Foreign nationals and companies operating in Bangladesh will come under the scanner of Bangladesh Bank as amendment is being brought to foreign exchange regulation act to check money laundering activities.
The cabinet yesterday approved the draft of the “Foreign Exchange Regulation (amendment) Bill, 2015” incorporating some new provisions.
However, a finance ministry official said the central bank will go for the measure only if suspicion arises against any individual or company.
Once the Act is passed in parliament, everything will be clarified, he said.
The central bank will also be able to seek information on immovable or any assets owned by the Bangladeshis abroad.
As per the existing law, the central bank can only ask for information from Bangladeshi citizens about their holdings of foreign currency and foreign securities.
After the cabinet meeting yesterday, Cabinet Secretary Musharraf Hossain Bhuiyan told reporters that the provision did not have any ambiguity regarding its application in case of Bangladeshi citizens.
However, earlier it was not clear whether the provision was applicable to the foreign nationals living in Bangladesh, he said.
Bhuiyan said, “The amended Act made it clear that it will be applicable to both Bangladeshi and foreign nationals.”
The move to update the seven-decade-old law comes after the International Monetary Fund tagged it as a condition for the Extended Credit Facility (ECF) loan to improve the trade and investment climate.
Meanwhile, the proposed amendment also contains other modifications to the existing law with a view to making foreign trade and investment easier.
Suggestions have been placed to make it easier to set up branches, representative and liaison offices of foreign companies.
At present, permissions are required from both the Board of Investment and BB to establish such offices.
As per the amendment, permission from the BoI will suffice but the central bank has to be informed about it.
The cabinet secretary said the amendment updated the definitions of some terms, including currency, securities, exchange, account transactions services, capital account transactions, and goods.
In the amended act, the central bank has been given the power to impose administrative fines. However, the amount of fine or punishment will be decided later through rules in the light of the Act, Bhuiyan said.
Bangladesh’s existing foreign exchange regulation act is almost a copycat version of the laws passed in undivided India in 1947.
In 1976 and 2003, some minor amendments to the act were introduced. Besides, the current account transaction convertibility was made in 1994, and the exchange rate was made market-based in 2003.
In case of foreign trade, the services sector’s share has increased, but the existing law does not have much about it.
A number of amendments have been proposed in the act to make foreign currency earning easier through the services sector.