Govt moves to set cash dealings guidelines

Dhaka,  Sat,  22 July 2017
Published : 12 Jul 2017, 00:45:41
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Govt moves to set cash dealings guidelines

Aims to prevent money laundering
Syful Islam


The government is set to formulate policy guidelines on reducing and discouraging cash transactions as part of its efforts to prevent money laundering and terrorist financing, officials said.

The central bank has been asked to prepare by next month a report on how to reduce cash transactions in the economy to reduce fund flow, they added.

Finance Minister AMA Muhith in his budget speech also mentioned the issue.

The national coordination committee on Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) also discussed the issue at a recent meeting and asked the central bank to submit the report on time.

Cash transaction is identified as one of the major means of sending money for terrorist activities.

Officials believe that reduction of cash flow among the people may help prevent terrorist financing to some extent.

In this case, officials said, people will be encouraged to use plastic money like debit card and credit card in automated teller machines (ATMs) or point-of-sale (POS) machines in case of shopping.  

Deputy governor of Bangladesh Bank and head of Bangladesh Financial Intelligence Unit (BFIU) Abu Hena Mohd Razee Hassan told the FE that in developed countries, people now use banking channel increasingly instead of handling cash money.

"Transaction through the banking channel generates document which helps prevent its misuse," he said.

Mr Hassan, whose department is preparing the report in this regard, said terrorist financing within the country is mainly being done through cash transactions.

Asked whether any measure to curb cash transactions would create difficulties for the common people when the rate of financial inclusion or access to banks in the countryside is still very poor, the deputy governor said financial literacy of the people will increase gradually and thus they would prefer using paper money.  

"I think time has come to curb cash transactions gradually," he noted.  

However, statistics show that the rate of use of cards for retail transactions still remains very low in the country. The people still prefer using cards mainly for withdrawing money from ATMs.  

The central bank data shows that in 2016, nearly 172 million transactions amounting to Tk 1.25 trillion were done through debit and credit cards. Of the transactions, 92 per cent took place through debit cards while 6.0 per cent through credit cards.

Of the total, transaction of only Tk 120.41 billion was done through POS, means for buying something or paying bills, even for withdrawing cash money.

"The main purpose of cashless transaction would not be served if use of card-based transactions remains limited to ATM withdrawals," Abul Kashem Md Shirin, managing director of Dutch-Bangla Bank Limited, a leading private bank with big presence in the card segment, told the FE earlier.

 syful-islam@outlook.com 
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