BANGLADESH BANK FINES ISLAMI BANK BANGLADESH FOR

C O N F I D E N T I A L DHAKA 001959

SIPDIS

SIPDIS

STATE FOR EB/ESC/TFS (DBROWN),S/CT (TKUSHNER),IO/PSC
(BFITZGERALD)
TREASURY FOR TFFC (DGLASER) AND OFAC (RWERNER)
NSC FOR THINNEN

E.O. 12958: DECL: 04/06/2016
TAGS: EFIN ETTC KTFN PTER BG UK
SUBJECT: BANGLADESH BANK FINES ISLAMI BANK BANGLADESH FOR
JMB RELATED AML VIOLATIONS


Classified By: Ambassador Patricia Butenis; reason 1.4(d)


1. (U) Summary: Bangladesh Bank (BB) (the central bank of
Bangladesh) fined Islami Bank Bangladesh on April 5 for
violation of the country's anti-money laundering law (AML) in
connection with an account linked to the JMB. The 100,000
taka ($1400) fine is the maximum fine authorized under the
law. The Islami Bank was previously fined in 2002 and 2004
for violations of the AML. End summary.


2. (U) The fine followed an investigation of account
documents, including a checkbook for an account at Islami
Bank, found at the house in Sylhet where JMB leader Sheik
Abdur Rahman was arrested. According to the BB report, the
checking account was opened in February 1999 in the name of
Saidur Rahman but lay dormant until January 2006, when eight
deposits totaling approximately 415,000 taka ($5,845) were
wired to the account from Islami Bank branches in Gazipur and
Savar (both near Dhaka) by a person who identified himself as
Javed Khan. The funds were withdrawn from the account within
a few weeks. Saidur Rahman is the former Ameer (leader) of
Habiganj district Jamaat-e-Islami and is said to be the
father of JMB's information and technology section chief
Shamim.


3. (U) Investigators also found documents showing Saidur
Rahman had accounts at the government-owned Rupali and Janata
banks. BB review of those accounts revealed the accounts
were inactive and the BB has taken no action against the
government banks.


4. (U) The BB action against Islami Bank is based on two
violations of the AML. First, the BB found that Islami Bank
failed to adhere to know your customer rules with respect to
both the transfers of Javed Khan and the account of Saidur
Rahman, when he reactivated the account earlier this year.
Second, the BB found that the large transactions (by local
standards) into and out of a previously dormant account
should have triggered a suspicious transaction report to the
BB.


5. (C) Islami Bank moved swiftly to conduct its own
investigation of the transactions. Executive President Abdur
Rakib told econoff the bank has suspended five employees,
including the three branch managers and is investigating 15
other employees for their involvement in the transactions.
"We take compliance very seriously" he said, adding the
actions against the employees were intended, in part, to
reinforce that message for other employees.


6. (C) Rakib says the bank regularly conducts training for
branch managers and employees on compliance with the AML,
often in conjunction with officials from the BB. He also
described an active information program within the bank,
including regular circulars to branches with current
information on AML issues. Rakib has publicly stated the
bank's commitment to combat terrorist financing and comply
with the AML and the rules and procedures of the BB. Despite
this lapse, he defends the bank's overall record, pointing to
its 2.7 million customer base severed by 169 branches in
Bangladesh.


7. (C) Citibank Bangladesh has a banking relationship with
Islami Bank. Contacted by econoff, Mamun Rashid, CEO for
Citibank Bangladesh said Citibank had conducted its own
internal review following initial reports linking JMB
accounts to Islami Bank. He expressed satisfaction with the
cooperation they received from Islami Bank. "They accept
responsibility for the mistakes, they have taken action, and
they are appropriately nervous about the lapses this
revealed" he said. Acknowledging the bank's connections with
Jamaat, he said Islami Bank has a solid reputation as a well
run bank. He too pointed to the bank's large customer base
and 169 branches as evidence that this was an anomaly and not
indicative of the bank's normal operations.
BUTENIS