Term paper

MONEY LAUNDERING

Prepared by:
(This report has been prepared for the partial fulfillment of the degree of
Bachelor of Business Administration)

Supervised by:

Submission Date: 2

Date:
To The Supervisor
Faculty of Business Studies
Premier University
Chittagong.

Subject: Submission of term paper on money laundering.

Dear Sir
It is my pleasure to submit my term paper on Money Laundering as a part of
BBA (Finance & Banking).
I tried my best to gather relevant information for constructing a complete repot
as outlined. The preparation of this report enables me to great extent to
complete my theoretical knowledge with practical analysis. I would like to
express my profound gratitude for your kind and mind for reading my report.
Thank you, very much for your heartiest co-operation.

Sincerely Yours

Acknowledgement:
It is high time for me to express my deepest gratitude and humble submission
to the Almighty for giving me chance to study in Premier University.
I am grateful to my supervisor for his cordial supervision and support to
prepare this report.
I am also grateful to Mr. Mohammed Hossain SPO of Al-Arafah Islami Bank
Ltd O.R.Nizam Road Branch, who gives the chance to do my interne on his
branch.
I express my deepest gratitude and respect to the officials of Al-Arafah Islami
Bank Ltd O.R.Nizam Road Branch who helped me a lot during my

Content
Chapter-1
Objectives of the study
Methodology of the study
Scope of the study
Limitation
Executive Summary
Chapter-2
Overview of Al-Arafah Islami Bank Ltd
Company Profile
Vision & Mission of AIBL
Objectives of AIBL
Functional area of AIBL
Historical Background of AIBL
SOWT analysis of AIBL
Banking service of AIBL

Chapter-3
Definition of Money Laundering (ML)
Reason of ML
Impact of ML
Affect of ML in Business/ economic development
Stage of ML
Symptom of ML
Penalties of ML
Chapter-4
Finding
Recommendation
Suggestion for Money Laundering
Conclusion

Chapter 1

Executive summary
Objective of the study
Methodology of the study
Scope of the study
Limitation of the study

Objective of the study

The main objectives of the study are given below:

1. To know about the banking system of Al-Arafah Islami Bank Ltd.

2. To know about money laundering.
3. Effect of money laundering.
4. Identification or symptom of ML.
5. To recommend how to solve the problem.
6. Prevention way of money laundering.

Methodology of the study:

The methodology of the can be discussed under the major heads:
1. Organization & development of the report: The report is organized &
development under a mixture of both descriptive an analytical frame
work.
2. Data sources :the data sources used to prepare this report delineated
as follows:
A. Primary sources:
Practical deskwork.
Face to face conversation with the officers and executives.
Face to face conversation with the client.

B. Secondary sources:

Annual report of Al-Arafah Islami Bank Ltd.

Bank statements.
Brochures of bank.
Annual circular on money laundering.
Guide line for foreign exchange transaction by BB.

Scope of the study:

n modern life there have no alternative way to develop the national

economy with out bank . Bank is not only a financial institution but also
life blood of the national growth. a banking institution is essential in a
modern society . It plays a key role in the economic development of a country
and forms the core of the money market in an advanced country .in recent age
the banking sector over the world has been undergoing a lot of change due to
deregulation, technological innovation, globalization etc. Bangladesh banking
sector is lagging for behind in adopting these changes. To succeed well in
these changing environments, not only development of appropriate
infrastructure is necessary but also infusion of professionalism in to banking
service is essential.
Commercial banks play a significant role to meet up the needs of the society
such as capital formulation, large scale production industrialization, growth
of trade etc. Carry the foreign remittances of wage earners and other fund for
the country. AIBL is and unconditional land specialized financial institution
that performs most of the standard banking services and investment activities
on the basis of profit and loss sharing system confirming to the principle of
Islamic shariah .A IBL bank does not pay interest to depositors. Instead
depositors participate in the profitability of the bank.
In this century bank is and essential part of every business commercial welfare
activities .but this is also using by criminals for illegal monetary activities. in
this case money laundering is commonly used a term .Financial
institutions ,government need to aware about the term money laundering
for protect illegality and ensure social and economic welfare.

