Anti-Money Laundering (AML) & Combating the Financing of Terrorism (CFT) Compliance of the Bank

Features of Money Laundering

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Features of Money Laundering

Money laundering means billions of pounds and dollars a year are laundered through our financial systems. The methods used to launder money are similar whether it’s for white-collar crimes such as tax evasion, people/drug trafficking, or proceeds from fraud and internet scams.

Anti Money Laundering

Anti-Money Laundering (AML) & Combating the Financing of Terrorism (CFT) Compliance of the Bank

In line with Bangladesh Bank (The Central Bank of Bangladesh)’s Policy & Guidelines and strong commitment to comply with the law, The Premier Bank Limited identified the Money Laundering as one of its core risk areas and has been making all-out efforts to prevent money laundering. As per Bangladesh Bank’s policy & guidelines, our Bank formed an independent Anti-Money Laundering Division (AMLD) and a Central Compliance Committee (CCC), which is headed by Deputy Managing Director as Chief Anti-Money Laundering Compliance Officer (CAMLCO) who has sufficient authority to implement & enforce corporate-wide AML policies, procedures & measure and who is reporting directly to the Senior Management & the Board of Directors. In addition, He is reporting to Managing Director for his responsibility, co-ordinates & monitors day to day compliance with money laundering laws, rules & regulation. The Bank has a written Anti-Money Laundering Guideline which has taken all control points suggested by Bangladesh Bank to control money laundering and resist terrorist financing.

Money Laundering (ML) and Terrorist Financing (TF) can potentially damage and pose serious threats to the integrity and stability of a financial system. To protect the Banking industry from these threats, the Bank Authority has been working in partnership with financial institutions and BFIU, government departments, and other key stakeholders to put in place an effective regime to fight against these crimes.

The Board of Directors and Senior Management of The Premier Bank Limited are firmly committed to complying with their roles and responsibilities vested under the Money Laundering Prevention Act of 2012 (Amendment-2015) & Anti-Terrorism Act of 2009 (Amendment-2012 & 2013). Money laundering Prevention is viewed as an integral part of the Bank’s activities and Risk Management strategy.

Our Bank is committed to complying with the MLP Act 2012 (Amendment- 2015) & ATA 2009 (Amendment-2012 & 2013), Bangladesh Bank Circulars & Instructions, and also other related local and international regulations. Our AML Policy spells out Senior Management’s responsibility in Anti Money Laundering Compliance and development of awareness at all levels of the Bank regarding the importance of the Bank’s Anti Money Laundering Strategy.

We are aware that financial institutions are particularly susceptible to money launderers; The Premier Bank Limited Strictly follows Bangladesh Bank Guidelines which sets standard controls and procedures to counter money laundering.

All Bank strictly follows:

Know Your Customer (KYC) policy and procedures before onboarding new customers.

Customer Acceptance Criterion- Interview of the customer by Bank Official and review of customer background, profession, etc. to understand the customers and their financial dealings.
Customer Rejection Criterion- Interview of the customer by Bank Official and review of customer background, profession, etc. to prevent illegal or criminal elements.

Documents required for Individual /Corporate Account Open -for identification of the Customer in compliance with applicable laws and regulatory guidelines.

Transaction Profile based on customer source of income.
Address Verification-supporting documents and physical verification for proof of address.
Monitoring existing accounts for unusual or suspicious activities.

Risk classification of accounts and their mitigation.
Reporting suspicious transactions.
Providing training on Anti-money laundering and terrorist financing to all employees.

We emphasize the responsibility of every employee to protect the Bank from exploitation by money launderers and describe the consequence of non-compliance with the applicable laws and the Bank’s policy, including the criminal, civil and disciplinary penalties and reputation loss that could arise from any relationship with money laundering activity.

Our Bank strongly believes in making or retaining a relationship with the customers who are involved in legitimate business activities and whose income and wealth are derived from a legitimate business.

What Is Money Laundering?

Money laundering is the unlawful process of disguising the origins of money earned through criminal activities, such as drug trafficking, corruption, fraud, smuggling or terrorism financing. In simple words, it’s like “washing” dirty money to make it appear clean and legitimate.

Why Money Laundering Happens

Criminals need their illegally earned money to look legitimate so they can use it without raising suspicion. Without laundering, using large amounts of dirty money can easily catch the attention of authorities.

Key Features of Money Laundering

1. Concealment of Illegal Sources

The main feature of money laundering is the concealment of where the money truly came from. Criminals hide the connection between the funds and their crimes by moving the money through different accounts or businesses.

