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Internship Report

Money Laundering as a Risk in the Banking Industry of Bangladesh: A study on the EXIM Bank Ltd, Rajuk Avenue Branch

Money

Laundering

as

Risk

in

the

Banking Industry of Bangladesh: A study on the EXIM Bank Ltd, Rajuk Avenue Branch

Prepared For
MR. Muhammad Intizar Alam Lecturer BRAC Business School BRAC University

Prepared By
Khandakar Mevij ID: 07104096 BRAC Business School BRAC University
Date of Submission:

Letter of Transmittal

Mr.Muhammad Intisar Alam Lecturer, BBS, BRAC University.

Subject: Submission of Internship Report.

Dear Sir, It is a great pleasure to submit the Internship report on Managing Money Laundering Risk in the Banking Industry of Bangladesh: A Study on The EXIM BANK Limited as the fulfillment of partial requirement of the BBA program. The topic that you gave me is really an important fact for the finance students. With the textual studies, acquiring practical orientation of the country knowledge of which you have created a big chance for me that must help to work with efficiency in future. I appreciate having this Report. I have prepared this report with sincerity and serious efforts. If you need any further assistance in interpreting or in implementing this report, please call on me and I will try my best to make myself available at your convenience. Sincerely yours ____________________ Khandakar Mevij ID: 07104096 BBS BRAC University.

Acknowledgement

I begin by thanking the Almighty & my beloved parents for my successful completion of the Internship Report, which is a significant part of the completion of BBA Program.

The successful completion of this Internship report has seen many helping hands, without which this would have not been possible. I specially want to acknowledge Mr. Zoshim Udddin Bhuiyan-Senior Vice President & Manager and Mr. Tariqul Islam Choudhury-SeniorAssistant Vice President of EXIM Bank Ltd., Rajuk Avenue Branch for their tremendous support, guidance and patience. Without their kind supervision, preparing this report would have been very difficult. I am also thankful to them for providing me all the relevant and available information to have a clear concept on the subject.

I would also like to take this occasion to thank Mr. Shanti Kumar Roy-Assistant Vice President, Mr. Muhammad Yunus Ali-Assistant Vice President, Mr. Md. Abdus Salam - Principal Officer, Mr.Maksudul Hoq-Principal Officer, EXIM Bank, Rajuk Avenue Branch for their guidance.

My heart full thanks to Mr. Ashraful Alam,-Senior officer, Mr. Belal Hossain(Tuhin)Management Trainee Officer, Mr. Md. Moshiur Rahman - Management Trainee Officer and Mr. Niaj Morshed - Assistant officer, IT, EXIM Bank, Rajuk Avenue Branch who provide me the guidance and counseling during my entire internship program. Their continuous and wellthought feedback enabled me to make this report a comprehensive one.

I would like to express my sincere gratitude to my academic supervisor Mr. Muhammad Intizar Alam-Lecturer, BRAC BUSINESS SCHOOL, BRAC University for his constant guidance, supervision and feedbacks which enabled me to prepare a well executed report.

EXECUTIVE SUMMARY

The internship program is called an Earn while you Learn program of training. As the fulfillment of partial requirement of the BBA program I have done the Internship in The EXIM Bank Limited and prepared report on Managing Money Laundering Risk in the Banking Industry of Bangladesh: A Study on The EXIM Bank Limited. In this study I have tried to reveal my three months internship experience. This report contains two parts- the Organizational part and the Project part. In the organizational part, a brief overview of EXIM Bank has given. In the Project part, I have covered efforts undertaken previously with the objective of preventing the banking system from Money Launderer which, has also largely been undertaken by judicial and regulatory agencies at national level seriously. Money laundering is a criminal offence; bank should not provide any service to any criminals and assisting a Money Launderer as it is a criminal offence too. Anticipating the importance of legislation in this arena,the Government of Bangladesh has made a timely decision by enacting a law titled, Money Laundering Prevention Act 2002 and then Money Laundering Prevention Act -2009 which are very comprehensive and valuable law. As the Central Bank mainly regulates this law, i.e. Bangladesh Bank and all its schedule banks, they must be well comprehended on this law and well equipped to implement it. Therefore, efforts have been undertaken in this study to focus on the real scenario of the EXIM Bank operating soundly in Bangladesh in anticipating the importance of the Act efforts to implement the law and continuity of banking business within legal framework. For the study, a number of secondary data has been collected from different sources, especially from The EXIM Bank Limited. According to those collected information and with the light of Money Laundering prevention Act 2002 & 2009 - a standard prevention procedure has been described in detail in this report, where I have mentioned different recommendations. To overcome the limitations and to harvest maximum output of the Anti-Money Laundering Act. in Bangladesh Some recommendations have been made in this paper also. To ensure a consistence and uniform treatment in implementing the law all the banks must work together in the Banking Industry.

Table Of Contents
Part
A

Chapter
Chapter 1 : Organization Part
1.1 Company Overview 1.2 Historical Background 1.3 Company Vision 1.4 Company Mission 1.5 Key Functions of EXIM Bank 1.6 Social Commitment 1.7 Products & Services 1.8 SWOT Analysis

Page No.
1-11
1-2 3 3-4 4-5 5 5 5-8 8-11

Chapter 2 : Job Description


2.1 Specific Responsibilities of My Job 2.2 Difference Aspects of Job Performance 2.3 A Brief of EXIM Bank, Rajuk Avenue Branch 2.4 Observations 2.5 Recommendations

12-16
12-13 13 14-15 15 16

Chapter 3 : Introduction
3.1 Origin of The Report 3.2 Objective 3.3 Scope 3.4 Methodology 3.5 Limitations

17-19
17 17-18 18 18 18-19

Chapter 4: History of Money Laundering And Evaluation of Laws


4.1 A Brief History of Money Laundering 4.2 Laws in Money Laundering

20-23
20-21 21-23

Chapter 5: Overview of Money Laundering (ML)


5.1 Definition of Money Laundering 5.2 Reasons of Money Laundering 5.3 The Cycle Of Money Laundering 5.4 Stages in Money Laundering 5.5 Occurrence of Money Laundering at Different Stages

24-29
24 24 25 26-28 28-29

Chapter 6 : Costs of Money Laundering To The Society, Business Ares And Financial Sectors
6.1 Costs To Our Society 6.2 Exposure of Emerging Markets 6.3 Threat to the Economy 6.4 Undermining the Integrity of the Financial Sector 6.5 Reputation Risk

30-36

30 3131-33 34-35

35-36

Chapter 7 : Money Laundering SystemHawallah, Hundi, Chop


7.1 7.2 7.3 Hawallah / Hundi / Chop Elements of Hawallah system Actual operation of this system

37-39
37 37-38 38-39

Chapter 8 : Money Laundering Tools Available in Bangladesh


8.1 8.2 8.3 8.4 Hundi Traders Over and Under Invoicing Cash Cultures Private Banking Relationship

40-43
40-41 41-42 4242-43

8.5

Electronic Banking

43

Chapter 9 : Money Laundering Prevention Steps Taken in Bangladesh By the Government


9.1 Money Laundering Prevention Act 2002 & 2009 9.2 Task Forces 9.3 Roles that Financial Initiations Must Play Chapter 10 : Steps Taken By EXIM Bank To Prevent Money Laundering 10.1 ML Risk For EXIM Bank 10.2 Procedures Followed in EXIM Bank Bangladesh to Combat Money Laundering Chapter 11 : Recommendations Chapter 12 : Conclusion Technical Terms And Acronyms References Appendix

44-51

44-47

48-49 49-51

52-54
52 52-54

55-56 57 58 59 60-72