Anti Money Laundering (AML) &

Combating Financing of Terrorism (CFT)

Presented By:
Mrs. Ruksana Chowdhury
Executive Director
BSEC

1
 United Nations and UN Security Council Resolutions
 The United Nations (UN) was the first international organization to
undertake significant action to fight against money laundering on a truly
world-wide basis. The UN actively operates a program to fight against
money laundering; the Global Program against Money Laundering,
which is headquartered in Vienna, Austria, is part of the UN Office on
Drugs and Crime (UNODC).

 The UN has adopted United Nations Convention against Illicit Traffic in

Narcotic Drugs and Psychotropic Substances (1988) known as Vienna
Convention and International Convention against Transnational
Organized Crime (2000) known as Palermo Convention. In 2001,
International Convention for the Suppression of the Financing of
Terrorism (1999) was adopted. These conventions bind all the state
parties of UN to place appropriate measures for combating money
laundering and terrorist financing.
 Apart from these conventions various UN Security Council Resolutions
has adopted in response to a threat to international peace and security
under Chapter VII of the UN Charter binding upon all UN member
countries (UNSCR 1267 and its successors, 1373 and the resolutions
related to the prevention, suppression and disruption of proliferation of
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weapons for mass destructions).
 Financial Action Task Force
 The Financial Action Task Force (FATF) is an independent inter-
governmental body that develops and promotes policies to protect the
global financial system against money laundering, terrorist financing and
the financing of proliferation of weapons of mass destruction. The FATF
Recommendations are recognised as the global anti-money laundering
(AML) and counter-terrorist financing (CFT) standard.

FATF performs three primary functions with regard to money laundering

and financing of terrorism:
 monitoring members’ progress (directly or via regional bodies) in
implementing AML/CFT measures;
 reviewing and reporting on laundering trends, techniques and
countermeasures; and
 promoting the adoption and implementation of FATF AML/CFT

3
standards globally.
 Asia Pacific Group on Money
Laundering (APG)
 The Asia Pacific Group on Money Laundering (APG), founded in 1997, is an
autonomous and collaborative international organization. APG is a FATF style regional
body that enforces FATF standards on AML & CFT in Asia Pacific region. As a member
of APG, Bangladesh is committed to APG’s mandate i.e. implementation of FATF
Recommendations.
The APG has five key roles:
To assess compliance by APG members with the global AML/CFT standards through a
robust mutual evaluation program;
To coordinate bi-lateral and donor-agency technical assistance and
training in the Asia/Pacific region in order to improve compliance by APG members with
the global AML/CFT standards;
To participate in, and co-operate with, the international anti-money laundering network -
primarily with the FATF and with other regional
anti-money laundering groups;
To conduct research and analysis on money laundering and terrorist financing trends and
methods and inform APG members related risks and vulnerabilities; and
To contribute to the global policy development of anti-money laundering and counter
terrorism financing standards by active Associate Membership status in the FATF.
4
 Asia Pacific Group on Money Laundering (APG)
 Asia Pacific Group on Money Laundering (APG) has identified several vulnerable sectors including
capital market in Bangladesh during their 2 nd round Mutual Evaluation in 2008. APG suggested that
Bangladesh should include Capital Market Intermediaries (CMI) in the AML/CFT regime. To
comply with the Mutual Evaluation Recommendations, Bangladesh Government has incorporated
CMI as reporting agency. Insider Trading and Market Manipulation are also been included as
Predicate Offences under section 2 of Money Laundering Prevention Act, 2009, by the power
conferred within that legislation on 30 September, 2010.

 Afterwards, the Government amended Money Laundering Prevention Act, 2009 and enacted
Money Laundering Prevention Act, 2012 (MLPA, 2012). MLPA, 2012, includes CMI, such as stock
dealer and stock broker, portfolio manager and merchant banker, securities custodian and asset
managers as reporting agencies. The MLPA, 2012 also include insider trading and market
manipulation (Using the price sensitive information relating to the capital market in share
transactions before it is published before the general public to take advantage of the market and
attempting to manipulate the market for personal or institutional gain)-as predicate offences for
money laundering.

 It is mentionable that APG completed 3 rd round Mutual Evaluation on October 2015.