Limitations of the study:

Objective of the practical orientation program is to have practical exposure for
the student .My report period is for 2 months , which was some how not
sufficient after working hole day in the office it was very much difficult , if not
impossible to study again theoretical aspect of banking . There is also having
some limitations:
1. Required information and data are not well furnished by the central
accounts departments of BB.
2. Lack of depth of knowledge and analytical ability for writing such
report.
3. The bank confidentially keeps the data.
4. The data and information related with the topic was not easily available.
5. Supply of more practical and contemporary data is another out coming.
6. The study was not done very successfully due to inexperience.
7. Time constraints.
8. This suffers from a narrow data range for analysis.
9. The data seems insufficient may be suffering from take of reliability to
some extent.
10.Communication gap between the related officials and me.

Executive summary:
Al Arafah Islamic bank Ltd is one of the promising banks practicing Islamic
banking system in Bangladesh. It has started its activities from 28th
August 1995. It is operating al most al kind of common banking activities.
Its operating system is free from the interest. It is operating activities by the
shariah guideline.
Now this report I have discussed about the existing banking system practice by
the Al Arafah Islamic bank ltd. here I have discussed about different
department like deposit foreign exchange , remittance, advances etc of AIBBL
O.R.Nizam road branch .
In this report I have also discussed about the money laundering .here I have
focused on the reasons of ML, Social and economical impact of ML, Symptom
or which raise the suspicion of ML.
From the case study of AIBL I have identified some problem of the bank and
according to that I have provided some suggestion .here I have also discussed
role and preventing activities can take by various financial institution.

10

Chapter 2
Overview of AIBL

Profile

Vision and Mission of the AIBL

Objective of AIBL

Functional area of AIBL

Historical background of AIBL

SOWT analysis of AIBL O.R.Nizam

Branch

Banking Services of AIBL O.R.Nizam

Branch

11

Vision and Mission of the AIBL:

Vision:
To be pioneer in Islami Banking in Bangladesh and contribute
significantly to the growth of the national economy.

Mission:
Achieving the satisfaction of Almighty Allah both here & hereafter
Proliferation of Shariah Based Banking Practices.
Quality financial services adopting the latest technology.
Fast and efficient customer service.
Maintaining high standard of business ethics.
Balanced growth.
Steady & competitive return on shareholders equity.
Innovative banking at a competitive price.
Attract and retain quality human resources.
Extending competitive compensation packages to the employees.
Firm commitment to the growth of national economy.
Involving more in Micro and SME financing.

12

Overview of Al-Arafah Islami Bank Limited:

The prime objective of Al-Arafah Islami Bank is to serve the people for
attainment of their economic goal and success in life here and hereafter. AlArafah Islami Bank stands not only for material well being but also for ethical
development of its customers.
Company Profile:
Company Name: Al-Arafah Islami Bank Limited
Legal Form: A public limited company incorporated in Bangladesh on 18
June under the company act 1994.
Incorporated on: June 18, 1995
Started operation on: September 27, 19995
Paid up capital: Tk.115.23 Crore
No. of Director: 23
Managing Director: M.A. Samad Sheikh
Registered Office :
Al-Arafah Islami Bank Limited
36, Dilkusha commercial Area
Dhaka- 1000, Bangladesh
Web.http//www. Al-Arafah bank .com
Type of Banking: Islamic Bankers / Based on Islamic shariah