2. Placement of Illicit Funds

Placement is the first stage, where illegal money is introduced into the financial system. It may involve depositing large sums into banks, buying chips in casinos, or using cash to purchase luxury goods.

3. Layering to Obscure the Audit Trail

Layering involves making complex financial transactions to confuse investigators. Criminals may:

  • Transfer money between multiple banks

  • Convert cash into assets

  • Use offshore accounts

  • Mix legal and illegal earnings

The goal is simple: make the trail impossible to follow.

4. Integration Into the Legitimate Economy

After layering, laundered money is reintroduced into the legal economy. This can happen through:

  • Business investments

  • Real estate purchases

  • International trade

  • Fake loans or contracts

By this stage, the money appears completely clean.

5. Use of Complex Financial Transactions

Money launderers use complicated transactions to evade detection. They know that simplicity creates visibility; complexity hides crime. Common methods include:

  • Wire transfers

  • Cross-border payments

  • Currency exchanges

  • Securities trading

6. International Movement of Funds

Criminals often move money across multiple countries to exploit weak regulations. Offshore tax havens and countries with poor AML laws become safe zones for hiding funds.

7. Structuring or Smurfing

Structuring means breaking large amounts of money into small deposits to avoid reporting thresholds. This is known as smurfing, where many people deposit small amounts that look normal.

8. Use of Cash-Intensive Businesses

Businesses that deal mostly in cash—like restaurants, bars, retail shops, or transport companies—help criminals blend illegal cash with legal revenue. These businesses become perfect washing machines for dirty money.

9. Use of Shell Companies and Front Businesses

Shell companies exist only on paper. They have:

  • No employees

  • No real operations

  • No physical office

They are used solely to hide ownership or transactions. Front businesses, on the other hand, operate legally but secretly support criminal activities.

10. Use of Digital Assets & Cryptocurrencies

Cryptocurrencies attract criminals because they offer:

  • Fast transfers

  • Cross-border anonymity

  • Limited regulations

  • Decentralized systems

Launderers use crypto mixers, DeFi platforms, NFTs, and anonymous wallets.

11. Trade-Based Money Laundering (TBML)

TBML involves disguising illegal money as legitimate trade transactions. Common techniques include:

  • Over-invoicing

  • Under-invoicing

  • Multiple invoicing

  • Fake shipments

International trade creates natural complexity, making it harder for authorities to detect illegal flows.

12. Use of Professional Enablers

Lawyers, accountants, financial advisors, and company formation agents sometimes— knowingly or unknowingly—help criminals launder money by:

  • Creating trust structures

  • Opening accounts

  • Drafting fake contracts

This adds a layer of legitimacy to illegal operations.

13. Rapid Movement of Money Across Accounts

Launderers frequently move funds quickly through multiple accounts to avoid detection. The faster the movement, the harder it becomes for regulators to identify patterns.

14. Use of Nominees and Third Parties

Criminals often use relatives, employees, or innocent individuals to open accounts or register businesses. This hides their connection to the illegal funds.

Effects of Money Laundering on Society

Economic Risks

Money laundering damages the economy by:

  • Reducing government revenue

  • Disrupting financial markets

  • Increasing inflation

  • Weakening legitimate businesses

  • Discouraging foreign investment

It can even destabilize entire countries.

Social and Political Risks

Money laundering fuels:

  • Crime

  • Corruption

  • Terrorism

  • Weak governance

When dirty money enters the political system, democracy suffers.

Conclusion

Money laundering is not just a financial crime—it’s a global threat that weakens economies, fuels corruption, and supports dangerous criminal networks. Understanding its features helps governments, businesses, and individuals recognize suspicious activities and protect society from financial crimes. As money laundering methods evolve, awareness and strong regulation remain the best defense.

FAQs

1. What is the main purpose of money laundering?

The primary aim is to disguise illegal money so criminals can use it without attracting attention.

2. Which industries are most vulnerable to money laundering?

Casinos, real estate, banks, trading companies, and cash-intensive businesses are highly vulnerable.

3. Why do criminals use shell companies?

Shell companies help hide ownership and make transactions appear legitimate.

4. How does cryptocurrency support money laundering?

Due to anonymity, fast transfers, and limited regulation, crypto is often used for layering and cross-border transfers.

5. What is the best way to prevent money laundering?

Strong AML regulations, strict monitoring, customer due diligence, and awareness are key to prevention.