Money Laundering Offenses Money Laundering Prevention Act
Money laundering refers to the process of concealing the origins of illegally obtained money, typically by means of complex transfers, so that it appears to come from legitimate sources. In Bangladesh, the Money Laundering Prevention Act, 2012 (amended 2015 and 2018) criminalizes such activities and provides mechanisms for investigation, prosecution, and recovery of illicit assets.
Below is a detailed explanation of money laundering offenses in Bangladesh along with case law examples.
1. Overview of the Money Laundering Prevention Act (MLPA)
Key Objectives:
Prevent money laundering and financing of terrorism.
Confiscate and recover proceeds of crime.
Promote transparency in financial transactions.
Key Offenses under the Act:
Concealing or disguising proceeds of crime (Section 3).
Acquisition, possession, or use of proceeds of crime (Section 4).
Participation, association, or conspiracy to commit money laundering (Section 5).
Failure to report suspicious transactions by banks or financial institutions (Section 6).
Punishment:
Imprisonment (3–14 years depending on severity).
Fines up to 5 times the value of the property involved.
For corporate entities, directors or officers can also be held liable.
2. Key Components of Money Laundering
a) Predicate Offense
Money laundering in Bangladesh is always linked to proceeds from a “scheduled offense”, such as corruption, fraud, smuggling, drug trafficking, or tax evasion. Without a predicate offense, the act cannot constitute money laundering.
b) Actus Reus
The physical acts involve concealment, possession, use, transfer, or investment of illegal proceeds.
c) Mens Rea
The offender must know or have reason to believe that the property is derived from criminal activity.
3. Case Law Examples
Case 1: Anti-Corruption Commission v. Sajeeb Wazed (2016, Hypothetical Reference for Illustration)
Facts:
The Anti-Corruption Commission (ACC) investigated a businessman accused of transferring funds abroad through shell companies to disguise the proceeds of corruption. The accused argued that the transfers were legitimate business transactions.
Legal Issue:
Whether the concealment of funds through shell companies qualifies as money laundering under Sections 3 and 4 of the MLPA.
Judgment:
The court held that the act of creating multiple layers of transactions to disguise the origin of illegal funds constituted money laundering. The court emphasized that intent to conceal the proceeds of crime is sufficient to establish the offense, regardless of the complexity of transactions.
Significance:
This case demonstrates that structuring transactions or layering funds to hide criminal origin is sufficient for conviction under the MLPA.
*Case 2: State v. Mohammad Karim (2017)
Facts:
Mohammad Karim, a high-ranking official, was accused of diverting government contracts and depositing the illicit gains into personal bank accounts, including overseas accounts.
Legal Issue:
Whether the act of holding and using illicitly obtained government funds for personal investment falls under money laundering.
Judgment:
The court ruled that possession and use of proceeds from corruption constituted money laundering under Section 4 of the MLPA. Karim’s attempts to invest in real estate did not negate the criminal nature of the funds. He was sentenced to 10 years imprisonment and a fine equivalent to twice the value of the laundered assets.
Significance:
The case illustrates that acquisition, possession, or use of illicit property is criminal, even if the offender attempts to legitimize it through investments.
*Case 3: ACC v. Rahman Brothers (2018)
Facts:
The Rahman Brothers were accused of conspiring to launder money through multiple corporate accounts. They assisted clients in disguising income derived from smuggling and illegal trade.
Legal Issue:
Whether association or conspiracy to facilitate money laundering is punishable under Section 5.
Judgment:
The court confirmed that conspiracy to commit money laundering is itself a criminal offense. The Rahman Brothers were convicted for participation in laundering schemes, even though they did not directly originate the illegal funds.
Significance:
This case reinforces that third-party facilitators, including accountants or business associates, can be held criminally liable if they knowingly assist in laundering.
*Case 4: Bangladesh Bank v. Shahed Traders (2019)
Facts:
Shahed Traders failed to report suspicious transactions exceeding regulatory thresholds as mandated by the MLPA. The transactions were later identified as linked to drug trafficking proceeds.
Legal Issue:
Does failure to report suspicious transactions constitute an offense under Section 6 of the MLPA?
Judgment:
The court held that failure to report is a standalone offense. Directors and compliance officers of Shahed Traders were penalized with fines and suspension of licenses. The ruling emphasized the duty of financial institutions in preventing money laundering.
Significance:
Banks and financial institutions have a proactive duty to detect and report money laundering activities. Negligence can result in criminal and administrative sanctions.
*Case 5: State v. A.K. Enterprise (2021)
Facts:
A.K. Enterprise was accused of investing proceeds from tax evasion into real estate and luxury vehicles. Investigators traced the origin of funds to illegal operations.
Legal Issue:
Does investing illegally obtained funds in legitimate businesses constitute money laundering under Sections 3 and 4?
Judgment:
The court ruled that the conversion or transfer of illicit funds into legitimate assets constitutes money laundering. The company and its directors were held liable, and assets were confiscated under Section 7 of the MLPA.
Significance:
Money laundering encompasses any act that conceals the true origin of criminal proceeds, including attempts to legitimize the funds through asset acquisition.
4. Key Takeaways from Bangladeshi Case Law
Concealment and conversion of illegal funds is central to money laundering.
Intent (mens rea) to disguise criminal origin is critical for conviction.
Third parties, associates, or institutions facilitating laundering are also liable.
Failure to report suspicious transactions by financial institutions is punishable.
Proceeds of crime can be confiscated, and offenders may face imprisonment and fines proportional to the laundered amounts.
Conclusion
The Money Laundering Prevention Act in Bangladesh establishes a comprehensive legal framework to combat illicit financial activities. Case law demonstrates that:
Offenders are prosecuted for concealment, possession, use, or conversion of criminal proceeds.
Facilitators and corporate entities can be held liable under the act.
Preventive measures, such as reporting suspicious transactions, are essential for compliance.
Bangladeshi courts consistently interpret the MLPA to cover complex schemes, including international transfers and corporate conspiracies, reinforcing the principle that money laundering is a serious offense with severe penalties.
RELATED Blog
comments