13

Objectives of AIBL
Form time immemorial Banks principally did the function of moneylenders or
Mohajans but the function and scope of modern banking are now-a-days
very wide and different. They accept deposits and lend money like their
ancestors, nevertheless, their role as catalytic agent of economic development
encompassing wide range of services is very important. Business commerce
and industries in modern times cannot go without banks. There are people
interested to abide by the injunctions of religion in all sphere of life including
economic activities. Human being is value oriented
And social science is not value neutral. Al arafah islami bank believes in moral
and material development simultaneously. Interest or Usury has not been
appreciated and accepted by the tawrat of Prophet Moses, the Bible of Prophet
Jesus and the Quran of Hazarat Muhammad (SM). Effort are there to do
banking without interest Al Arafa islami bank limited avoids interest in all its
transactions and provides all available modern banking services to its client
and want to contribute in both moral and material development of human
being. No sustainable material well being is possible without spiritual
development of mankind. Only material well being should not be the objective
of development. Socio economic justice and brotherhood can be implemented
better in a God-fearing society.
Other objective of Al Arafah Islami Bank include:

To establish interest-free and welfare oriented banking system.

To help in poverty alleviation and employment generation.
To contribute in sustainable economic growth.
To establish the relationship between bank and customer as
partnership Basis.

14

Functional Area of AIBL:

Export and Import Function

Retail Banking

Industrial financing trade financing

Syndicated Loan

Project financing

Hire purchase

Lease financing

Online service

Automated Accounting

Integrated System

Signature Verification

Any Branch Banking

ATM Services (to be implemented )

POS Services ( to be implemented )

Other Delivery Channel Services (to be implemented)

15

Historical Background of the AIBL:

The Bank started its operation on June 18,1995 as a commercial Bank in the name and
Style of Al Arafa Islami Bank Limited. The prime objective of Al Arafa Islami Bank is to
serve the people for attainment of their economic goal and success in life here and
Hereafter. AIBL faced a several setbacks in respect of business. With active initiative taken
by the member of the board and the management team, the company could overcome the
problem and get it converted into a full-fledged commercial.

Problem on 2001 after obtaining license from Bangladesh Bank as Al Arafa Islami Bank
Ltd. The Authorized capital of the Bank was fixed at TK .100 Million and paid up capital at
TK .100.12 Million of which 20.50 Million was subscribed by the sponsors at that time. At
present the Bank is operating through 46 Branches of the country.

16

SOWT Analysis of the Al-Arafah Islami Bank:

Cooperation with each other .
Fewer default loan .
Strength

Membership with SWIFT.

Good banker-customer relationship.
Energetic work force.
Reluctance to add campaign.

Weakness

Some inexpert and laggard assistant officers .

Existing manual vouchers.
Shortage of Branch.
Lack of consumer credit scheme.
Entrance of new private Banks.
Not enough Efficient administration.
Weak in marketing.
Huge business area.
Introducing ATM card.

Opportunity

Growth sales volume.

Introducing any branch banking through online.
Different services of FCBS (ex: Phone Banking )
Different classic services of Foreign Banks.

Threats

Entrance of new PC Banks.

Political unrest.

17

Banking Services of Al- Arafah Islamic Bank Limited

O.R.Nizamg Rood, Chittagong:
Cash
Account
General Banking

Remittance
Clearing House
Customer Services
Musharaka (equity participation on the basis of sharing profit
and loss)
Mudaraba (sharing of profit and loss in business where one of
the partner provides expertise and management and other
partner provides capital remaining inactive)

Investment Department

Murabaha (buying and selling of commodities goods etc. with

profit)
Bai-Muajjal (credit sale with profit)
Ijara(leasing for rent )
Hire purchase or Shirkatul Melk)
Bi-Salam (purchasing of agricultural products while in
production and providing advance money to the producers)
Istisna (purchasing of industrial products while in production
and providing advance money to the producers)
Quard
Import

Foreign Exchange

Export
Remittance

18

Chapter -3

Money Laundering

Definition of Money Laundering

Reasons of Money Laundering
Affect of Money Laundering in Business /
economic development
Stages of Money Laundering
Symptom of Money Laundering

