Banks to be asked to maintain standard reference prices against LCs
Bangladesh Bank is going to make mandatory for the scheduled banks to maintain standard reference prices against their opening of letters of credit in a bid to check money laundering through price forgery in the form of over-invoicing and under-invoicing, said central bank officials. The central bank has taken the initiative when the import of capital machinery increased significantly in the last few months despite having unfriendly business environment in the country amid political unrest, a BB official told New Age on Tuesday.
He said that the BB was now scrutinising the matter as it suspected that money laundering might have occurred behind the import of huge amount of capital machinery in the recent months.
Besides, the BB will also ask the scheduled banks to ensure whether the exporters were returning their export earning in the country in due time, he said.
The official said that it was a common phenomenon to increase the flow of money laundering before the national polls.
Under the circumstances, the BB will issue a circular to all authorised dealer branches of the banks in the quickest possible time asking them to take required measures to stop money laundering through the over-invoicing and the under-invoicing, he said.
The official said, ‘The majority number of banks are now opening letters of credit for capital machinery as per products’ prices of the importers. The banks do not verify the original prices of the capital machinery. Sometimes, the banks intentionally avoid the matter in collaboration with the importers.’
The officials of the scheduled banks usually express their ignoring attitude about the original prices of the
capital machinery when the BB inspection team visited the AD branches of the banks, he said.
Under the circumstances, the central bank will ask the banks, before opening of the LCs, to verify the machinery prices from other banks or production companies concerned, he said.
Besides, the banks will have to check price information in this regard on the internet, he said.
The banks concerned will receive help from the country’s high commission offices located in the importer’s country, he said.
According to the latest BB data, the import of capital machinery increased by 13.82 per cent in the first two month of the current financial year 2013-14 compared with that of a negative growth of 15.85 per cent in the corresponding period of the FY13.
Settlement of LCs in the first two months of the FY14 for industrial raw materials was worth $380.28 million against $334.10 million during the same period of the FY13.
Another BB official said that the importers showed higher prices than the original products’ prices in the import form if they wanted to launder money through the over-invoicing process.
On the other hand, the exporters show lower price than the real price of their exported products in the export form in order to launder money through the under-invoicing process, he said.
The BB will ask the banks to verify the information of the bills of entry and the post facto report of the customs department so that the over-invoicing in the import can be prevented, he said.
The central bank will also give directions the banks to scrutinise the export earnings of the exporters as it (BB) has recently received a number allegations that some businesspeople were not returning their earning from foreign countries in due time, he said.
An exporter has to return its export earning in the country within three months.
The banks will have to take approval from the government’s discount committee if full export earning is not returned in due time, he said.
The banks will have to take legal action against the exporters if they do not return their earning in the country in due time, he said.
-With New Age input