 Bangladesh has complied with the International standard in the AML/CFT issue and thus
achieved the status of complaint country in the APG’s 19 th AGM held on September, 2016

5
 Bangladesh Financial Intelligence Unit (BFIU)
 Bangladesh Financial Intelligence Unit (BFIU) is the central agency of
Bangladesh responsible for analyzing Suspicious Transaction Reports (STRs),
Cash Transaction Reports (CTRs) & information related to money laundering
(ML) /financing of terrorism (TF) received from reporting agencies & other
sources and disseminating information/intelligence thereon to relevant law
enforcement agencies. BFIU has been entrusted with the responsibility of
exchanging information related to money laundering and terrorist financing with
its foreign counterparts. The main objective of the BFIU is to establish an
effective system for prevention of money laundering, combating financing of
terrorism and proliferation of weapons of mass destruction.       BFIU was
established in June 2002, in Bangladesh Bank (Central bank of Bangladesh)
named as 'Anti Money Laundering Department'. To enforce and ensure the
operational independence of FIU, Anti Money Laundering Department has been
transformed as the Bangladesh Financial Intelligence Unit (BFIU) in 25 January,
2012 under the provision of Money Laundering Prevention Act, 2012 and has
been bestowed with operational independence. BFIU has also achieved the
membership of Egmont Group in July, 2013.  

 Legal Framework BFIU works under the provisions of Money Laundering

Prevention Act, 2012 and Anti-Terrorism Act, 2009 (including amendments in
2013).
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 Bangladesh Securities and Exchange Commission
(BSEC)
 The Bangladesh Securities and Exchange Commission (BSEC) was established
on 8th June, 1993 as the regulator of the country’s capital market through
enactment of the Securities and Exchange Commission Act 1993.  Through an
amendment of the Securities and Exchange Commission Act, 1993, on
December 10, 2012, its name has been changed as Bangladesh Securities and
Exchange Commission from previous Securities and Exchange Commission.
The Commission has overall responsibility to formulate securities legislation and
to administer as well.  The Commission is a statutory body and attached to the
Ministry of Finance. BSEC has achieved the membership of IOSCO in 22
December 2013.

 Mission of the BSEC is to:

  Protect the interests of the investors in securities. 
  Develop and maintain fair, transparent and efficient securities markets. 
  Ensure proper issuance of securities and compliance with securities laws.

 Role of BSEC has been defined in the Money Laundering Prevention Rules,
2013 as well as Money Laundering Prevention Act, 2012.

7
 Supervision and monitoring of
AML/CFT measures:
 AML/CFT measures taken by reporting agencies are properly
supervised and monitored by BSEC.

 BSEC has included AML/CFT issues at its regular

inspection. DSE, CSE have also been instructed for this.

 Important issues like awareness, training, coordination,

offline/online supervision, evaluation and enhancement are
being implemented for sustainable achievement.
 BSEC has included link of UNSCR sanction list in it’s website
www.sec.gov.bd
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 Awareness and Commitment of BSEC for AML/CFT measures
in Capital Market
 Bangladesh Securities and Exchange Commission (BSEC) is aware of the risk
of ML/TF in capital market
 BSEC understands the importance and need for AML/CFT measures in capital
market
 Chairman of BSEC is a member of NCC for AML/CFT
 A Commissioner is a member of the working group for AML/CFT
 BSEC has instructed market intermediaries to comply with AML/CFT
guidelines of BFIU
 BSEC has issued BFIU’s off-site supervision checklist to Stock dealers, Stock
brokers, Portfolio Managers & Merchant Bankers, Security Custodians and
Asset Management Companies for necessary compliance.
 AML/CFT issues have been included in the curriculum of authorized
representative’s certification course
 BSEC is committed to provide all support for successful and sustainable
implementation of AML/CFT in the capital market
 BSEC has formed a AML & CFT wing on October 19, 2014.
 BSEC has registered with GOAML software on July 16, 2014.
9
 gvwbjÛvwis cÖwZ‡iva AvBb, 2012
†gvZv‡eK ÒgvwbjÛvwisÓ A_©-
(A) wbgewY©Z D‡Ï‡k¨ Aciv‡ai mv‡_ m¤ú„³ m¤úwË ÁvZmv‡i
¯’vbvšÍi ev iƒcvšÍi ev n¯ÍvšÍi t
(1) Acivajä Av‡qi A‰ea cÖK…wZ, Drm, Ae¯’vb, gvwjKvbv I
wbqš¿Y †Mvcb ev QÙve„Ë Kiv; A_ev
(2) m¤ú„³ Aciva msMV‡b RwoZ †Kvb e¨w³‡K AvBbMZ e¨e¯’v
MÖnY nB‡Z iÿvi D‡Ï‡k¨ mnvqZv Kiv;

(Av) ˆea ev A‰ea Dcv‡q AwR©Z A_© ev m¤úwË wbqg

ewnf©~Zfv‡e we‡`‡k cvPvi Kiv;