19

 Penalties for Money Laundering

Definition of Money Laundering:

A definition of what institutes the offence of money laundering under
Bangladesh law is set out in Section-2 (Tha) of the 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;
(Au) Illegal transfer, conversion concealment of location or assistance in the
above act of the properties acquired or earned directly or indirectly legal or
illegal means;
Properties has been defined in section 2(Da) of the Act as Properties means
movable or immovable Properties of any nature and description.
The U.S customs Service, an arm of the Department of the Treasury, provides
a lengthy definition of money laundering as the process whereby proceeds,
reasonably believed to have been derived from criminal activity, are
transported, transferred, transformed, converted or intermingled with
legitimate funds for the purpose of concealing or disguising the true nature,
source disposition, movement or ownership of these proceeds. The goal of the
money laundering process is to make funds derived from, or associated with,
illicit activity appear legitimate.
Another definition of Money laundering under U.S. law is, the involvement
in any one transaction or series of transactions that assists a criminal in
keeping, concealing or disposing of proceeds derived from illegal activities.
The EU defines it as the conversion or transfer of property knowing that such
property is derived from serious crime, for the purpose of concealing or
disguising the illicit origin of the property or of assisting any person who is
20

involved in committing such an offence or offences to evade the legal

consequences of his action, and the concealment or disguise of the true nature,
source, location, disposition, movement, rights with respect to or ownership of
property, knowing that such property derived from serious crime.

A concise working definition was adopted by Interpol General Secretariat

Assembly in 1995, which defines money laundering as: Any Act or attempted
act to conceal or disguise the identity of illegally obtained proceeds so that
they appear to have originated from legitimate source.
The joint Money Laundering Sterling Group (JMLSG) of the U.K. defines
it as the process whereby criminals attempt to hide and disguise the true
origin and ownership of the proceeds of their criminal activities, thereby
avoiding prosecutions, conviction and confiscation of criminal funds.
In lay terms Money Laundering is most often described as the turning of
dirty or black money into clean or white money. If undertaken successfully,
money laundering criminals to legitimate dirty money by mingling it with
clean money, ultimately providing a legitimate cover for the source of their
income. Generally, the act of conversion concealment is considered crucial to
the laundering process.

21

Reasons of Money Laundering:

Criminals engage in money laundering form three main reasons:
First, Money represents the lifeblood of the organization that engages in
criminal conduct for financial gain because it covers operating expenses,
replenishes inventories purchases the services of corrupt officials to escape
detections and further the interests of the illegal enterprise, and pays for an
extravagant lifestyle. To spend money in these ways, criminals must make the
money they derived illegally appear legitimate.
Second, a trial of money from an offence to criminals can become in
criminating evidence. Criminals must obscure or hide the source of their
wealth or alternatively disguise the ownership or control to ensure that illicit
proceeds are not used to prosecute them.
Third, the proceeds from crime often become the target of investigations and
seizure. To shied ill-gotten suspicion and protect them from seizure, criminals
must conceal their existence or alternatively make them look legitimate.

22

Impact of money Laundering:

Money Laundering has potentially devastating economic, security and
social consequences. Money laundering is a process vital to making crime
worthwhile. It provides the fuel for drug dealers, smugglers, terrorists, illegal
arms dealers, corrupt public officials, and others to operate and expand their
criminal enterprises. This drives up the cost of government due to the need for
increased law enforcement and health care expenditures (for example, for
treatment of drug addicts) to combat the serious consequences that result.
Crime has become increasingly international in scope, and the financial
aspects of crime have become more complex due to rapid advances in
technology and the globalization of the financial service industry.
Impact of Tax and Revenue:
Money Laundering diminishes government tax revenue and therefore
indirectly harms honest taxpayers. It also makes government tax collection
more difficult. This loss of revenue generally means higher tax rates than
would normally be case if the untaxed proceeds of crime were legitimate. We
also pay more taxes for public works expenditures inflated by corruption. And
those of us who pay taxes pay more because of those who evade taxes.
Impact of Market price:
Money Laundering distorts asset and commodity prices and leads to
misallocation of resources. For financial institutions it can lead to an unstable
liability base and to unsound asset structures thereby creating risks of
monetary instability and even systemic. The loss of credibility and investor
confidence that such crises can bring has the potential of destabilizing
financial systems, particularly in smaller economics.

