Operational Issues Under BFIU Circular-26:

Special Focus on CDD & Regulatory Reporting

Md. Motiar Rahman

Senior Executive Vice President
Islami Bank Bangladesh Limited
What is Money Laundering ?

Money Laundering is a :

 process of transfer, transform & conversion of

 criminally originated money

 through concealing its true origin

 for evasion of legal consequences

(more at clause no. 2(Fa) of MLPA-2012)

What is Terrorist Financing ?

 The process by which terrorists fund their operations in order to perform terrorist acts.

 TF relates to financial supporting to any individual / entity / organization involved in

terrorist activities.

 Assisting any revenue-generating activities undertaken by the terrorists.

(more at 5-8 recommendations of FATF 40 recommendations)

 National Initiatives

a) Enactment of two Acts namely–Money Laundering Prevention Act-2012 (revised 2015) &

Anti Terrorism Act-2009 ( revised 2012/2013).

b) Issuance of Money Laundering Prevention Rules, 2013 and Anti Terrorism Rules, 2013

c) National Co-ordination Committee (NCC) headed by the Hon'ble Finance Minister.

d) Establishment of BFIU.

e) BFIU master circular No 26 dated 16.06.2020

Overview of BFIU Circular- 26

 BFIU Circular-26
 BFIU Master Circular-26
 Issue Date : 16.06.2020
 Issuing Authority: BFIU
 Issued on the basis of 23 (1)/Gha, MLPA 2012 & 15/1 Gha ATA-2009
 Total Chapter: 13

