The Bangladesh Financial Intelligence Unit (BFIU) has directed capital market intermediaries to establish dedicated measures to prevent money laundering and terrorist financing.

The directive applies to TREK holders, stock dealers and brokers, merchant banks, portfolio managers, securities custodians and asset management companies, with the aim of strengthening safeguards against illicit funds entering the capital market.

Under the new guidelines, institutions cannot open or operate accounts under anonymous or fictitious names. They must conduct proper customer identification and customer due diligence using government databases, including national identity cards, passports and birth certificates. Applicable institutions must also comply with BFIU’s e-KYC guidelines.

The institutions have been instructed to identify the beneficial owners of customers. For companies and other entities, they must identify controlling shareholders or individuals holding 20% or more of the shares.

If customers fail to provide required information or documents, institutions must stop providing services and, where necessary, submit suspicious transaction reports to the BFIU.

Additional due diligence will be required for politically exposed persons, domestic prominent persons and senior officials of international organisations. Institutions must verify the source of funds and obtain approval from senior management before establishing relationships with such customers. The enhanced classification will remain applicable for at least one year after they leave office.

Capital market institutions must also regularly monitor customer transactions and report transactions lacking an apparent legitimate economic purpose to the BFIU through its designated portal.

The guidelines further require institutions to monitor individuals and entities listed under UN Security Council resolutions or banned by the Bangladesh government. If such accounts are identified, transactions or payments must be suspended immediately and the BFIU informed.

Institutions must retain account-related documents and transaction records for at least five years after an account is closed.

According to the Bangladesh Bank directive, every capital market institution must formulate its own policies and strategies to prevent money laundering and terrorist financing. Each institution must establish a Central Compliance Unit (CCU) at its head office, led by a senior official designated as the Chief Anti-Money Laundering Compliance Officer.

Branch-level compliance officers must also be appointed, while risk review meetings involving head-office and branch officials must be held at least once every three months.