23

Impact on Private sector:

One of the most serious microeconomic effects of money laundering is felt
in the private sector. Money Launderers often use front companies, which comingle the proceeds of illicit activity with legitimate funds, to hide the illgotten gains. These front companies have access to substantial illicit funds,
allowing them to subsidize front company products and services at levels well
below market rates. This makes it difficult, if impossible, for legitimate
business to complete against front companies with subsidized funding, a
situations that can result in the crowding out of private sector business by
criminal organizations.
Impact on Global Economy:
No one knows exactly how much dirty money flows through the worlds
financial system every year, but the amounts involved are undoubtedly huge.
The international Money has estimated that the magnitude of money
laundering is between 2 and 5 % of world gross domestic product, or a least
USD 800 billion to USD1.5 trillion. In some countries, these illicit proceeds
dwarf government budgets, resulting in a loss of control of economic policy by
governments. Indeed, in some cases, the sheer magnitude of the accumulated
asset base of laundered proceeds can be used to corner markets- or even small
economies.
Impact on national economy:
Among its other negative socioeconomic effects, money laundering
transfers economic power from the market, government, and citizens to
criminals. Furthermore, the sheer magnitude of the economic power that
accrues to criminals from money laundering has a corrupting effect on all
elements of society.
Impact on society;
The social and political costs of laundered money are also serious as
laundered money may be used to corrupt national institutions. Bribing of
officials and governments undermines the moral fabric in society, and by
weakening collective ethical standards, corrupts our democratic institutions.
When money laundering goes unchecked, it encourages the underlying
criminal activity from which such money is generated.

24

Impact of financial Institutions:

Nationals cannot afford to have their reputations and financial institutions
tarnished by an association with money laundering especially in todays global
economy. Money laundering erodes confidence in financial institutions and the
underlying criminal activity-fraud, counterfeiting, narcotics trafficking and
corruptionweaken the reputation and standing of any financial institution.
Actions by banks to prevent money laundering are not only a regulatory
requirement, but also an act of self interest. A bank tainted by money
laundering accusations from regulators, law enforcement agencies, or the press
risk likely prosecution, the loss of their good market reputation, and damaging
the reputation of the country. It is very difficult and requires significant
resources to rectify a problem that could be prevented with proper anti money
laundering controls.
It is generally recognized that effective efforts to combat money laundering
cannot be carried out without the cooperation of financial institutions, their
supervisory authorities and the law enforcement agencies. Accordingly, in
order to address the concerns and obligations of these three parties, these
guidance Notes were drawn up.

Affect Of Money Laundering in business/ economic development:

Damages market integrity

Deters foreign investment
Diminish Gov. Tax revenue.
Contaminates the Industry.
Uneven playing field for honest business.
Risks for financial institutions.
25

 Distorts assets and commodity prices and leads to misallocation of

resource.
Makes crime a profitable enterprise.

Stages of Money Laundering:

Three basic stages on money laundering are:
Placement: The physical disposal of the initial proceeds derived from illegal
activity.
Layering: Separating illicit proceeds from their source by creating complex
layers of financial transactions designed to disguise the audit trail and provide
anonymity.
Integration: The provision of apparent legitimacy to wealth derived
criminally. If the layering process has succeeded, integration schemes place the
laundered proceeds back into the economy in such a way that they re-enter the
financial system appearing as normal business funds.
Placement stage
Cash paid into bank
(sometimes with staff
complicity or mixed
with
proceeds
of
legitimate business.)