Total Points – 169 , Total Page-21

নাম: মাননলন্ডান িং ও সন্ত্রাসী কার্যে অর্োয়ন প্রনির্ ার্ে িফনসনল ব্ািংকসমূ র্ে জন্ অনু স নীয় ননর্দেেননা জা ীক প্রসর্গ
 Overview of BFIU Circular- 26(cont’d)
Sections Different Chapters At a Glance
01 Compliance Structure
02 Customer Selection Policy
03 Customer, Definition of Customer, CDD & Others
04 Instructions for branches and subsidiaries that are being operated in foreign
jurisdictions
05 Transaction Monitoring
06 Cash Transaction Report (CTR)
07 Suspicious Transactions Report (STR)
08 Self Assessment & Independent Testing
09 Wire Transfer
10 Prevention of Terrorist Financing and Financing of Proliferation of Weapons of Mass
Destruction
11 Recruitment & Training
12 Preservation of records and necessary information/documents
13 Others
 Overview of BFIU Circular-26, (June-16, 2020)
অনু র্েদে নিং নবষয়
১ পন পালন কাঠার্মাোঃ- (Compliance Structure)
১.১ মাননলন্ডান িং ও সন্ত্রাসী কার্যে অর্োয়ন প্রনির্ াে নীনিমালা (Policy for prevention of ML&TF)
১.২ মাননলন্ডান িং ও সন্ত্রাসী কার্যে অর্োয়ন প্রনির্ ার্ে ব্বস্থাপনা কিতেপর্ে অগীকা ন াষনা
(Declaration of Undertaking by the Authority)
১.৩ পন পালন কমেকিো ননর্য়াগ (Assigned Compliance Officer)
Assigned Compliance Officer: CAMLCO, CCC, DCAMLCO, 7 members
২ গ্রােক ননবোচন নীনিমালা (Policy for selection of client)
২.১ No Account will be opened with nameless / disguised name / only number based
২.২ No relation / transactions with Shell Bank
২.৩ No transactions with Sanctioned Entities / Individuals.
২.৪ BFIU Instructions from time to time
৩ গ্রােক পন নচনি, সিকেমূলক ব্বস্থা ও অন্ান্ (Customer Identification and Preventive measures)
৩.১ গ্রাের্ক সিংজ্ঞা (Definition of Customer), BO, Occasional Transaction
৩.২ ঝূূঁনক নিনিক ব্বস্থা (Risk Based Approach)
৩.৩ গ্রােক পন নচনি (Know Your Customer-KYC)
 Overview of BFIU Circular-26, (cont’d)
অনু র্েদে নিং নবষয়
৩.৪ গ্রােক সম্পনকেি সিকেমূলক ব্বস্থা (Customer Due Diligence-CDD)
৩.৫ গ্রােক সম্পনকেি সেজি সিকেমূলক ব্বস্থা (Simplified Customer Due Diligence)
৩.৬ CDD সিংক্রান্ত অন্ান্ ননর্দেেননা (Instruction of CDD)
৩.৭ CDD সম্পাদেন ক া সম্ভব না ের্ল ব্ািংর্ক ক ীয় (Banks Duty, If Not Possible CDD)
৩.৮ গ্রােক সম্পনকেি অনেকি সিকেমূলক ব্বস্থা ( Enhanced Due Diligence-EDD)
৩.৯ প্রিাবনালী ব্নি (Influential Person: IPs) নের্ে ক ীয়
৩.১০ পনলনিক্ানল এক্সর্পাজড পাসেন (Politically Exposed Persons-PEPs) নের্ে ক ীয়
৩.১১ আন্তজোনিক সিংস্থা প্রোন বা উচ্চ পযোর্য় কমেকিো নের্ে ক ীয় ( Responsibilities incase of Head of International
Organization)
৩.১২ PEPs সিংক্রান্ত অন্ান্ ননর্দেেননা (Guidance on PEP’s)
৩.১৩ কর্ সপর্ডন্ডি ব্ািংনকিং (Correspondent Banking) সম্পকে স্থাপর্ন নের্ে ক ীয়
৩.১৪ এর্জন্ট ব্ািংনকিং সিংক্রান্ত ননর্দেেননা (Guidelines for Agent Banking)
৩.১৫ সন ীর্ অনু পনস্থি গ্রাের্ক (Non face to face Customer) নের্ে ক ীয়
৩.১৬ নিুন নসবা বা প্রযু নি গ্রে র্ নের্ে ক ীয় (Guidance for ADC Products)
৩.১৭ নগাপনীয়িা ো (Maintaining Secrecy)
৪ নবর্দের্ন অবনস্থি ব্ািংক নাখা ও সাবনসনডয়া ী প্রনিষ্ঠার্ন নের্ে ক ীয় (Guidelines for branch and subsidiary institution
in abroad)
৫ নলনর্দেন প ীে (Transaction Monitoring)
৫.১ Guidance on suspicious transaction reporting and Guidelines for prevention of TBML
 Overview of BFIU Circular-26, (cont’d)
অনু র্েদে নিং নবষয়
৬ নগদে নলনর্দেন নবব ী দোনখল (Cash Transaction Report-CTR)
৭ সর্েেজনক নলনর্দেন প্রনির্বদেন (Suspicious Transaction Report-STR)
৮ Self Assessment & Independent Testing
৮.১ নাখাসমূ র্ে ক ীয় (Half-Yearly bank’s evaluation)
৮.২ অি্ন্ত ী নন ীো নবিার্গ ক ীয় (Duties of Internal Audit Divisions)
৮.৩ মাননলন্ডান িং ও সন্ত্রাসী কার্যে অর্োয়ন প্রনির্ াে নবিার্গ ক ীয় (Duties and responsibilities of AMLD)
৯ ওয়্া ট্রান্সফা (Wire Transfer)
৯.১ আন্তর্দেনীয় এবিং অি্ন্ত ী ওয়্া ট্রান্সফা
৯.২ ওয়্া ট্রান্সফা সিংক্রান্ত অন্ান্ ননর্দেেননা
৯.৩ অডো , ইন্টা নমনডয়া ী ও নবনননফননয়ান ব্ািংর্ক ক ীয়
১০ সন্ত্রাসী কার্যে অর্োয়ন ব্াপক েিংসাত্বক অর্ে নবস্তার্ অর্োয়ন প্রনির্ ােোঃ (Prevention of Financing of Terrorism
and Financing of Proliferation of Weapons of Mass Destruction)
১১ ননর্য়াগ ও প্রননে োঃ (Recruitment & Training)
১১.১ ননর্য়াগ (Recruitment)
১১.২ প্রননে ব্ািংক কমেকিো, (Training of Bank’s Officers)
১১.৩ ননে - ব্ািংক গ্রােক (Training- Bank’s Customer)
১২ ন কডে এবিং প্রর্য়াজনীয় ির্্ / দেনললানদে সিং ে (Record Keeping and Preservation)
What is CDD ?

1. Identifying the customer/beneficial owner.

2. Verifying the customer’s / beneficial owner’s identity & sources of fund/nature of

business.

3. On the basis of documents, data or information obtained from reliable and

independent sources.

4. Following Transaction Monitoring on regular basis.

 Element of CDD

 A sound CDD program includes following minimum compulsory elements:

1. Know your Customer (KYC)

2. Transaction Profile (TP)

3. Definition & acceptance of the Customer

4. Risk grading of the Customer

5. Transaction Monitoring

6. Detection of unusual transaction/activity

7. Documentation
 Different Tyres for CDD

1. Time of establishing a new business relationship.

2. Carrying out occasional transaction though wire transfer.

3. Suspecting Money Laundering or Terrorist Financing.

4. Suspecting the veracity of documents, data or information previously obtained for

verification purpose.