(B) ÁvZmv‡i Acivajä Av‡qi A‰ea Drm †Mvcb ev Avovj Kwievi

D‡Ï‡k¨ Dnvi n¯ÍvšÍi, we‡`‡k †cÖiY ev we‡`k nB‡Z evsjv‡`‡k
10
†cÖiY ev Avbqb Kiv;
 ÒgvwbjÛvwisÓ A_©-
(C) †Kvb Avw_©K †jb‡`b GBiƒcfv‡e m¤úbœ Kiv ev m¤úbœ Kwievi
†Póv Kiv hvnv‡Z GB AvB‡bi Aaxb Dnv wi‡cvU© Kwievi
cÖ‡qvRb nB‡e bv;

(D) m¤ú„³ Aciva msNU‡b cÖ‡ivwPZ Kiv ev mnvqZv Kwievi

AwfcÖv‡q †Kvb ˆea ev A‰ea m¤úwËi iƒcvšÍi ev ¯’vbvšÍi ev
n¯ÍvšÍi Kiv;

(E) m¤ú„³ Aciva nB‡Z AwR©Z Rvbv m‡Ë¡I GB ai‡Yi m¤úwË MÖnY,
`L‡j †bIqv ev †fvM Kiv;

(&F) GBiƒc †Kvb Kvh© Kiv hvnvi Øviv Acivajä Av‡qi A‰ea Drm
†Mvcb ev Avovj Kiv nq;

(G) Dc‡i ewY©Z †h †Kvb Aciva msNU‡b AskMÖnY, m¤ú„³ _vKv,

Aciva msNU‡b lohš¿ Kiv, msNU‡bi cÖ‡Póv A_ev mnvqZv Kiv,
cÖ‡ivwPZ Kiv ev civgk© cÖ`vb Kiv;
11
 mš¿vm we‡ivax (ms‡kvab) AvBb, 2013 †gvZv‡eK
mš¿vmx Kvh© A_©t
(1) hw` †Kvb e¨w³, mËv ev we‡`kx bvMwiK-
(K) evsjv‡`‡ki ALÛZv, msnwZ, RbwbivcËv ev mve©‡fŠgZ¡ wecbœ Kwievi
Rb¨ RbmvaviY ev Rbmvavi‡Yi †Kvb As‡ki g‡a¨ AvZ¼ m„wói gva¨‡g
miKvi ev †Kvb mËv ev †Kvb e¨w³‡K †Kvb Kvh© Kwi‡Z ev Kiv nB‡Z
weiZ ivwL‡Z eva¨ Kwievi D‡Ï‡k¨-
(A) Ab¨ †Kvb e¨w³‡K nZ¨v, ¸i“Zi AvNvZ, AvUK ev AcniY K‡i ev Kwievi
cÖ‡Póv MÖnY K‡i; A_ev
(Av) Ab¨ †Kvb e¨w³‡K nZ¨v, ¸i“Zi RLg, AvUK ev AcniY Kivi Rb¨ Aci †Kvb
e¨w³‡K lohš¿ ev mnvqZv ev cÖ‡ivwPZ K‡i;A_ev
(B) Ab¨ †Kvb e¨w³, mËv ev cÖRvZ‡š¿i †Kvb m¤úwËi ¶wZ mvab K‡i ev
Kwievi cÖ‡Póv MÖnY K‡i; A_ev
(C) Ab¨ †Kvb e¨w³, mËv ev cÖRvZ‡š¿i †Kvb m¤úwËi ¶wZ mvab Kwievi
D‡Ï‡k¨ lohš¿ ev mnvqZv ev cÖ‡ivwPZ K‡i; A_ev
(D) Dc-`dv (A), (Av), (B), ev (C) Gi D‡Ïk¨ mvabK‡í †Kvb we‡ùviK `ªe¨, `vn¨
c`v_© I Av‡Mœqv¯¿ e¨envi K‡i ev wbR `L‡j iv‡L;