Layering stage
Integration stage
Sale or switch to other Redemption of contract
forms of investment.
or switch to other forms
of investment.
Money transferred to
assets of legitimate False loan repayments
financial institutions.
or forged invoices used
Cash exported.
as cover for laundered
Telegraphic
transfers money.
Cash used o buy high (often using fictitious
value goods, property names
or
funds Complex
web
of
or business assets.
disguised as proceeds of transfers (both domestic
legitimate business.)
and
international)

26

Cash purchase of single

makes tracing original
premium life insurance Cash
deposited
in source of funds virtually
or other investment
outstation branches and impossible.
even overseas banking
system
Resale of goods/ assets.

Symptom of money laundering:

The following is a list of circumstances, which might give rise to a suspicion
of money laundering. The list is not exhaustive and whether or not they are
suspicious depends on the background and details. He example are as under:
Money Laundering using Cash Transactions:
a) Unusually large cash deposits made by an individual or business whose
ostensible business activities would normally be generated by Cheque
and other instruments.
b) Substantial increases in cash deposits of any individual or business
without apparent cause, especially if such deposits are subsequently
transferred within a short period out of the account and/or to a
destination not normally associated with the customer.
c) Customers who deposit cash by means of numerous credit slips so that
the total of each deposit is unremarkable, but the total of all the credits is
significant.
d) Company accounts where the transactions, both deposits and
withdrawals, are denominated in cash rather than forms of debit and
credit normally associated with commercial operations (e.g. Cheque,
casher orders, demand drafts etc.)
e) Customers who constantly paying or deposits cash to cover requests for
demand draft, money transfer or others negotiable instruments.
f) Customers who seek to exchange large quantities of law denomination
notes for those of higher denomination.
g) Frequent exchange of cash into other currencies.
h) Customers whose deposits contain counterfeit notes, or forged
instruments.
27

i) Customers transferring large sum of money to or form overseas

locations with instructions for payment in cash.
j) Purchase or sale of foreign currencies in substantial amounts using cash
settlement, deposit the customer having an account with the institution.

Money Laundering Using Bank Accounts:

1. Customers who wish to maintain a number of trustee or customers
accounts which do not appear consistent with the type of business,
including transactions which involve nominees.
2. Customers who have numerous account and paying amount of cash to
each of them where the total of credits is a large amount.
3. Any individual or business whose account shows virtually no normal
personal banking or business related activities, but is used to receive or
disburse large sums which have no obvious purpose or relationship to
the account holder and/or his business (e.g. a substantial increase in
turnover on an account.)
4. Reluctance to provide normal information when opening an account,
providing minimal fictitious or conflicting information, or information
which is difficult or expensive to verify.
5. Customers who appear to have accounts with several financial
institutions within the same locality, especially when there is a regular
consolidation process of funds from such other accounts prior to a
request for onward transmission of the funds.
6. Matching of debits with credit paid in by cash on the same or previous
day.
7. Paying in large third party Cheque endorsed in favor of the customer.
8. Large cash withdrawals from a previously dormant or inactive account,
or from an account which has just a large credit from abroad.
9. Business representatives avoiding contract with the branch.
10.Customers who decline to provide information which normally would
make them eligible for credit or other valuable banking services.
11.Insufficient use of normal banking facilities (e.g. avoidance of high
interest rate facilities for large balance.)
28

