BB Detects More Suspicious Transaction

Central bank detects transaction suspicious
Not all indicate act malicious.
Growth of mobile financial service
Hardly brings offer for local ICT office.

Bangladesh Financial Intelligence Unit(BFIU) of Bangladesh Bank in its annual report claims that it has detected 5280 suspicious transactions in 2020-21. In 2018-19,suspicious transactions were 3675. BFIU notes that the growth in suspicious transactions is mostly due to fraudulent and multilevel marketing activities of e-commerce platforms. Banks have reported 4495 suspicious transactions during this period,financial institutions and exchange houses have reported the rest. However, head of BFIU underscores that reporting of suspicious transactions does not indicate rise in clandestine transactions or criminal activity; rather it indicates increase in awareness about reporting the incident of suspicious transaction¹.

Generally, e-commerce platforms do their transactions online and through mobile financial services, which have registered commendable growth in the last one decade. But every mobile financial operator has to maintain unique bank account,known as trust and settlement account whose role is to convert digital money into actual money,against every mobile financial account opened as per the mobile financial services guidelines laid out by Bangladesh Bank.Despite having 51% share of Nagad, Department of Posts did not own the trust and settlement accounts. Those were owned by 49% share holder of Nagad,Third Wave Technologies Limited². This information was brought to surface when Third Wave Technologies Limited had tried to change the ownership of the settlement accounts of Nagad in a bid to avoid paying the clients in the wake of a scam. The objective was to put responsibility of clearing client’s money on the other owner's shoulder,here Department of Posts. As the news became public, Bangladesh Bank intervened and required that Nagad abstain from opening new account without prior consent of Bangladesh Bank and Department of Posts.³

Banks are obliged to report about transactions over TK 1 million. In addition, they can also report on transactions that they deem malevolent. During pandemic, when most of the economic activities were stalled and transportation with the rest of the world was disrupted, meteoric growth of e-commerce platforms raised suspicion. Many feared the platforms were used to legalize black money and launder money abroad. Regulatory environment was weak back then.This kind of transactions was reflected in the mobile financial service provider's bank account. BFIU back then froze many accounts sensing illegal MLM activities. Many used Nagad ,offering lucrative rates,to run their e-wallets to do e-commerce transactions. It is not known what percentage of suspicious transaction belongs to Nagad subscribers. Since row revolved round eValy,e-orange and clients mostly drawn from Nagad, Nagad subscribers may constitute a large part of the accounts fell under suspicious category.

Nevertheless, this should not be the pretense to clip the wings of mobile financial services, which did a tremendous job in financial inclusion. The services are now diversifying its product range. Now many can open savings account using such services.Mobile financial service operators should concentrate on procuring local software. This is no rocket science that our local software developers will not be able to develop. Many brokerage houses in Bangladesh use local software. Mobile financial service operators may follow their steps.

The head of BFIU anticipates correctly that suspicious transactions may grow in future and it is wrong to categorize every suspicious transaction as criminal offense. This observation came at a moment when government continues legalizing black money in ICT sector in the current budget⁴[*]. So apart from e-commerce,many startups may pop up to avail this opportunity. Government has to make sure that this kind of capital turns out to be productive and catalyst for the industry instead of just relabeling the money,which does little help for the industry in terms of job creation, innovation and adding values. While the number of suspicious transaction goes up, central bank should take the onus to spell clearly which one is an act of malevolence and which one passes the scrutiny.

Notes And References:
1 “Suspicious Transaction Reporting Up By 43.67%,BFIU ”,Shamprotik Deshkal, March 15,2022. For more read at https://en.shampratikdeshkal.com/economy/news/220327725/suspicious-transaction-reporting-up-by-bfiu

2 “What Does Nagad Ownership Row Reveal?”,Rezaul Hoque, https:hoquestake.blogspot.com,September 12,2021.For more read at https://hoquestake.blogspot.com/2021/09/what-does-nagad-ownership-row-reveal.html?m=1

3 “BB Bars Renaming Bank Accounts Of Nagad Without Its Approval”,New Age,September 06,2021. For more read at https://www.newagebd.net/article/148399/bb-bars-renaming-bank-accounts-of-nagad-without-its-approval

4 "Bangladesh Retains Option To Legalise Dirty Money By Raising Fines", bdnews24.com,June 29,2021. For more read at https://m.bdnews24.com/en/detail/economy/1908159

[Note:This piece has been updated on March 22,2022 at 11:04 AM Bangladesh Standard Time (BST).
*The update includes reference to legalizing dirty money in ICT sector.]