Reasons behind Money Laundering and Ways to Controlling it in Bangladesh

Money laundering is a system, treated to legitimate illegally earned wealth in a way aiming to conceal the source of the wealth and after the process, the money looks like legal money. Our study aims to identify, analyze, and reveal the reasons that occur the offense and simultaneously, to suggest strategies and a model to control money laundering in Bangladesh. This study conducted based on primary data using a factors-based questionnaire, which responded to by teachers of universities and officers of banks. Findings suggest that reasons behind the offense are to transform black money into white money; to pay bribe and speed money; to hide the source of bribe and speed money; to get higher remittance, the illegal channel being used; to get a higher return from investment in other countries’ securities, stocks, and derivatives; to deposit money safely abroad; to evade import duty for having a higher rate in the specific items like gold, and to build a second home abroad. Findings also suggest a lack of ethical practice in life; having an imbalance in income and expenditure, and more earning tendency influenced people to conduct money laundering. Findings further suggest that the politician has a higher tendency to conduct money laundering than other occupations. Countries should control money laundering internationally by helping each other and update the way of controlling rules and regulations continuously.


INTRODUCTION:
Every year, World Gross Domestic Product (WGDP) between 2 to 5 percent amounted between $1.5 trillion from $600 billion is laundered around the world. It becomes a serious threat to international capital flows and exchange rates (Schroeder, 2001). The maximum amount of capital flows is occurring in developed countries from lower-income countries. This becomes a barrier for the lower-income countries for their development. Money laundering considered as a crime by maximum countries and actions taken against those who are involving in money laundering crime because countries are hampering financially for this crime. Bangladesh is one of the countries that are taking it seriously to stop. In Bangladesh, the Bangladesh Financial Intelligence Unit (BFIU) which is a division process. Transactions in financial institutions and banks are monitored by the regulatory authorities in many countries. Countries are attempting to control money laundering internationally and helping each other. Regional and international organizations formed to control criminal financing and money laundering. The Money Laundering Prevention Act, 2012, and Anti-Terrorism Act, 2019 (including amendment in 2013) of Bangladesh are used as a law to control unlawful activities.
The risk of money laundering becomes an important issue for many governments because criminal activities correlated with money laundering. To minimize the risk, transactions monitored and guidelines followed. But existing guidelines cannot help properly to control the serious problem. Inadequate preventive measures, acts, and laws exist to combat criminalist financing and money laundering (Al-Suwaidi and Nobanee, 2020). Therefore, they need to update rules and regulations frequently. For the risk of the world, national and global cooperation can help more to combat it and it will be a win-win situation for them. Mutual legal assistance among nations can also work much to combat the offense. Moreover, non-profit organizations along with financial institutions and banks can also assist governments to fight against the offense. Besides, sharing knowledge and ideas through national and international conferences can also assist the world to control the offense. However, electronic money laundering adds more anxiety to many nations. So, the importance of modern-secure transaction techniques becomes more necessary to control it.
Criminals need to launder illegal money and they always search for a new way to commit the crime safely. Thus, the system of money laundering is changing day by day. Countries also update their antimoney laundering policies regularly but most of the policies taken after money laundering occurrence. Therefore, it is very important to identify the main reasons behind money laundering and authorities should work on it to stop the money laundering strongly.

Theoretical Framework
Money Laundering -Laundering means to make something look clean. Black money acquired by violating a law such as terrorism funding, tax evasion, drug trafficking, and bribe. The system of appearing black money into white money in away called money laundering. There are some ways to launder black money and those ways are changing day by day. Suppose, Mr. Neta gets Tk. 1, 00,000 as a bribe. He has a hotel business and he deposits the bribe amount in the hotel's bank account as earnings from his hotel business. Thus, he makes the placement of the amount and conceals the origin of the amount. Now, the amount used as white money. In Bangladesh, the Money Laundering Prevention Act, 2012 -"Money laundering," means- Intentionally moving, changing, or transferring wealth involved in a crime for the following intentions: - Carrying out such actions to the lawful source of the earnings of the offense maybe secreted or disguised; and (viii) Sharing, cooperating with scheming, trying, covering, persuading, or advice to perform any crime alluded above. Laundering   Fig 1: Steps of the Process of money laundering.

Process of Money
The beginning step is placement. In this step, unlawful proceeds are put in away to conceal the birth of the proceeds. Layering is the next step. In this steps the birth of proceeds hidden in a way such as cash-based business, and round tripping. Integration is money laundering's ultimate step. After the layering, the proceeds appear as laundered money and this wealth can use as legal money. improve the support of each of the member's national anti-money laundering programs and to coordinate anti-money laundering initiatives in those countries.

