Bangladesh Stalled on Enacting Terrorist Finance Law

By Jonathan Winer

Internal political tension over making it illegal to finance terrorism has continued to stall enactment of a strengthened anti-money laundering law in Bangladesh. As a result, the country, whose governance remains among the weakest in the world, continues to be without meaningful legal barriers to money laundering and terrorist finance.

While enactment of an improved AML/counter terrorist finance law would not make it difficult for anyone to launder money through Bangladesh any time soon given the country's universally available hundi system, it would at least provide a foundation for the country's principal banking institutions to begin to develop meaningful AML controls.

The stalled legislation would criminalize terrorist financing; create a functional finnacial intelligence unit; provide for asset forfeiture; and facilitate international cooperation. That it continues to remain stalled because of political forces that view terrorism to be a "political" issues speaks volumes about the growing influence of extreme Islamists in Bangladesh.

Islamist influence has grown almost geometrically in Bangladesh over the past ten years, with growing discrimination against minorities, secularists, and women seeking social reform.

There are, remarkably, some positive signs. The current caretaker government, unlike its predecessor, which left Bangladesh as a near safe-haven for terrorism, is cooperating with India, China, Pakistan and the U.S. among other countries in various counter-terrorism initiatives.

But development of comprehensive counter-terrorist activities in Bangladesh would require the country meaningfully to improve its overall governance and to develop functional systems for its underground banking system. These problems continue to "threaten the social fabric" of the country, the chief advisor to the caretaker government told Dhaka businessmen February 25. How is the battle against it going? To clean up the country prior to elections, the military sought and got the resignation of the two senior officials of the country's anti-corruption commission in early February, who were widely seen as protecting the most corrupt senior members of the outgoing government.

With eyes wide open, and recognizing that there will be constant set-backs, the U.S. and other donor countries need to continue to press Bangladesh to enact the comprehensive AML and terrorist finance law. They will then need to provide for significant, long-term assistance and training in AML implementation. These must be accompanied by the provision and implementation of strategies for registering and integrating the country's underground banks into a regulatory system that still readily facilitates remittances for Bengal expatriates working as laborers throughout the Middle East and indeed, the world.

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