The Asia-Pacific Group (APG) on Money Laundering has confirmed what years of persistent reporting had already made clear to close observers of Bangladesh's banking sector. Its delegation recently left Dhaka appalled by the scale of irregularities, looting and money laundering that flourished under the previous Awami League regime. This carries serious consequences as Bangladesh prepares for its fourth Mutual Evaluation in 2027 and 2028. The country had once exited the APG grey list in 2014 after years of remedial effort, and the compliant rating earned in the 2016 evaluation was celebrated at the time as evidence of durable institutional reform. That celebration now looks grotesque in hindsight. Whatever technical compliance existed on paper merely masked the hollowing out of the banking sector, as bank boards came under political control and lending decisions were increasingly driven by connections rather than creditworthiness. A poor performance in the coming evaluation could increase the cost and difficulty of trade financing, complicate international financial transactions and weaken Bangladesh's standing with lenders already cautious about extending further support. Preparing for that evaluation cannot be reduced to a technical exercise confined to the Bangladesh Financial Intelligence Unit. It demands a full confrontation with the financial plunder that the delegation was reacting to.
The mechanics of this plunder reveal a sophistication that should anger every citizen. It was facilitated by institutional arrangements that allowed politically connected interests to gain influence over banks and then exploit them. Hundreds of billions of taka were disbursed through this route and then laundered abroad using manipulated letters of credit. Bond issuances meant to finance renewable energy and real estate projects were similarly diverted. Individuals linked to the fallen regime accumulated properties in Malaysia, Singapore, Canada, the US, the UK and the UAE, among many other countries, without any legitimate overseas income to justify them. The immediate-past interim government's own white paper estimated illicit financial outflows between 2009 and 2023 at around $234 billion, averaging $16 billion annually and equal to roughly 3.4 per cent of gross domestic product.
Meanwhile, non-performing loans ballooned from Tk 2.11 trillion to Tk 5.30 trillion in a single year once the facade of concealment collapsed after the July uprising. The revaluation of assets from five merged banks alone added Tk 700 billion to this pile of bad debt. The sheer volume of capital locked in these toxic assets has brought credit growth to a virtual standstill, with banks unable to extend fresh loans for productive sectors while struggling to meet regulatory capital requirements. Millions of ordinary depositors who played no part in these illicit transactions now bear the risk created by capital inadequacy across the sector. Recovering any of this money looks doubtful, since much of it passed through several layers of transactions before being converted to cash, and no one can say with certainty which route it took out of the country.
The APG delegation has cautiously welcomed the current government's asset recovery efforts and reform initiatives, but that welcome was tied to continued action rather than intent. The finance minister's promise to strengthen the framework for combating money laundering must therefore translate into tangible legal actions against those responsible. Plunder on this scale could not have occurred through individual wrongdoing alone, and its scale is itself evidence that the boards, regulators and enforcement bodies meant to prevent it had failed as well. Large scale institutional failure demands nothing less than comprehensive reform. Assessors returning in 2027 will be testing whether that reform has actually taken hold, and so will the millions whose savings were put at risk by years of financial abuse.
