When reporting on financial crimes like money laundering, accuracy is crucial. Misinterpreting data—particularly by confusing stocks with flows or misusing relative versus absolute figures—can lead to public misunderstanding. This is a common issue, especially in media reports on Bangladesh, where the numbers related to money laundering are often presented in a confusing manner.
Stocks vs flows: Understanding the basics
In economics, “stocks” refer to the accumulated value of a variable over a given period, while “flows” represent annual or periodic changes. In Bangladesh, media often cite the staggering figure of $150 billion being siphoned overseas by politically connected individuals over the past 15 years. This stock value, though alarming, should not be conflated with annualised flow data such as GDP, as some reports do. Such misrepresentation can leave readers confused about the actual scale of money laundering.
Who tracks money laundering in Bangladesh?
The responsibility for monitoring illicit financial activities in Bangladesh lies with the Bangladesh Financial Intelligence Unit (BFIU), a small and likely under-resourced team within the Bangladesh Bank. While their data might not always be the most robust, other organisations provide alternative estimates that can help paint a fuller picture. For example, Transparency International Bangladesh (TIB) estimates that $3 billion is laundered annually, while the Global Financial Integrity Institute (GFI) puts this figure closer to $8.7 billion. A significant portion of this occurs through trade mis-invoicing, but methods like the informal Hundi system also play a role. The bank heist by one of Bangladesh’s richest men is sensational but not a very common source of money laundering.
The importance of annualised data
I prefer using annualised figures because they allow for easier comparison across time and between countries. Stock figures can inflate the sense of scale—especially if we consider some estimates that encompass money laundering activities from as far back as 1972. While these long-term totals are valuable for context, they can obscure current trends and challenges.
Relative vs absolute numbers
Another key consideration is how we express these figures. Absolute numbers might grab headlines, but relative figures—such as the share of money laundering as a percentage of GDP—offer a clearer understanding of the problem’s scope. For instance, Bangladesh’s annual money laundering, based on the $150 billion stock estimate, amounts to about 3.2 per cent of the country’s GDP. This is within the global norm of 2-5 per cent, as reported by the UN, but the implications for economic growth and public welfare remain significant.
Is the problem getting worse?
Bangladesh’s ranking on a global anti-money laundering index provides some insight into whether the problem is intensifying. In 2017, Bangladesh ranked 82 out of 152 countries, but its position worsened significantly before recovering to 46th place in 2023. The reasons behind these fluctuations warrant further investigation.
Global cooperation is key
Money laundering not only depletes resources in developing nations, but also enriches wealthier countries that serve as safe havens for illicit funds. For instance, cities like London and Singapore have been identified as major centres for hiding stolen wealth. London has been described as …’the main nerve centre of the darker global offshore system that hides and guards the world’s stolen wealth’. Unless these havens are addressed, the incentive for criminals to park their money abroad will persist.
In sum, accurate reporting and global collaboration are essential in tackling money laundering, a crime that harms developing nations the most. Understanding the nuances of financial data is the first step toward resolving this critical issue.
Iyanatul (Yan) Islam is an Adjunct Professor at the Griffith Asia Institute and former Branch Chief, ILO, Geneva. The views expressed here are strictly personal.
