Welcome to Business Outlook
Related Articles
The Bangladesh Bank on Tuesday asked all the banks to ensure that appropriate safeguards were in place for export trade along with the restrictions on establishing transactions with shell banks.
The BB’s Foreign Exchange Policy Department issued a circular in this regard on the day where it reminded the banks of the existing regulations on conducting export trade.
The regulations were outlined in the Guidelines for Prevention of Trade Based Money Laundering, the Guidelines for Foreign Exchange Transactions-2018, the Core Risk Management in Banking: Foreign Exchange Risk Management, and the Instructions of Bangladesh Financial Intelligence Unit, among other guidelines.
The circular reminded authorised dealer banks about the risk factors in cross-border transactions in terms of foreign exchange risk management guidelines, restrictions on establishing and conducting transactions with shell banks and preventive measures under tradebased money laundering guidelines, among other things.
For export under letter of credits, the AD banks must satisfy themselves of the authenticity of applicant banks or issuing banks in case of LCs received through authenticated channels from third banks.
In this case, the AD banks need to be ensured that the applicant banks or issuing banks will receive export documents directly from the respective ADs or through third banks or other authenticated banks with whom the respective ADs maintain appropriate relationship.
In case of transferred LCs, the circular asked the AD banks to satisfy themselves about the authenticity of the first beneficiary and transferring bank in addition to the LC applicant banks or issuing bank, the circular said.
For export under sales contracts, the banks must conduct due diligence regarding importers’ banks designated for transactions under sales contracts for being ensured of their step-by-step responsibilities regarding release of export documents to importers and procedural arrangement of payment as per foreign exchange regulations and relevant provisions of the prevailing Uniform Rules for Collection.
The banks were also asked to ensure that the importer’s banks will receive export documents directly from the respective AD banks or through third banks or other authenticated banks with whom the respective AD banks maintain appropriate relationship.
In case of any difficulties in execution of the instructions mentioned above or in any doubt regarding the transactions, the banks must guide the exporters so that they can take appropriate measures for execution of the transactions.
An official of central bank said that the circular was a compilation of trade-related instructions.
The instructions will work as safeguards for both the AD banks and the exporters, he added.