(L) Ab¨ †Kvb iv‡óªi wbivcËv wewNœZ ev Dnvi m¤úwË webó Kwievi
AwfcÖv‡q `dv (K) Gi Dc-`dv (A), (Av), (B), (C) ev (D) Gi Abyiƒc †Kvb
Aciva msNUb K‡i ev msNU‡bi cÖ‡Póv K‡i ev D³iƒc Aciva msNU‡bi Rb¨
12 cÖ‡ivwPZ, lohš¿ ev mnvqZv K‡i;
 mš¿vm we‡ivax (ms‡kvab) AvBb, 2013 †gvZv‡eK
mš¿vmx Kvh© A_©t
(M) †Kvb Avš—R©vwZK ms¯’v‡K †Kvb Kvh© Kwi‡Z ev Kiv nB‡Z weiZ
ivwLevi Rb¨ `dv (K) Gi Dc-`dv (A), (Av), (B), ev (D) Gi Abyiƒc †Kvb
Aciva msNUb K‡i ev msNU‡bi D‡`¨vM MÖnY K‡i ev D³iƒc Aciva
msNU‡bi Rb¨ cÖ‡ivwPZ, lohš¿ ev mnvqZv K‡i;
(N) ÁvZmv‡i †Kvb mš¿vmx m¤úwË e¨envi K‡i ev AwaKv‡i iv‡L;
(O) GB AvB‡bi Zdwmj-1 Aš—fy©³ RvwZmsN Kb‡fbk‡b ewY©Z †Kvb Aciva
Kwi‡Z mnvqZv, cÖ‡ivwPZ ev lohš¿ K‡i ev msNUb K‡i ev msNUb Kwievi
cÖ‡Póv K‡i;
(P) †Kvb mkš¿ msNvZgq ؇›Øi ˆewi cwiw¯’wZ‡Z (hostilities in a situation of
armed conflict) mwµq AskMÖnY K‡ib bvB GBiƒc †Kvb †emvgwiK,
wKsev Ab¨ †Kvb e¨w³i g„Zz¨ NUvBevi ev gvivZ¥K kvixwiK RLg
NUvBevi AwfcÖv‡q GBiƒc †Kvb Kvh© K‡i, hvnvi D‡Ï‡k¨, Dnvi cÖK…
wZMZ ev e¨vwßi Kvi‡Y, †Kvb Rb‡Mvôx‡K fxwZ cÖ`k©b ev Ab¨ †Kvb
miKvi ev ivóª ev †Kvb Avš—R©vwZK ms¯’v‡K †Kvb Kvh© Kwi‡Z ev
†Kvb Kvh© Kiv nB‡Z weiZ _vwK‡Z eva¨ K‡i;
Zvnv nB‡j D³ e¨w³, mËv ev we‡`kx bvMwiK Òmš¿vmx Kvh©Ó msNU‡bi
13 Aciva Kwiqv‡Q ewjqv MY¨ nB‡e|
 mš¿vm we‡ivax (ms‡kvab) AvBb, 2013
†gvZv‡eK mš¿vmx Kv‡h© A_©vqb msµvন্ত
Acivat

