Terminologies used for AML & CFT Program


Terminologies used for AML & CFT Program
As Bangladesh continues to strengthen its financial integrity framework, banks and financial institutions must stay updated with the latest Anti-Money Laundering (AML) and Counter-Terrorist Financing (CFT) regulations. The Bangladesh Financial Intelligence Unit (BFIU) and Bangladesh Bank have introduced stricter measures in 2025 to combat emerging risks, including crypto-related laundering, trade-based money laundering (TBML), and digital fraud. Below is a comprehensive guide to key AML/CFT terms and regulatory updates from a Bangladesh perspective.

Key AML/CFT Terms & 2025 Updates for Bangladesh

1. Regulatory Bodies & Frameworks

  • BFIU (Bangladesh Financial Intelligence Unit) – The central agency enforcing AML/CFT compliance, now using AI-powered goAML 2.0 for suspicious transaction monitoring.

  • FATF Compliance – Bangladesh remains on the FATF Grey List (2025), requiring enhanced beneficial ownership transparency and VASP (Virtual Asset Service Provider) regulations.

  • AML Act 2012 (Amended 2024) – Now includes crypto assets, digital wallets, and stricter penalties for non-compliance.

  • Anti-Terrorism Act (ATA) 2009 (Amended 2023) – Expands counter-terror financing measures, including real-time asset freezing for UN-sanctioned entities.

2. Mandatory Reporting & Compliance

  • CTR (Cash Transaction Report) – Threshold remains Tk 10 lakh, but digital transactions above Tk 5 lakh now require additional scrutiny.

  • STR (Suspicious Transaction Report) – Must include crypto transactions, shell company red flags, and unexplained wealth.

  • SAR (Suspicious Activity Report) – New 2025 BFIU Circular mandates reporting for PEPs (Politically Exposed Persons) with unexplained fund movements.

3. Emerging Risks & New Regulations

  • Crypto & Virtual Assets – Bangladesh Bank bans crypto trading (2025), but VASPs must still report suspicious digital wallet activity.

  • Trade-Based Money Laundering (TBML) – Banks must now verify trade invoices and monitor over/under-invoicing under BFIU’s 2025 TBML Guidelines.

  • Environmental Crime & Wildlife Trafficking – Now classified as predicate offenses under AML Act amendments (2024).

  • AI & Machine Learning – BFIU’s new AI-driven FIU Portal detects mule accounts, layering schemes, and deepfake fraud.

4. Customer Due Diligence (CDD) Updates

  • KYC (Know Your Customer) – Biometric verification mandatory for high-risk accounts (2025 BFIU Rule).

  • EDD (Enhanced Due Diligence) – Required for PEPs, NGOs, and offshore company dealings.

  • UBO (Ultimate Beneficial Ownership) – New 2025 Company Act requires live UBO registers for all corporate clients.

5. Sanctions & Watchlists

  • UN Sanctions List – Banks must freeze assets of terror-linked entities within 24 hours.

  • OFAC & BFIU Blacklist – Expanded in 2025 to include cybercriminals and TBML networks.

What’s New in 2025?

✅ Stricter Crypto Controls – Ban on trading but mandatory STRs for digital asset movements.
✅ AI-Powered AML – BFIU’s new FIU Portal automates STR/CTR filings.
✅ Environmental Crimes as Predicate Offenses – Now part of AML Act.
✅ Real-Time UBO Verification – Mandatory for all corporate accounts.

Conclusion

Bangladesh’s AML/CFT framework is rapidly evolving to counter digital financial crimes, TBML, and terror financing. Banks must adopt AI-driven monitoring, stricter KYC, and real-time sanctions screening to avoid penalties. Staying compliant with BFIU and FATF guidelines is crucial for Bangladesh’s financial sector stability.


Labels: ,

ANTI MONEY LAUNDERING



Money Laundering is defined as “the process by which the proceeds of crime are converted into asset
including bank or other deposits so that they may be retained permanently or use the fund for further crime.
Money Laundering generally refers to ‘washing’ of the proceeds or profit generated from:
• Drug Trafficking
• People Smuggling
• Arms, antique, gold smuggling
• Prostitution rings
• Financial frauds
• Corruption, or
• Illegal sale of wild life products and other specified predicate offences.
International Anti-money Laundering Initiatives
• The United Nations
• G-7 (Presently G-8) Summit in Paris in 1989 established the Financial Action Task Force (FATF)
• The Basel Committee on Banking Supervision
• The International Organization of Securities Commissions
• The International Association of Insurance Supervisors
• G-7 (Presently G-8) Summit in Paris in 1989 established the Financial Action Task Force (FATF)
• 40 (forty) Recommendations on Money Laundering.
• 9 (nine) Special Recommendations on Terrorist Financing.
• Now 40 (forty) Recommendation for both ML & CF merging (40+9) recommendations since 2012.
• Monitoring Members Progress.
• Methodology for AML/CFT Assessments.
• List of Non-cooperative Countries and Territories (NCCT).
• The Basel Committee on Banking Supervision
– Prevention of Criminal use of Banking system for the purpose of Money Laundering (December,
1988)
– Core Principles for effective Banking Supervision (September, 1997)
– Core Principles Methodology (October, 1999)
– Customer Due Diligence (October, 2001)
Stages.

Factoring and Forfaiting


Factoring and Forfaiting:
1. Factoring is both domestic and foreign trade finance. Whereas forfaiting is only financing of foreign trade.
2. Factoring provides only 80% of the invoice. But 100% finance is provided in forfaiting.
3. In factoring, invoice is purchased belonging to the client. Whereas the export bill is purchased in forfaiting.
4. There is no letter of credit involved in factoring. But there is letter of credit involved in forfaiting.
5. Factoring may have recourse to seller in case of default by buyer. But there is no recourse to exporter in forfaiting.
6. Factoring does not provide scope for discounting in the market as only 80% is financed. But forfaiting provides scope for discounting the bill in the market due to 100% finance.
7. Factoring may be financing a series of sales involving bulk trading. Only a single shipment is financed under forfaiting.
Subscribe to: Posts (Atom)