Bangladesh Bank, the central bank and apex regulatory body for the country’s monetary and financial system, is turning out to be a mysterious organization day by day. In recent years, this esteemed organization of the country has been under severe question due to its relation to several scams. We have even seen removal of its governor based on some allegations of negligence towards his duty. But still its image is under serious threats due to more and more wrong incidents. Being one of the controlling and regulatory authority of the whole banking and financial sectors of Bangladesh, it is highly important that Bangladesh Bank performs on its transparency and reliability. But we see some recent incidents which suggest that its image is again under the questions.

In February, 2016 tens of millions of dollars were stolen from the Bangladesh Bank via the Federal Reserve Bank of New York, transferred to accounts in the Philippines and then laundered through the Philippine casino system. The Bangladesh Bank has identified the people involved in the hacking of around USD 100 million (BDT 780 crores) from its foreign currency account with the Federal Reserve Bank of New York as it was claimed by the bank’s officials. Almost the entire amount was transferred online to the Philippines banking system and a small portion of it to Sri Lanka by suspected Chinese hackers on February 5, 2016. This incident took place at a time when Bangladesh’s banking system was trying hard to recover from a severe ATM and credit card fraud.

This heist stunned the whole world and prompted investigations in the Philippines and Bangladesh. FBI also got involved in the investigation and it revealed weaknesses in the supposedly secure global money transfer system known as SWIFT, which banks widely use all around the world to move billions of dollars daily between themselves. The heist also exposed the foggy banking system of the Philippines, where some of the world’s toughest bank confidentiality laws make the country vulnerable to potential corruption and money laundering. And it drew attention to the country’s casinos, which are exempt from anti-money laundering laws, and not required to report suspicious transactions. But nevertheless no policies actually came out as very helpful to Bangladesh to come out of this trauma.

After the heist, several questions were raised over many irregularities of the central bank and it was also found that, the Bangladesh Bank authority did not even informed the incident immediately to the finance minister or any other higher authority. The then governor of the Bangladesh Bank Atiur Rahman resigned from his post under tremendous pressure due to his role in identifying and reporting the incident. Though he claimed to resign on the ground of ethical responsibility but the heat was even unbearable to one of the most successful governors of Bangladesh Bank.

It was found that the security of Bangladesh Bank’s system was completely compromised and involvement of few employees was doubted in exposing the system especially on the days when the operation of the bank was closed. Serious investigation was conducted involving all possible international investigative resources and a Philippines Bank, Rizal Commercial Banking Corporation was identified through which the money laundering was mainly conducted. Several negotiations were held between the Bangladesh government and the Philippines government to bring back the money home. But even after two years, there is no word on who was responsible, and Bangladesh Bank has been able to retrieve only about USD 15 million, mostly from a Manila junket operator.

Bangladesh being a progressive economy and a country of over 160 million people is still fighting to stabilize its economic stature. For us a heist of USD 100 million is a very big setback. It was people’s hard-earned money. But we tremendously failed to recover that money even after identifying the culprits abroad. It is still a concern if any employee of Bangladesh Bank was involved in exposing the system of Bangladesh Bank. It seems like all actions and talks on that cyber heist issue is over and we have accepted our fate. Police investigating the cyber heist of Bangladesh Bank’s reserves in New York have failed to submit a report to court for the 25th time since the case was started last year. A probe panel formed by the Bangladesh Bank, headed by former governor Mohammed Farashuddin, submitted its report to the finance ministry on May 30 last year. But Finance Minister AMA Muhith did not release the committee’s findings despite repeated assurances to do so.

As we were about to forget the notorious incident, Bangladesh Bank came into the limelight again with a shocking recent incident. An investigation by the customs intelligence revealed that gold weighing almost 1000 kilograms which was kept in Bangladesh Bank’s vault has been adulterated. The 22-carat gold has turned into 18-carat gold as other metals were mixed with it after the central bank received gold discs and rings over a period of time as was told by the investigators.

The customs intelligence and investigation directorate of the National Board of Revenue dug out serious discrepancies in gold management, as the investigators examined 963 kg of gold out of huge quantity kept at the central bank’s vault, on the basis of random sampling. A gold disc and ring weighing 3.3 kg deposited with the Bangladesh Bank vault two years ago was later found to be alloy of metals.

It is unthinkable on the part of the custodian of the national monetary system and huge questions are being raised over what is going on at the central bank as most of the media termed it as a ‘ghostly’ incident. The sampling check was done on over 960 kg gold and on most occasions, the gold was degraded or mostly gone. It is an unbearable loss monetarily and hence is the largest scam after the cyber heist incident of February, 2016.

Later Bangladesh Bank officials claimed it to be a clerical mistake as the carat was miswrote as a typo mistake. But to almost everyone this explanation seemed to be lame. Despite the promise of finance state minister to investigate the matter, we cannot be very optimistic about the outcome of this investigation based on our prior experiences. The gold can be expected to be gone forever and it will definitely create mistrust among the people over the management of the Bangladesh Bank.

Being the central bank of our country, Bangladesh Bank plays several important roles like; formulation and implementation of monetary and credit policies, regulation and supervision of banks and non-bank financial institutions, promotion and development of domestic financial markets, management of the country’s international reserves, issuance of currency notes, regulation and supervision of the payment system, money laundering prevention etc.

The mentioned scams have strongly proven that Bangladesh Bank lacks in performing several of their roles. Hence, their credibility and also accountability has come under severe questions.
Moreover, during the last two decades, Bangladesh is focusing on the idea of sustainable development which is a precondition for a developing nation like ours containing social, environmental and financial parameters.

Bangladesh Bank being one of the major policy makers and also working as the adviser of the government of Bangladesh has both moral and legal obligations to ensure sustainable development in the country by implementing efficient and effective plans and programs. Hence, it is working as a key force in achieving the goals of sustainable development of Bangladesh from the birth of the nation through different measures and methods. But it becomes very problematic if such an organization comes under allegations repeatedly.

Bangladesh Bank and Bangladesh Securities Exchange Commission (BSEC) works as the regulatory authority of the financial and monetary sector of Bangladesh. They are monitoring the activities of all banks and non-bank financial institutions. They are the supreme power in ensuring that these institutions are performing on the set guidelines and contributing to the welfare of the national economy. Their efficiency matters a lot to the people of Bangladesh and moral slip can never be accepted from these institutions.

Any mark on the image of Bangladesh Bank will have severe negative impact on the total financial sector of Bangladesh which will result in logical mistrust of the investors both from home and abroad. Moreover, it will drive away the tendency of savings from the general people and will also have negative impact on the tax revenue collection. So, it is very urgent that the image of Bangladesh Bank is protected.

In light of the current situation, the operations and management of Bangladesh Bank should be rearranged tactically. The loopholes should be identified and eliminated through open consultation with the financial sector experts. Prime Minister Sheikh Hasina should look into the matter with utmost urgency as the system failure of Bangladesh Bank will take us a lot backwards for sure. We hope without hiding any facts, the government will take strong measures to bring back the trust of all relevant parties on Bangladesh Bank as well as our financial sector.

The writer is Chief Editor at Mohammadi News Agency (MNA), Editor at Kishore Bangla and Vice-Chairman, Democracy Research Center (DRC)