12.Large numbers of individual making payments into the same accounts

without an educate explanation.
Money Laundering Using Investment Related transactions
1. Purchase of government securities, where this does not appear
appropriate given the customers apparent standing.
2. Requests by Customers for investment management services (either
foreign currency or government securities ) where the source of the
funds is unclear or inconsistent with the customers apparent standing.
3. Large or unusual settlements of securities in cash form.
4. Purchase or selling securities with no discernible purpose or in unusual
circumstances.
Money Laundering by Off-shore Activity
1. Customers introduced by an overseas branch, affiliate or other bank in
known drug producing or drug trafficking countries.
2. Use of letters of credit and other methods of trade finance to move
money between countries where such trade is not consistent with the
customers usual business.
3. Customers who make regular and large payments, including wire
transfer transactions, that cannot be clearly identified as bona fide
transactions to, or receive regular and large payments from, known
drug producing or drug trafficking, countries or countries which are
commonly associated with terrorist activity or which are tax havens.
4. Building up of large balances not consistent with the known turnover
of the customers business and subsequent transfer to accounts held
overseas.
5. Unexplained electronic fund transfers by a customer on an in and out
basis or without passing through an account.
6. Frequent requests for travelers, Cheque, Foreign currency, drafts or
other negotiable instruments.
7. Frequent paying in of travelers Cheque or foreign currency drafts
particularly if originating from overseas.
8. Numerous were transfers received in a account but where each transfer
is below the transaction size reporting requirement in the remitting
country.

29

Money Laundering by Secured and Unsecured Lending

1. Customers who repay problem loans unexpectedly.
2. Requests to borrow against assets held by the financial institution or a
third party, where the origin of the assets is not known or the assets are
inconsistent with the customers standing.
3. Request to provide or arrange finance where the source of the
customers financial contribution to a deal is unclear, particularly where
property is involved.

Penalties for Money laundering:

All offences under the act are non-bail able and the penalties for the
commission of the offences all have prison terms and/or fines as prescribed in
the act as follows:
The offence of money Laundering is punishable by terms of a minimum
imprisonment for six months and a maximum of up to seven years plus a fine
amounting to double the money laundered (See Section 13 of the Act).
The punishment for violation of seizure Orders is a minimum imprisonment
for one year or a fine of at least Taka ten thousand or both (See Section 14 of
the Act).
The punishment for violation of Freezing Orders is a minimum
imprisonment for one year or a fine of at least Taka five thousand or both (See
Section 15 of the Act).

30

The offence of divulging information by informing i.e. tipping off the

person who is the subject of a suspicion, or any third party is pounishable by a
minimum imprisonment for one year or a fine of at least Taka ten thousand or
both (See Section 14 of the Act).
The offence of obstructing investigation or failure to assist any enquiry
officer in connection with an investigation into money laundering is
punishable by a minimum imprisonment for one year or a fine of at least Taka
ten thousand or both (See Section 17 of the Act).

If any bank, financial institution and other institutions engaged in financial

activities fail to retain customer identification and transaction records or fail to
furnish required information as per the Act, Bangladesh Bank will report such
failure to the licensing authority can take proper action for such negligence and
failure (See section 19 (3) of the Act).
Bangladesh Bank is empowered to impose fines of not less than Taka ten
thousand and not more than Taka one lac on any bank, financial institution and
other institutions engaged in financial activities for the failure or negligence to
retain customer identification and transaction records or fail to furnish required
information to Bangladesh Bank (See section 19 (4) of the Act).
If any Company Partnership Firm, Society or Association violates any
provisions of the Act it will be deemed that every owner, partner directors,
employees and officers have individually violated such provisions.

31

Chapter 4

Finding
Recommendation
Suggestion for Money Laundering
Conclusion

32

Finding
During my internship period at Al- Arafah Islami Bank limited I have
observed the system following by the bank. By observing the system I have
identified some problem of Al- Arafah Islami Bank limited .The finding are as
follows:
Less attractive remuneration package and motivation for the employees.
Very few initiatives have taken to it known among public through
advertisement.
Lengthy procedure in handling simple general banking transaction such
as issuing of T.T, D.D,P.O,
There is no online banking system in the Al- Arafah Islami Bank limited
There are many illiterate clients in AIBL.
Communication or dealing with customer is enough poor
Has not enough strong marketing policy.
Promotional activities are poor.
Employees of AIBL are not getting enough training facility.
There is no customer care section.
There is no Islamic banking facility
Customer are not enough satisfied by its service
Information cell are not enough equipped (i.e. Booklet brochure of
services )
Though AIBL using banking software but it is not integrated with all
departments
33