(1) hw` ‡Kvb e¨w³ ev mËv †¯^”Qvq, ˆea ev A‰ea Drm

nB‡Z, cÖZ¨³ ev c‡iv¶ †h †Kvbfv‡e GB AwfcÖv‡q A_©,
†mev ev Ab¨ †h †Kvb m¤úwË mieivn, MÖnY, msMÖn
ev Dnvi GBiƒc e¨e¯’v K‡i †h, Dnvi m¤ú~Y© ev
Avskwe‡kl-
(K) mš¿vmx Kvh© cwiPvjbvq e¨eüZ nB‡e; ev
(L) mš¿vmx e¨w³ ev mš¿vmx mËv KZ…©K †h †Kvb
D‡Ï‡k¨ e¨eüZ nB‡e, A_ev e¨eüZ nB‡Z cv‡i g‡g© ÁvZ
_v‡K;
Zvnv nB‡j D³ e¨w³ ev mËv mš¿vmx Kv‡h© A_©vq‡bi
14
Aciva msNU‡bi Kwiqv‡Q ewjqv MY¨ nB‡e|
 Reporting Organization means-
i. Bank;
ii. Financial institution;
iii. Insurer;
iv. Money changer;
v. Any company or institution which remits or transfers
money or money value;
vi. Any other institution carrying out its business with
the approval of Bangladesh Bank;
vii. (1) stock dealer and stock broker,
(2) portfolio manager and merchant banker,
(3) securities custodian,
(4) asset manager;
15
 Reporting Organization means-
viii. (1) non-profit organization,
(2) non-government organization,
(3) cooperative society;
ix. Real estate developer;
x. Dealer in precious metals or stones;
xi. Trust and company service provider;
xii. lawyer, notary, other legal professional and
accountant;
xiii. any other institution which Bangladesh Bank may,
from time to time, notify with the approval of the
Government;
16
 Predicate offence Means-
The offences mentioned below, by committing which within
or outside the country, the money or property derived
from is laundered or attempt to be laundered, namely:-
(1) Corruption and bribery (`ybx©wZ I Nyl);
(2) Counterfeiting currency (gy`ªv RvjKiY);
(3) Counterfeiting deeds and documents (`wjj `¯Ív‡eR RvjKiY);
(4) Extortion (Puv`vevwR);
(5) Fraud (cÖZviYv);
(6) Forgery (RvwjqvwZ);
(7) Illegal trade of firearms (A‰ea A‡¯¿i e¨emv);
(8) Illegal trade in narcotic drugs, psychotropic substances
and substances causing intoxication ( A‰ea gv`K I †bkv
17 RvZxq `ª‡e¨i e¨emv);
 Predicate offence Means-
(9) Illegal trade in stolen and other goods ( †PvivB I Ab¨vb¨ `ª‡e¨i A‰ea e¨emv);
(10) kidnapping, illegal restrain and hostage taking (AcniY, A‰eafv‡e
AvUKvBqv ivLv I cYe›`x Kiv);
(11) murder, grievous physical injury ( Lyb, gvivZ¥K kvixwiK ÿwZ);
(12) Trafficking of women and children ( bvix I wkï cvPvi);
(13) Black marketing (†PvivKvievi);
(14) Smuggling of domestic and foreign currency (দেশী ও বিদেশী মুদ্রা পাচার);
(15) Theft or robbery or dacoit or piracy or hijacking of aircraft ( Pzwi ev
WvKvwZ ev `my¨Zv ev Rj`my¨Zv ev wegvb `my¨Zv);
(16) Human trafficking or obtaining or trying to obtain, money or valuable
commodities by giving false hope of foreign work/work abroad to any
individual. (gvbe cvPvi)
(17) Dowry (†hŠZzK);
(18) Smuggling and offences related to customs and excise duties
†PvivPvjvbx I ïé msক্রান্ত Aciva;;
18
 Predicate offence Means-
(19) Tax related offences (Ki msক্রান্ত Aciva);
(20) Infringement of intellectual property rights (†gav¯^Z¡ jsNb);
(21) Terrorism or financing in terrorist activities (mš¿vm I mš¿vmx Kv‡h©
A_© †hvMvb);
(22) Adulteration or the manufacture of goods through infringement
of title (†fRvj ev ¯^Z¡ jsNb K‡i cY¨ Drcv`b);
(23) Offences relating to the environment (cwi‡ekMZ Aciva);
(24) Sexual exploitation (†hŠb wbcxob);
(25) Insider trading and market manipulation using price sensitive
information relating to the capital market in share transactions
before it is published for general information to take advantage
of the market and attempting to manipulate the market for
personal or institutional gain (cuywR evRvi m¤úwK©Z g~j¨ ms‡e`bkxj Z_¨
Rbm¤§y‡L cÖKvwkZ nIqvi c~‡e© Zvnv Kv‡R jvMvBqv †kqvi †jb‡`‡bi gva¨‡g
evRvi myweav MÖnY I e¨w³MZ ev cÖvwZôvwbK myweavi j‡ÿ¨ evRvi wbqš¿‡Yi
19 †Póv Kiv )
 Predicate offence Means-
(26) Organized crime, and participation in organized
criminal groups (msNe× Aciva);
(27) Racketeering (fxwZ cÖ`k©‡bi gva¨‡g A_© Av`vq); and
(28) Any other offence declared as predicate offence by
Bangladesh Bank, with the approval of the
Government, by notification in the official Gazette,
for the purpose of this Act. (GB AvB‡bi D‡Ïk¨ c~iYK‡í
evsjv‡`k e¨vsK KZ…©K miKv‡ii Aby‡gv`bক্রমে †M‡R‡U
cÖÁvc‡bi gva¨‡g †NvwlZ Ab¨ †h †Kvb m¤ú„³ Aciva)

20
 Stages of Money Laundering
Placement - the physical disposal of the initial proceeds derived
from illegal activity.
Layering - separating illicit proceeds from their source by creating
complex layers of financial transactions designed to disguise the
audit trail and provide anonymity.
Integration - the provision of apparent legitimacy to wealth
derived criminally. If the layering process has succeeded,
integration schemes place the laundered proceeds back into the
economy in such a way that they re-enter the financial system
appearing as normal business funds.

21
 Vulnerabilities of the Financial System to Money
Laundering

Certain points of vulnerability have been

identified in the laundering process, which the
money launderer finds difficult to avoid, and
where his activities are therefore more
susceptible to being recognized. These are:
 entry of cash into the financial system;
 cross-border flows of cash; and
 transfers within and from the financial
system..
22
 Responsibilities of Reporting agencies (Section 25)

Following are the responsibilities to be discharged by CMIs as

reporting agencies in order to prevent money laundering:

a.Correct and complete information of clients;

b.Preserve information at least five years for Closed Accounts

c.Provide with the information to BFIU;

a.“Suspicious Transaction Report (STR)”

23
 RISK MANAGEMENT
 Form a AML/CFT Compliance Unit.

 Scope of Work, Strategy & Program of Compliance Unit,

approved by the Board.

