What is Money Laundering? Money Laundering is the practice of disguising the origins of illegally-obtained money.

Ultimately, it is the process by which the proceeds of crime are made to appear legitimate. The methods by which money may be laundered are varied and can range in sophistication from simple to complex. As per definition of Prevention of Money Laundering Act 2002 (Act No. 7 of 2002) which is reads as follows: Money Laundering means (Au) Properties acquired or earned directly or indirectly through illegal means; (Aa) Illegal transfer, conversion, concealment of location or assistance in the above act of the properties acquired or earned directly of indirectly through legal or illegal means; Why Money is laundered? When a criminal activity generates substantial profits, the individual or group involved must find a way to control the funds attracting attention to the underlying activity or the person involved. Criminals do this by disguising the source, changing the form, or moving the funds to a place where they are less likely to attract attention. How is money laundered? Money laundering often occurs in three steps: Placement: The launderer introduces his illegal profits/cash into the financial system. This might be done by i) Breaking up large amount of cash into less conspicuous smaller sums that are then deposited directly into a bank account, ii) Purchasing a series of monetary instruments (cheques, bank drafts, pay order etc) that are then collected and deposited into accounts at another location. Layering: In this stage, the launderer engages in a series of conversion or movements of funds to camouflage their source. The funds might be channeled through the purchase and sales of investment instruments, or the launderer might simply wire the funds through a series of accounts at various banks across the globe. This use of widely scattered accounts for laundering is especially prevalent in those jurisdictions that do not co-operate in anti-money laundering investigations. In some instances, the launderer might disguise the transfers as payments for goods and services, thus giving them a legitimate appearance. Integration: At this stage, the funds re-enter into the legitimate economy. The launderer might choose to invest the funds into real estate, luxury assets, or business ventures. Where does money laundering occur? As money laundering is a necessary consequence of almost all profit generating crimes, it can occur practically anywhere in the world.

Generally, the money launderer tends to seek out areas in which there is a low risk of detection due to weak or ineffective anti-money laundering programs. As the money launderers want to get back the illegal money as legitimate, they usually prefer to move funds through areas with stable financial systems. Money laundering activity may also be concentrated geographically according to the stage the laundered funs have reached. At the placement stage, - for example, the funds are usually processed relatively close to the underlying activity; in the country where the funds originated. With the layering phase, the launderer might choose offshore financial centre, a large regional business centre, a world banking centre- any location that provides an adequate financial or business infrastructure, where this can be done without leaving trace of their source or ultimate destination. Finally, at the integration phase, launderer might choose to invest laundered funds in still other locations if they were generated in unstable economies or locations offering limited investment opportunities.

Responsibilities of Bangladesh Bank: The Money Laundering Prevention Act-2008 gives Bangladesh Bank broad responsibility for prevention of money laundering and wide- ranging powers to take adequate measures to prevent money laundering, facilitate its detection, monitor its incidence, enforce rules and to act as the prosecuting agency for breaches of the Act. The responsibilities and powers of Bangladesh Bank are, in summary (See Section 4 and 5 of the Act): 1. To investigate into all money-laundering offences. 2. Supervise and monitor the activities of banks, financial institutions and other institutions engaged in financial activities. 3. Call for reports relating to money laundering from banks, financial institutions and other institutions engaged in financial activities analyze such reports and take appropriate actions. 4. Provide training to employees of banks, financial institutions and other institutions engaged in financial activities on prevention of money laundering. 5. To authorize any person to enter into any premises for conducting investigations into money laundering offences. 6. Persons authorized by Bangladesh Bank to investigate offences can exercise the same powers as the Officer in Charge of Police Station can exercise under the Code of Criminal Procedure. 7. To do all other acts in attaining the objectives of the Act. 8. The Courts will not accept any offence under the Act for trial unless a complaint is lodged b y Bangladesh Bank

or any person authorized by Bangladesh Bank in this behalf. What Does Financial Analysis Mean? The process of evaluating businesses, projects, budgets and other finance-related entities to determine their suitability for investment. Typically, financial analysis is used to analyze whether an entity is stable, solvent, liquid, or profitable enough to be invested in. Objectives of Financial Analysis: The main objective of financial analysis is to know company/industries financial status, its debt, revenue, expenditure, equity, share price, segmental revenue/expenditures etc. With Financial analysis we can know the present company/ industry/ sector status and we can expect its future.

How to Compute Credit Risk Grading: i) ii) iii) iv) v) vi) Identify all the Principal Risk Components Allocate Weightages To Principal Risk. Establish key parameters Assign weightages to each of the key parameters Input data to arrive at the score on the key parameters Arrive at the Credit risk Grading based on score obtained.

Short-comings of CRG System: i) ii) iii) iv) v) vi) Non-availability of data. Poor Auditing Standards Information on Competitors Honesty and Integrity Projected Value of Security Financial and business Risks