5. At Occasional transaction for Tk. 5 Lac or above by a walk-in-customer.

 Different Tyres for CDD (Cont’d)

6. Verify the purpose for entablements of business and his nature of business.

7. Observe the type of business and source of capital, If high risk business monitor

regularly.

8. Rechecking the information provided by the client before withdrawal deposit.

9. Confirm the real beneficial owner of the A/C holder at the time of A/C opening from

independent sources
 Different Tyres for CDD (Cont’d)

10. Obtain the details particulars of the beneficial owners who intend to operate the A/C

on behalf of A/C holder.

11. Details particulars must be preserves of Co-shared & Co-parties.

12. Information of co-parties ,B.O authenticated by MD/Chairman/Prop. ordinance

13. Must follow the guidelines on beneficial owners

 CDD-Others

1. Preserved the all information of the client along with CDD.

2. Use the Annex-KA where KYC as per guidelines on e-KYC is not possible.

3. Use the UCIC (Unique customers Identification Code ) for the client who maintaing
more than one A/C.

4. Observe the TP for 6/12 month and correct (if required) the same.

5. Update the KYC every after 5 years for low risk client & 1 year for high risk client.

6. Follow the F.EX regulation Act 1947 for opening A/C in the name of Foreign citizen.

7. Follow the “Guidelines for prevention of TB ML issued by BFIU for maintain the
Foreign Trade A/C ”
 Simplified Customer due to Diligence

1. Tk 5000 or above transacted by walk-in customer detailed address with cell No of

sender or receiver must be collected & preserved.

2. Any transaction between 50000 up Tk 50000 by the walk in customer photo pest ID

must be preserved.

3. Farmers A/C student A/C under financial inclusion be relaxed.

4. Follow the guidelines on e-KYC instruction.

 CDD: Enhanced Due Diligence

For all high risk customers, following steps-

✓ More KYC information from reliable and independent sources

✓ More steps to know the purpose of account opening & source of funds

✓ If required, permission from CAMLCO

✓ Constant Transaction Monitoring

 Cash Transaction Report (CTR)
Monthly reporting to BFIU for cash transaction of Tk. 10.00 lac & above

✓ goAML weblink- on 21st day of every month

✓ CTR based STR/clean certificate

✓ Centrally or branch record keeping

✓ Govt./govt. owned/full-semi autonomous body’s account exempted for deposit, but not for

withdrawal

✓ No IBG account

✓ goAML weblink posting use goAML manual & submit the same.

✓ Records of STRs be preserved until further instruction by BFIU.

Bank must follow the instruction of guidelines on reporting suspicious transaction.

 Suspicious Transaction Report (STR)
Each & Every Employee’s duty to detect Suspicious Transactions

➢ Definition of suspicious transaction as stipulated by MLPA 2012under section No-25

(i)Gha be considered

➢ Suspected transactions be informed to the BAMLCO as per section 2(Jha) of MLPA 2012

and Section no 2(16) if ATA 2009

➢ BAMLCO observations with keeping the record thereon

➢ If confirmed by BAM LCO/BCU, report to AMLD

 Money Laundering Prevention Act-2012 Amend 15
➢ Name & Title : Money Laundering Prevention Act-2012

➢ Basic Rules for Prevention of Money Laundering & Terrorism Finance

➢ Issue Date:20.02.2012

➢ Issuing Authority : Bangladesh National Parliament

➢ Enforced Form:16.01.2012

➢ Total Chapters :31

➢ Amendment=2015
 Important Sections of this Act
Section-02: All related definitions

Section-04-08: Offence of Money Laundering and Punishment

Section-23-24: Establishment of BFIU and its powers and responsibilities

Section-25: Duties and responsibilities of ROs, Penalties for non-compliance

Section-28: Employee protection for filing of STR

Responsibilities of ROs as per MLPA-2012
1. To maintain correct & complete information of the clients.

2. To preserve previous records of transactions of closed account for at least 5 (five) years
from the date of such closure .

1. To provide with the information maintained under clauses (A) and (B) to BFIU from
time to time, on its demand .

2. To submit/send 'suspicious transaction report (STR)' to BFIU immediately and

proactively on its own accord.