 Guidelines incorporating KYC, Record Keeping, Transaction

Monitoring & Reporting.
 An Independent Audit to be conducted on regular interval.
 Self Assessment & Independent testing process.
 New service or technology.
 Each organization concerned with the capital market must
conduct meeting with the executive/officers of the principal
and branch office every three month. Decision in connection
with AML/CFT issue must be preserved.

24
 KNOW YOUR CLIENTS (KYC)
 Correct & Complete information of the Clients.

 Security Custodian shall obtain Certificate for Underlying Customer from

Correspondent Bank.

 Complete information of a Beneficiary shall be obtained in case of Money Transfer

through NITA or Custodian Account.
 Complete information in respect of individual/organization shall be obtained by
the Asset Management Company. In case of close-end mutual fund, sources of
funds regarding sponsors, pre-IPO or share holders under lock-in period shall be
verified under simplified CDD procedure.
 Complete information in respect of individual/organization shall be obtained by
Portfolio Manager except client discretionary portfolio, source of fund shall be
verified under simplified CDD procedure.
 Trustees’ required information to be obtained by the Portfolio Manager & Assets
Manager

 Required information of Accounts (if active) opened before 30-09-2010.

Cont’d……..

25
 KNOW YOUR CLIENTS (KYC)
Cont’d……..
 No BO or related Account in fictitious/false or
anonymous name.

 Customer Acceptance Policy

 Classification of customers on Risk Assessment, EDD

or CDD performed.

 Customers’ information to be updated on Regular

Interval.

 Beneficiary Owner to be identified

 EDD for Politically Exposed Persons (PEPs), Influential

Persons (IPs) & Chief or Top Ranking Officer of
26 International Organization.
 Transaction Monitoring, STR Identification
and Reporting
 Every Employees of the Organization shall be
vigilant Suspicious Transaction

 If the BO or relevant account have related with

UNSCR sanction list or local sanction list shall
be Reported to BFIU immediately.

 A report to be submitted to BFIU on half-yearly

basis on STRs & SAR through goAML web.

 Any STRs related information shall not be

shared with clients or any other person or body.
27
 TRANSACTION MONITORING

Any transaction seem to be suspicious in terms of

nature, activity, volume, complexity, geographical
origin or destination, possible trade related to
market manipulation or insider trading etc. Simply,
transactions not usual or fund proceed from crime,
insider trading, market manipulation under
monitor

CMI have to develop corporate compliance culture and properly

trained vigilant staff to monitor day to day transactions/ clients .

28
 TRANSACTION MONITORING

Example:
 Client provide false information /identification
 Offer money or unusual favor
 Questionable legal reputation or background
 Avoid reporting or record keeping
 Inconsistent transactions
 Dealing as third party where beneficiary is undisclosed.

 Several trading account open to trade same stock etc.

29
 Responsibilities of CMI employees

Functions
Functions Role/Responsibilities Role/Responsibilities
Senior ManagementCommitment
Senior Management (CEO/MD
Necessary measures and and
to assess Board of Directors)
identify ML/TF risk and
Necessary measures
Commitment to assess
appropriate and to
mechanism identify
mitigateML/TF risk and
those risks.
appropriate mechanism
(CEO/MD and Board of to mitigate those risks.
Directors)  Establish AML/CFT Compliance Unit.
Establish AML/CFT Compliance
 Unit.
Should issue a policy/guidance.

Should issue a policy/guidance.

Head of Compliance Unit Circulate BFIU circulars/instructions.
Head of Compliance  Circulate BFIU circulars/instructions.
Monitor,
Unit review and coordinate, implement and enforces Policies.
 Monitor, review and coordinate, implement and enforces
Policies.
Formulate the policy of identification procedure “Know your Client
(KYC)”, STRs etc.  Formulate the policy of identification procedure “Know
your Client (KYC)”, STRs etc.

30
 Responsibilities of CMI employees
Functions Role/Responsibilities
HeadFunctions
of Compliance Role/Responsibilities
 Respond queries of the branches to ML & TF.
UnitSenior Management Commitment (CEO/MD and Board of Directors)
Necessary measures
Report toto assess
the and
BFIU on identify ML/TF risk and
STRs/SARs.
appropriate mechanism to mitigate those risks.
Ensure timely reporting of STR/SAR & Compliance of
Establish AML/CFT Compliance
Circular. Unit.