Anti-Money Laundering and History of Anti-
In cooperation with international bodies, the Asia-Pacific Group of money laundering (APG) established in 1997 for generating a wide regional commitment to implement anti-money laundering policies and initiatives. Different countries have different authorities to monitor international transactions and the flow of funds from country to country. In 2002, Bangladesh Financial Intelligence Unit (BFIU) formed in Bangladesh Bank, which is the Central bank of Bangladesh as a division of the Bank. It is the main agency of Bangladesh to combat money laundering. The vision of the BFIU is that a robust financial system in Bangladesh effectively deterring money laundering, terrorist and proliferation financing, and other related offences (Mezgebe, 2020). The BFIU is performing to control the offense by investigating the skeptical transactions, and ready money transaction report in Bangladesh.

Literature Review
Money Laundering hampers the development of a nation, mostly in developing and underdeveloped countries. It has a bad effect on every economy. It damages financial institutions by hampering economic growth. Productivity in the economy's real division shortened by displeasing resources and motivating offense and corruption. It damages long-term economic development by distorting capital flows and the economy's international trade (Bartlett, 2002). There are many reasons for occurring money laundering such as black money, which earned illegal way, or to tax evasion etc. There are many parties involved in money laundering such as criminals, some politicians, some businesspersons, some directors and owners, and some employees, etc.

Placement Layering Intregation
Following a report of the BFIU, there are three reasons for committing money laundering. The first reason is that money is the lifeblood of offender organizations because it covers all the expenses of the organization. The second reason is that the origin of money can become evidence of a crime and so they must conceal the origin of their wealth. The third reason is that to protect them from seizure and investigation, they must convert their money like legitimate. Nearly hundreds of billions of dollars flow out from post-Soviet Russia for many reasons as money laundering. A nexus between political groups and business ones is there. Mafia operations are a reason for the offense in Russia. Another reason is the scope for malpractices created by the privatization and deregulation of foreign trade. In the banking system, there has corruption for money laundering (Gidadhubli and Kumar, 1999). However, Hawala is an old system of transferring remittance. It originated in South Asia. It is widely used for transferring remittance around the world but now it is playing a role in money laundering (Jost and Sandhu, 2000). Only in the past two decades, money laundering has arrive an issue of global anxiety because it is used as a technique to bring unlawful gains from fraud, drugs, and other offenses and back into the lawful economy (Unger, 2009). The heart of the offense is deception and it is a system of hiding the existence, unlawful source, or application of income from offender activity (Zdanowicz, 2009).
The offense is not only a serious problem for the economic growth of a single country but also is for the whole world. Almost all of the nations are following steps to control the problem. An effective global financial system is facing a threat to the problem. Organizations and anti-money laundering policies established by many countries that help to reduce the problem. Using the policy by many countries provides a very good result for them. It resists potential offenders from unlawful behavior and lowers the rate of crime (Ferwerda, 2009).
Blaming crime cartels, tax havens, and new techniques like cyber laundering by policy makers, moneylaundering scandals not only sap economies but also destabilize governments (Morris-Cotterill, 2001). Moreover, money laundering occurred to conduct of cash for illegal activities such as, to evade taxes, to pay for bribes, and to remain a low economic profile that is more usual than the use of other economic instruments (Zabyelina, 2015). However, international trade is one of the oldest techniques to circumvent government security used to move funds (Zdanowicz, 2009).
Because of profitability, Financial Institutions do not check all risky transactions occasionally. Even, they do not inform Bangladesh Bank about suspicious transactions properly but they have positive intentions in consideration of cost in the AML mechanism (Kutubi, 2011). In this study, we are attempting to know factors that affect to perform money laundering. We have developed 12 factors to analyze. Under the factors, there have 35 variables. We also have developed a model to control money laundering.

Objectives of the Study
The general purpose of the study is to identify the major reasons behind money laundering and to suggest a model to control money laundering in Bangladesh. The followings are the specific objectives of the study:

The Rationale of the Study
Bangladesh is a populated country. Every year, the government of Bangladesh needs to create a large number of jobs for the people of Bangladesh but it cannot possible for the government to create a large number of jobs for the population. Every year, a huge amount of money transferred from Bangladesh because of the crime. The private sector in Bangladesh provides the largest job opportunities for the population as well as they help other businesses to run and to create job opportunities. If money laundering controlled, many funds can utilized in the business sector of Bangladesh. Thus, businesses can create more job opportunities. In Bangladesh, many young people have ideas and enthusiasm to begin a business but they cannot get enough essential capital to start a business because of the fund transfer from Bangladesh. If money laundering controlled, young people can get more funds to start a business, they can create more job opportunities for them as well as for others, and they can contribute more to the economic development of Bangladesh.
The study is for finding out the reasons behind money laundering and analyzing the reasons to develop recommendations to control money laundering which considered a crime (Temesgen, 2020). As the offense rate is increasing, countries make more hard rules to make transactions. Thus, all transactions are facing some difficulties. Sometimes, the criminal transactions cannot identify. Therefore, in our study, we are focusing more on this problem as well.

