The central bank of Bangladesh has issued a circular to banks asking them to verify the identity of importers before opening letters of credit (L/Cs).

Bangladesh Bank (BB) has also directed banks not to remit funds without diligently confirming the arrival of goods against L/Cs.

Irregularities

The circular followed the detection of serious irregularities in L/C openings and settlements in which so-called importers had used fake addresses in L/C documentation.

In most cases according to the BB circular, banks remitted funds against such L/Cs without properly checking whether goods scheduled in the documentation had actually been delivered.

Press questions

These L/C scams have caused the Bangladeshi press to question the role banks and their officials play in such frauds.

Newspapers are pointing out that banks may be negligent by omitting to check the documentation while the Financial Express suggests that collusion of bank officials in these frauds cannot be ruled out.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.