Should issue a policy/guidance.

 Cooperation to Internal Audit Team, BFIU, BSEC
Head of Compliance Inspection
Unit Circulate
Team andBFIU circulars/instructions.
other Agencies.
 Assess the number of legacy accounts (before 30-09-
2010) and prepare
Monitor, review and coordinate, an Action
implement and Plan to update
enforces & report to
Policies.
BFIU.
Formulate the policy of identification procedure “Know your Client

(KYC)”, STRs etc. Monitor the progress of the Action Plan & Report
Progress

31
 Responsibilities of CMI employees
Branch Manager  Ensure that the AML/CFT issues are in place.
(Unit Head)
Functions Role/Responsibilities
 Responsible for educating and updating the Br. officers.
Senior Management Commitment (CEO/MD and Board of Directors)
Necessary
 measures toSTR
Ensure that assess and identify
identification ML/TF risk
and reporting and
system is
appropriate mechanism to mitigate those risks.
effective

Establish AML/CFT Compliance Unit.

Staff responsible  Perform due diligence on prospective clients prior to opening
forShould an account.
accountissue a policy/guidance.
opening  Shall
Head of Compliance Unit be vigilant regarding
Circulate the identification of account
BFIU circulars/instructions.
holder and the suspicious activity of a prospective client
Monitor, review andwhile opening an
coordinate, account. and enforces Policies.
implement
 Ensure all required documentation is completed satisfactorily
Formulate the policyasof
peridentification procedure “Know your Client
concerned Guideline.
(KYC)”, STRs etc.
 In case of new accounts the concerned, s/he will follow the
policy of identification procedure “Know your Client (KYC)”
and analyze the track record of the existing accounts.
 Ensure that customer information are verified and undertake
32 reviewing of customer information after a certain period
 RELATION TO CAPITAL MARKET
 Insider Trading:

 Insider trading is unique to the securities industry and generates illicit assets.
As a predicate offence for money laundering, and an offence in its own right,
this type of misconduct is reportable on STRs and has proven useful in
assisting law enforcement and regulators prosecute such misconduct.

 Such as-
 The customer makes a large purchase or sale of a security, or option on a
security, shortly before news or announcement is issued that affects the
price of the security;
 The customer is known to have friends or family who work at or for the
securities issuer;
 The customer’s account is opened or significantly funded shortly before a
purchase.

33
 RELATION TO CAPITAL MARKET
 Market Manipulation:
 Market manipulation generally refers to conduct that is intended to
deceive investors by controlling or artificially affecting the market for
a security. In particular, the manipulator’s purpose is to drive the
price of a security up or down in order to profit from price
differentials.
 The most pervasive market manipulation method involves what is
colloquially referred to as a “pump-and-dump” scheme.
 Suspicious Indicators for Market Manipulation
 The customer engages in large or repeated trading in securities
that are illiquid, low priced or difficult to price;
 The issuing company has experienced frequent or continuous
changes in its business structure and/or undergoes frequent
material changes in its business strategy or line of business;
 The customer’s account is opened or significantly funded shortly
before a purchase & sale in conjunction with any announcement.

34
 RISK MEASUREMENT & KYC

 Develop Customer Acceptance Policy.

 Use a well design A/C opening form
 Accounts must open with proper identification.
 Before Opening A/C, Meet customer face to face.
 Classification of customer based on risk level like
Enhanced due diligence or
normal.
 Complete enhanced due diligence for Politically Exposed
Persons (PEPs) & Influential Persons (IPs) (Senior politicians,
government official, Head of State or Govt., Senior Executives of
State Owned Company).
 Complete enhanced due diligence for Chief or Top Ranking
Officers of International Organization (persons who are or have
been entrusted with a prominent function by an international
organization refers to members of senior management, i.e.
35 directors, deputy directors and members of the board or
equivalent functions).
 RISK GRADING OF ACCOUNT

 KYC Profile Form

 Transaction Profile (TP)
 Source of Fund
 Type of Profession/Nature of business
 Net assets of client
 Assess Risk grading
 Other Risk factors deem required

Note: To reduce risk - Match TP with transactions

36
 Suspicion Indicators

The following are examples of common indicators that may point to a

suspicious transaction, whether completed or attempted as explained below:
 Client provides false information or information that seems unreliable.
 Client offers money, gratuities or unusual favors for the provision of
services that may appear unusual or suspicious.
 It is observed that a client is the subject of a money laundering, terrorist
financing, insider trading or market manipulation related investigation.
 It is known from a reliable source (that can include media or other open
sources), that a client is suspected of being involved in illegal activity.
 A client name listed under UN or Local sanctions list.
 A new or prospective client is known to you as having a questionable
legal reputation or criminal background.

