruiting Agents commission
• Realization of export proceeds
• Donation
• Gift etc.
Inward remittances-No Restrictions:
The ADs may freely purchase foreign currencies.
Remittances equivalent to US$2000/- and above should be reported on Form C
attached to the appropriate schedule.
However, declaration on Form C by the beneficiary is not required against
remittances sent by Bangladesh nationals working abroad. The purpose of
remittances should be clearly stated on the Form C.

Disposal of Foreign Currency Notes, Coins etc. by Incoming Passengers:

Incoming passengers may bring in any amount of foreign currency with
declaration in FMJ at the time of arrival.
No declaration is necessary for amounts up to US$5000/-.
For non-resident, the entire amount brought in with declaration or up to US$5000/-
brought in without declaration may be freely taken out at the time of departure or
may deposit the amount in F.C account or NFCD Account subject to submission
of Form FMJ for excess of US$5000/- or equivalent.

Out ward remittances are of different types:

• Private Remittance
• Official & Business Travel related Remittance
• Commercial Remittance

Private Remittance:

a) Family remittance facility:

Foreign nationals working in Bangladesh with the approval of the Government

may remit through authorized dealer 50% of salary and 100% of leave salary as
also actual savings and admissible pension benefits. Besides, Bangladeshi
nationals are allowed to remit moderate amount of foreign exchange for the
maintenance of family members working abroad.

b) Membership fee and Registration Fee:

AD may remit without prior approval of Bangladesh Bank, the membership
fees of foreign professional/scientific organizations or fees for examination.
c) Education:
ADs are authorized to release Foreign currency to the students for tuition and
other fees for studying abroad in full time and regular undergraduate and post
graduate course.
The fees shall be released in favor of the institution and other expenses in
favor of the student.
Foreign Currency will be released for only one year.
Foreign currency for the second and subsequent years will be released on
submission of progress report.
 Files shall be opened for each student and shall be kept ready for BB
inspection. Not to be handed over to student.
Money will be released from same branch/ bank where File is opened.
Transferable to any other AD on request.
In no case the file shall be handed over to the student.
In case of students US$200 may be released from the travel quota.
d)Travel:
ADs may release foreign currencies for traveling under the travel quota. The
quota is set at US$5000/- per year for visit in countries other than SAARC
countries. Quota for SAARC member countries and Myanmar is $1,500/-. Past
it was set at US$3,000/- per year for visit in countries other than SAARC
countries and Myanmar. SAARC countries and Myanmar was US$1,000/- for
travel by air & US$500/- for travel by Road. In case of minor the admissibility
is just half.

e) Health/Medical:
ADs without prior approval of Bangladesh Bank may release foreign exchange
upto $10,000/- for medical treatment abroad on the basis of the
recommendation of the medical board/specialist set up by the Health
Directorate and the cost estimate of the foreign medical institution.

f) Seminars and Workshops:

Without prior approval of Bangladesh Bank, ADs may release for SAARC
countries and Myanmar US$200/- per day, for others countries US$250/- per
day for attending in the conferences, seminars and workshops.

F C ACCOUNTS:
In Bangladesh the Authorized Dealers can open Foreign Currency Accounts in
US Dollar, Euro, Pound Sterling, Japanese Yen or any other approved foreign
currencies. The following category of persons/organizations can open F.C
Accounts:

Foreign Currency Accounts Holders:

 Overseas Bangladeshis
 Foreign expatriates and firms.
 United Nations and other international organizations
 Diplomatic Missions & their expatriates
 Diplomatic bonded warehouses (duty free shops)
 Bangladeshi working with international organization in Bangladesh and
drawing Salary in foreign currency.
Operations in FC Accounts

The FC Account Opening:

 In prescribed AOF duly signed and filled in.

 Filling the nomination form
 Two photographs of A/C holders/operators/nominees
 The proof of salary drawn in foreign currency or proof of resident abroad or
foreign nationality.
 The photocopies of relevant pages of Passport
 Legality of staying in Bangladesh/work permit etc.
 Somebody may introduce the Account
 In case of organization the registration, permission etc.
 Authority Power of Attorney of the operators of A/c

Operations in FC Accounts

 ADs can issue Cheque book to FC A/C holders.

 No interest is given in FC Account
 NFCD Accounts be opened by debiting FC A/c
 Wage Earners Development Bonds can be issued by debiting equiv. Foreign
currency.
 The credit balance is freely transferable/remittable anywhere in abroad.
 Account maintained as long as the account holders desire (including
Bangladeshi nationals).
 Any Bangladeshi on return to Bangladesh, within six months of their arrival
can open the account.

Non-Resident Foreign Currency Deposit (NFCD) A/C

 This is a interest bearing account
 Can be opened by FC Account holders
 The exporters can also open NFCD A/C from their retention quota of
merchandise or service export.
 Interest payable in respective foreign currency. Minimum balance
US$2000/-
 Opened for 1,3,6 and 12 months period
 Maintained as long as the account holders desire
 Any Bangladesh, within six months of their arrival.

Resident Foreign Currency Deposit (RFCD) A/C

 RFCD can be opened by the persons ordinarily resident in Bangladesh
 With cash brought at the time of their return to Bangladesh
  Interest is payable in foreign currency. Minimum balance US$1,500/-
 Account continued as long as the account holder desires.
 Min. period 1month.

FOREIGN CURRENCY ACCOUNTS OF AUTHORIZED DEALERS

In order to be able to put through foreign exchange transaction, the authorised

dealers in foreign exchange maintain balances, normally in current accounts, in the
form of foreign currencies with the overseas branches/correspondent banks. The
foreign currency accounts maintained by the authorised dealers in foreign
exchange with the foreign banks/correspondents are called Nostro Account.

When we talk about ‘Nostro’, we should be familiar with the relevant terms
‘Vostro’ and ‘Loro’ . All these are Latin words which literally mean ‘our’, your’
and ‘their’ respectively.

Current Accounts of foreign banks with their correspondents in the latter’s

currency is called Vostro accounts. What is Nostro Account for a bank in
particular country is a Vostro Account for the bank abroad maintaining the
account. So, Taka account of an overseas correspondent of a bank in Bangladesh is
Vostro Account for the latter which is Nostro Account for the former. When two
Bank’s maintain two Nostro A/C with a same Foreign Bank in abroad, then one
Bank’s Nostro A/C is a Loro A/C for other Bank.

-end-