METHODOLOGY:
The area of the study is in Bangladesh but the previous study of many countries on money laundering has studied to know the real scenario of money laundering around the world. This study is a survey-based data analysis from the perspective of Bangladesh.

Sources and Technique of Data Collection -
The study conducted based on primary data using a questionnaire. Primary data collected from an exploratory survey using a self-selection method. Secondary data used in the literature review from many journals and articles. Besides this, secondary data collected from other authentic sources such as Bangladesh Bank. Technique of Data Analysis -The survey data have grouped and tabulated based on their subject matter. Findings have come from the completion of the factors-based questionnaire analysis, which has done by SPSS Software.   KMO returns values between zero and one. Here, the KMO is 0.535, which indicates the sampling is adequate for factor analysis.    Religiousness: Money laundering takes place due to not following religious practices. Similarly, being a non-believer in religion is a reason for the crime. Furthermore, being ignorant of religious knowledge is another reason for it.

ANALYSIS AND FINDINGS:
Patriotism: Money laundering occurs due to having indifference in the country's development.
Income and Expenditure: Higher-income influences on conducting money laundering. Besides, more earning tendency influences to conduct the offense. Besides, money laundering occurs to transform black money into white money. Even, having an imbalance in income and expenditure causes money laundering.

Occupation:
The politician has a higher tendency to conduct money laundering than other occupations.

Bribe and Speed Money:
Money laundering occurs to hide the source of bribe and speed money. Besides, money laundering happens to pay bribes and speed money.

Risk and Return:
Investing in other countries' secureties, stocks, and derivatives for getting a higher return that causes money laundering. Moreover, safe investment opportunities in foreign nations attract people to perform money laundering. In addition, money laundering occurs due to having lower better investment opportunities in the homeland. Besides, to get higher remittance, the illegal channel is used which is also a reason for money laundering.
Future Security: To build a second home abroad is a cause for happening money laundering. Similarly, to deposit money safely abroad is the reason for occurring money laundering. Besides, money laundering happens for having high inflation in a home country that reduces the value of money day by day.
Family Support: To lead a higher-class life causes money laundering to occur.
Tax: To evade tax for having a higher tax rate causes money laundering. Moreover, to evade import duty for having a higher rate in the specific items like gold is a reason for occurring money laundering.

To Control Money Laundering
Note: After completing transactions, there must operate an investigation and documentation that the transactions performed following the commitment of the purpose of the transaction and there is not any violation of laws. If there is a violation of any laws found, there must taken action. It will also help to stop further transactions at the beginning stage.

CONCLUSION AND RECOMMENDATIONS:
Money laundering regarded as a breach of law in almost all countries in the world because it destroys a country's economic growth. Developing countries are suffering more for having higher inflation rates, lack of safe investment opportunities, and lack of higher return investment opportunities. There are many such kinds of reasons for occurring money laundering. Countries trying to control the crime by taking necessary steps but the steps are not working properly because politicians have a higher tendency to conduct the offense in developing countries. As a bribe, speed money, and other illegitimate earnings considered illegal in all countries, money laundering occurred to hide the sources of the money. As illegal channels provide higher exchange rates than banks in transferring remittance, some expatriates use the illegal Good Documentation channels to get higher remittance. Money laundering must control by performing effective steps and ensuring strong punishment for the crime.
 Financial institutions and Banks should provide adequate training to their employees to control money laundering;  Illegal channels of transferring remittance should be stopped and banks should provide a higher exchange rate;  Govt. should take necessary steps to improve ethics and morality, religiousness, and the patriotism of people;  Tax rate and import duty shouldn't be as much as high that become a burden for the taxpayers;  Inflation should be controlled and a safe deposit should be confirmed in the home country;  Every country should create more investment opportunities and ensure lower risk investment opportunities;  Strong punishment must be ensured for the individuals who have involvement in the money laundering activities, and  Suspicious transactions should investigate before and after the transactions and illegal transactions must be punishable. No transaction should allow to those who are involved in illegal transactions.

ACKNOWLEDGEMENT:
This study funded by the University Grants Commission of Bangladesh (UGC) and Jatiya Kabi Kazi Nazrul Islam University (JKKNIU).Thanks a lot, to the informants who have supported us to conduct this research.

CONFLICTS OF INTEREST:
The author(s) declared there is no conflict of interest to publish it.