 Insufficient presence of modern communication equipment

Application of modern technology such as computerization is not
sufficient.
There is no investment section
Shortage of officers

Recommendation:
Recommendation for Al-Arafah Islami Bank limited.
Though conducting this study I have acquired some practical knowledge
about banking system and other relevant matters. Now I would like to
provide some recommendation, which maybe helpful to promote the
performance of Al-Arafah Islami Bank limited. As per earnest observation
some suggestions for improvement of the situation are given below:
1. Need to offer more incentive to depositors Al-Arafah Islami Bank
limited.
2. Increase the branch to reach the depositors all over the country
3. Deeply more efficient marketing force.
4. Training facility should be in crease in order to increase the
capability of the employee.
5. Need more attention to the customer
6. Information cell need to improve more by equipping related
material
7. Atomization /computerization should introduce all over the system.
8. Interior decoration needs more improvisation
9. Established a smartness of the customer service department needs to
improve.
10. Proper training system should e conducted at regular interval for the
junior level officer.

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11.Online banking is very much in todays modern world. I highly

recommended launching of such service

Suggestion for Money Laundering:

In order to prevent money maundering, attention should be given following
things to be considered besides law enforcing:
1. Only banking system will not achieve expected success. Its necessary
to build up economic infrastructures which are helpful for the
development of the country.
2. Strong determination should be taken and fruitful measures should be
taken to remove corruption from country. For this accountability and
transference will ensure and as a result liability will be increase.
3. Everything required for the development of banking system should be
done and qualified person should be given duties. In this regard
honesty, competencies, sincerity and responsibility should be under
consideration.
4. The bad effect of money Laundering should be published through
newspaper, radio and other world service. Besides immigrants should
be encouraged to send money through legal way. Foreign embassies can
play a positive role in this case.
5. The distance of foreign exchange should be reduced. Many people
dont want to send money through banking channel for high remittance
charge fixed by foreign banks.
6. The advantage of online banking system should be extended and its
fruitfulness should be sent to peoples. The distance of bank in town and
villages should be lessened and the quality of the service should be
developed.
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7. In order to prevent money laundering mutual co-operation between

governments of different countries can play a significant role.
Moreover, International Monitory fund (IMF) can take appropriate
measures in this case.
8. Foreign aid to the government sanction money, loan etc. should be
used appropriately in appropriate fields. This should be a system for
different non-government organizations, foreign agencies for their
activities and liabilities.

After all the aspects of money laundering is worldwide and with it

powerful, shrewd and dishonest persons are involved in this Act. So these steps
are not taken by only central bank and other commercial banks. Actually a
combined efforts and sincerity of people in different occupations such as
police income tax authority, customs, BDR and civil society is needed and
moreover wit the help of responsible and powerful authority of the government
and international agency and all the chief of the government can bring
expected success.

Conclusion:
In Conclusion, I can say that this types of are very essential for a MBA
student to take preparation to meet the global competition in the real life
business. By this program I have learned about practical banking practice. I
have also tried to learn about the theoretical emersion of money laundering.

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Bibliography

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Reference taken from:

Various report and statement supplied by AlARAFAH ISLAMI

BANK LIMITTED
Annual report of AIBL
Various Booklet and brochure of AIBL and Islamic bank ltd
Bank and company act 1991 by Md ommar chy and syeed javed
Shaleuddin.
Guidelines for foreign exchange transaction (vl 1&2) published by
Bangladesh Bank.
Bank and Finance by Nasiruddin ahmed
Annual circular on Money laundering by BB

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 Web site http: //www.AlArafah Bank .com

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