FATF Status

Bangladesh is no longer on the FATF List of Countries that have been identified as having strategic AML deficiencies

Latest FATF Statement:  14 February 2014

The FATF welcomes Bangladesh’s significant progress in improving its AML/CFT regime and notes that Bangladesh has established the legal and regulatory framework to meet its commitments in its action plan regarding the strategic deficiencies that the FATF had identified in October 2010. Bangladesh is therefore no longer subject to FATF’s monitoring process under its on-going global AML/CFT compliance process. Bangladesh will work with APG as it continues to address the full range of AML/CFT issues identified in its mutual evaluation report.

Compliance with FATF Recommendations

The last follow-up Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Bangladesh was undertaken in 2020. According to that Evaluation, Bangladesh was deemed Compliant for 9 and Largely Compliant for 27 of the FATF 40 Recommendations. It was deemed Highly Effective for 0 and Substantially Effective for 3 of the Effectiveness & Technical Compliance ratings.

​US Department of State Money Laundering assessment (INCSR)

Bangladesh was deemed a Jurisdiction of Concern by the US Department of State 2016 International Narcotics Control Strategy Report (INCSR). Key Findings from the report are as follows: -

While Bangladesh is not a regional financial center, its geographic location, seaports, and long porous borders with India and Burma make it a transshipment point for drugs produced in both the “golden triangle” of Southeast Asia and the “golden crescent” of Central Asia. Drug trafficking, corruption, fraud, counterfeit money, gold smuggling, and trafficking in persons are the principal sources of illicit proceeds. Bangladesh is also vulnerable to terrorism financing, including funding that flows through the hawala/hundi system and by cash courier. The Bangladesh-based terrorist organization Jamaat ul-Mujahideen Bangladesh has publicly claimed to receive funding from Saudi Arabia.

The Bangladeshi economy relies heavily on remittances, with remittances through official channels reaching over $15.3 billion in calendar year 2015. According to the central bank, the share of remittances transmitted through the formal sector is increasing although there remains widespread use of the underground and illegal hawala/hundi alternative remittance system.

Black market money exchanges remain popular because of the limited convertibility of the local currency, cash-based economy, and scrutiny of foreign currency transactions made through official channels. Alternative remittance and value transfer systems also are used to avoid taxes and customs duties. Additional terrorism financing vulnerabilities exist, especially the use of non-governmental organizations (NGOs), charities, counterfeiting, and loosely-regulated private banks.

Rating                                                                           (100-Good / 0-Bad)

Transparency International Corruption Index                           24

World Governance Indicator – Control of Corruption             16

According to all major ranking institutions, Bangladesh routinely finds itself among the most corrupt countries in the world. Corruption is pervasive at all levels of society and companies have reported being subjected to costly and unnecessary licence and permit requirements. Reasons often include low salaries and weak institutional capacities. The Code of Criminal Procedure, the Prevention of Corruption Act, the Penal Code and the Money Laundering Prevention Act criminalise attempted corruption, extortion, active and passive bribery, bribery of foreign public officials, money laundering and using public resources or confidential state information for private gain. Nevertheless, anti-corruption legislation is inadequately enforced. Facilitation payments and gifts are illegal, but common in practice. For further information - GAN Integrity Business Anti-Corruption Portal

Bangladesh is the most densely populated non-city-state country in the world, with the eighth largest population (170 million) within a territory the size of Iowa. Bangladesh is situated in the northeastern corner of the Indian subcontinent, sharing a 4,100 kilometer border with India and a 247 kilometer border with Burma.

In 2023, Bangladesh obtained an International Monetary Fund (IMF) loan to bolster its foreign currency reserves. The IMF Executive Board approved USD 3.3 billion under the Extended Credit Facility/Extended Fund Facility and USD 1.4 billion under the Resilience and Sustainability Facility. According to the IMF, “Bangladesh’s robust economic recovery from the pandemic has been interrupted by Russia’s war in Ukraine, leading to a sharp widening of Bangladesh’s current account deficit, depreciation of the Taka and a decline in foreign exchange reserves.” The 42-month program “will help preserve macroeconomic stability, protect the vulnerable, and foster inclusive and green growth.”

Historically, Bangladesh had annual GDP growth of over six percent between 2010-2020. Its strategic location between the emergent South and Southeast Asian markets and its large workforce were reasons for U.S. companies to invest. Bangladesh received USD 3.44 billion in foreign direct investment in FY 2021-2022, according to Bangladesh Bank (the central bank). The COVID-19 pandemic and Russia’s war in Ukraine impacted Bangladesh by reducing demand for its main export—ready-made garments—while contributing to a sharp rise in the prices of energy and food.

Bangladesh’s rising commodity prices and a surge in imports in 2022 resulted in a widening balance of payments deficit. Foreign currency reserves declined from USD 48 billion in August 2021 to under USD 32.2 billion in January 2023. The Government responded with measures to delay foreign currency payments. The foreign currency shortage also coincided with a banking scandal in which several major Bangladeshi banks made large, questionable loans to companies that then defaulted on the loans. In September 2022, nonperforming loans (NPL) in the banking system reportedly surged to a record USD 12.8 billion, much of which the Government has been unable to trace.

Bangladesh has made gradual progress over the past decade in reducing some constraints on investment, such as taking steps to better ensure reliable electricity, but inadequate infrastructure, limited financing instruments, bureaucratic delays, lax enforcement of labor laws, and corruption continue to hinder foreign investment. The Government has made efforts to improve the business environment, but the full implementation of its foreign investment policies has yet to materialize. Capital markets in Bangladesh are still developing and the financial sector is highly dependent on banks, which suffered a major scandal in 2022 in which 11 banks faced a collective shortfall of USD 3.1 billion. A sluggish and reportedly corrupt judicial process and limits on alternative dispute resolution mechanisms impede the enforcement of contracts and the resolution of business disputes.

In the areas of labor, intellectual property rights (IPR), and environment, the Government has passed various modern laws but does not effectively enforce many of them. It devotes limited resources to IPR protection. Although Bangladesh has made measurable progress over the past decade to improve fire and building safety standards, workers’ rights to associate freely and bargain collectively are limited. Despite the many environmental conventions Bangladesh joined, Dhaka is among the world’s worst cities for air pollution.

Bangladesh is historically moderate, secular, peaceful, and stable, but as the country nears general elections in late 2023/early 2024, the political and security situation may become volatile. The last election in December 2018 was marred by irregularities, violence, and intimidation. Prime Minister Sheikh Hasina and her ruling party, the Awami League, adopted legislation and policies that diminished space for the political opposition, undermined judicial independence, and threatened freedom of the media and civil society.

Country Links

Bangladesh Bank

Bangladesh Financial Intelligence Unit (BFIU)

Office of the Registrar of Joint Stock Companies and Firms