37
 Suspicion Indicators

 Transaction involves a suspected shell entity (that is, a corporation that

has no assets, operations or other reason to exist).
 Client attempts to convince employee not to complete necessary
documentation required for the transaction/CDD process.
 Client makes inquiries that would indicate a desire to avoid reporting.
 Client has unusual knowledge of the law in relation to suspicious
transaction reporting.
 Client is quick to volunteer that funds are “clean” or “not being
laundered.”
 Client appears to be collaborating with others to avoid record keeping,
Client identification or reporting thresholds.
 Client provides doubtful or vague information.

38
 Suspicion Indicators
 Client produces seemingly false identification or identification that appears
to be counterfeited, altered or inaccurate.
 Client refuses to produce personal identification documents.
 Client only submits copies of personal identification documents.
 Client wants to establish identity using something other than his or her
personal identification documents.
 Client’s supporting documentation lacks important details such as a phone
number.
 Client inordinately delays presenting corporate documents.
 All identification presented is foreign or cannot be checked for some
reason.
 All identification documents presented appear new or have recent issue
dates.
 Client presents different identification documents at different times.
 Client alters the transaction after being asked for identity documents.
 Client presents different identification documents each time a transaction
is conducted.
39
 Reasons for reporting of STR:
 It is a legal requirement in Bangladesh;

 It helps protect the reputation of the organization ;

 It helps to protect the organization from unfounded

allegations of assisting criminals, including terrorists;

 It helps the authorities to investigate money laundering,

terrorist financing, and other financial crimes.

40
 Offences relating to financing terrorist activities
(Sec 7 of ATA, 2013)
 If any person or entity willingly, from legal or illegal
sources, supplies, receives, collects money, services or
any other property or makes arrangement of such
things either directly or indirectly with such intention
that partially or fully-

will be used for conducting terrorist activities; or

will be or may be used for any purposes by terrorist

person or entity in this respect is known by the person
or entity;

41
 Responsibilities of reporting agencies (CMIs)
 necessary measures, to prevent and identify financial
transactions which are connected to any offence under
the AT Act 2013.

 Any suspicious transaction is identified, to BFIU.

 BoD, or CEO or MD of every CMIs shall approve and

issue directions regarding the duties of its officers,

 Shall ascertain whether the directions issued by BFIU

Bangladesh Bank under section 15, are complied with
or not.
42
 Steps for implementing UNSCR (sec 20)

 UNSC resolution no. 1267 Subsequent resolutions and

 UNSC resolution no. 1373

 To be updated regularly and implement a screening

mechanism.

43
 PUNISHMENT OF DIFFERENT OFFENCE UNDER
MLPA-2012

Secti Nature of Offences Punishment

on

04 Money Laundering Offences 4 to 12 years jail & penalty Tk. 10 Lac-

individual & Tk. 20 Lac-Institution or double
of committed value

05 Leakage of Information Maximum 2 years Jail or penalty 50,000 Or

both
07 Non cooperation in investigation Maximum 1 years Jail or penalty 25,000 Or
or failure in sending information both

08 Providing False Statement Maximum 3 years Jail or penalty 50,000 Or

both
44
 PUNISHMENT OF DIFFERENT OFFENCE UNDER
MLPA-2012
 For violation of MLPA 2012, 25(1)-Impose a fine starting from Tk
50 thousand to a maximum of Tk 25 lac, on reporting organization

 Either impose a fine, starting from Tk 10 thousand per day to a

maximum of Tk 5 lac, on any violating organization or impose the
fine on officials/owners/contractual staff linked with the organization
or move directly to administrative action. False/wrong/mistaken
statement or failure to send statement on time 3 times a year may
lead to cancellation of the license of organization/branch.

 Failure to provide the penalty will cause the penalized amount to be

withdrawn from any Bank A/C. If there is still unrealized penalty,
the organization will be taken to court.

45
 Reference

 gvwbjÛvwis cÖwZ‡iva AvBb, 2012

 mš¿vm we‡ivax (ms‡kvab) AvBb, 2013
 GUIDELINES ON PREVENTION OF MONEY LAUNDERING &
COMBATING FINANCING OF TERRORISM FOR CAPITAL
MARKET ORGANIZATION (TREC Holder, Portfolio Manager and
Merchant Banker, Security Custodian and Asset Management Company)-
Associate Master Circular.

46
 All praise is due to Allah, Lord of
All the Worlds.

Thank You!

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