( Clause 25/1 of MLPA-2012)

Anti Terrorism Act-2009,Amend -12,13,15

➢ Name & Title : Anti Terrorism Act-2009

➢ Basic Rules for Prevention of Terrorism Finance

➢ Issue Date:24.02.2009

➢ Issuing Authority : Bangladesh National Parliament

➢ Enforced Form:11.06.2008

➢ Total Chapters :45

➢ Amendment=2012,2013,2013
Co-Relation between Money Laundering and Terrorist Financing

Difference and Similarities

Parameter Money Laundering Terrorist Financing

Motivation Profit Generation Ideological

Source of Fund Internally from with in Self Funding

criminal organization Externally from benefactors
and fund raisers
Channels Favors formal financial Favors cash couriers or
system informal system such as
Hundi
Money Trail Circular- Money eventually Help to propagate terrorist
ends who generated it group and activities

Tr. Amounts Large amounts often Small amount usually below

structured to avoid reporting thresholds
reporting thresholds
Important Sections of ATA-2009

Section-06: Offences and Punishment of Terrorist Activities

Sectioin-07: Offences and Punishment of Terrorist Financing

Section-08: Membership of a proscribed entity

Section-10: Punishment for criminal conspiracy of committing an offence

Important Sections of ATA-2009(cont’d)

Section-13: Punishment for instigating terrorist activities

Section-15: Powers of Bangladesh Bank

Section-16: Duties of Reporting Agencies

Section-21(3): Special Provisions with regard to examination of witnesses by police.

Section-22 to 26: Recording of statement of witness, recording of confession of an accused

person, seizure or attachment of terrorist property during investigation,

time limit for investigation, remand, etc.

Penalty for Non-Compliance
If any reporting organization violates the provisions of sub-section (25/1), Bangladesh
Financial Intelligence Unit (BFIU) & Regulatory/Controlling Authority of the reporting
organization may:

(a) Impose a fine of at least taka 50 (fifty) thousand but not exceeding taka 25 (twenty-five)
lacs on the reporting organization; and---

(b) In addition to the fine mentioned in clause (1), cancel the license or the authorization for
carrying out commercial activities of the said organization or any of its branches, service
centers, booths or agents, or as the case may be, shall inform the registration or licensing
authority about the fact so as to be relevant authority may take appropriate measures
against the organization.
 Penalty for Non-Compliance (Power of BFIU)

Failure to submit
necessary information/ For submitting wrong Failure to comply any
documents to BFIU in /false information: instruction
time:

Penalty for Tk. 10,000/-

Penalty for Tk. 10,000/- Penalty for (not less than)
per day (for each of such
per day but up to Tk. 5.00 Tk. 20,000/- but not
non-compliance) but up to
lac. exceeding Tk. 5.00 lac.
Tk. 5.00 lac.

License of the Bank/it’s License of the Bank/it’s License of the Bank/it’s

Branch/ it’s service Branch/ it’s service Branch/ it’s service
center/ ATM booth may center/ ATM booth may center/ ATM booth may
be held up if penalty is be held up if penalty is be held up if penalty is
imposed for 03 time in a imposed for 03 time in a imposed for 03 time in a
financial year. financial year. financial year.

Clause no-23 (3), (4) & (5) of MLPA-2012/(2015)

 Penalty for Non-Compliance (Power of BFIU)

Failure to pay any Fine BB may also impose Fine

Failure to comply with
imposed by BB under on respective officials &
any order for freezing or sections-23,25 of MLPA- owners along with the
suspension in time: 2012,2015: organization:

Fine will be recovered

Penalty for not less than
from A/C maintained Penalty for Tk. 10,000/-
the Balance amount but
with BB or any other but not exceeding Tk.
not more than the twice
banks of the respective 5.00 lac.
of the Balance.
amount.

On the responsible
Freezing of any A/C for If any Fine remains owner, directors,
a period of 30 (thirty) unrealized then BB may officers, and staff or
days & maximum of 07 goes to Court for persons employed on
(seven) months. recovery. contractual basis of that
organization.
Clause no-23 (6), (7) & (8) of MLPA-2012,2015
Responsibility of IBBL
As a Reporting Organization (clause no. 25 (1) of MLPA-2015)

a) To maintain correct & complete information of the customers.

b) if any account of a customer is closed, to preserve previous records of such account and
transactions of the same for at least 5(five) years from the date of such closure;

c) to provide with the information maintained under clauses (a) and (b) to Bangladesh
Financial Intelligence Unit from time to time, on its demand;

d) if any doubtful transaction or attempt of such transaction as defined under clause (n) of
section 2 is observed, to report the matter as “suspicious transaction report‟ to the
Bangladesh Financial Intelligence Unit immediately on its own accord.
 Mathematical Analysis for Manager’s Ability
Y
P

Extra Benefit
0
KE
Benefit

0,0 X
Capacity
KE= Knowledge & Experience
P= Prudence O=KE=P
N=Negative Slop
P=f(ak,f1,f2………………….)
Thank You
For your Attention