During the tenure of ousted Prime Minister Sheikh Hasina, Bangladesh’s external accounts reflected a dual reality. On the surface was the official narrative of export-driven growth and strengthening foreign exchange reserves.
Beneath it, as increasingly detailed by estimates from Global Financial Integrity (GFI) and a growing body of investigations, lay a pattern of systematic capital flight — channeled through trade misinvoicing and networks tied to politically connected businesses — that siphoned tens of billions of dollars out of the country over the past decade.
GFI’s latest assessment places Bangladesh among the economies most exposed to trade-based illicit financial flows. The mechanism is neither novel nor sophisticated: importers overstate invoices to shift money abroad, exporters understate proceeds to retain earnings offshore. Yet the scale is exceptional.
Estimates suggest Bangladesh lost roughly US$68 billion over 10 years through misinvoicing alone, while other calculations put annual outflows at over $ 8 billion in certain periods, equivalent to a significant share of export receipts in some years.
These figures align with broader global patterns. Across 134 developing countries, GFI estimates up to $1.6 trillion in potential trade misinvoicing. Bangladesh’s persistent discrepancies with partner-country trade data—especially with major hubs—indicate chronic and structured manipulation rather than statistical noise.
The distortion is embedded in the trading system itself, where a triad of customs enforcement, banking oversight and political economy intersect. What distinguishes Bangladesh is the convergence of these flows with concentrated corporate and political networks.
Investigations launched after the fall of Hasina’s government have mapped alleged money-laundering activities across at least 10 major conglomerates, including S Alam Group, Beximco Group, Bashundhara Group, Summit Group and others.
The headline number from domestic investigators is even larger than GFI’s trade-based estimates. Former Bangladesh Bank Governor Ahsan H. Mansur has indicated that between 2.5 trillion and 3 trillion taka — roughly $23 billion to $27 billion — may have been laundered abroad by major industrial groups and associated actors.
This figure captures not only trade misinvoicing but also loan diversion, tax evasion and offshore asset accumulation.
Institutionalized money laundering
The case of S Alam Group illustrates the mechanics. Investigators allege the group diverted more than 2 trillion taka from at least 11 banks, including Islami Bank and others, much of which has since become non-performing.
A significant portion of these funds is believed to have been transferred abroad and converted into assets spanning at least six countries, including real estate and hospitality holdings.
The group alone accounts for a substantial share of the irregularities identified by authorities, suggesting that vulnerabilities in the banking system were central to capital flight.
Beximco Group, long one of Bangladesh’s flagship conglomerates, is estimated to have laundered approximately 500 billion taka. Investigations have traced overseas properties in jurisdictions such as London and Singapore linked to members of the owning family.
Bashundhara Group presents a similar profile. Authorities have identified more than 350 billion taka in loans tied to group entities, with some exposures already in default.
Overseas assets linked to the group’s principals span multiple jurisdictions, including Singapore, Switzerland, the United Kingdom, the United Arab Emirates, Cyprus and Caribbean offshore centers such as the British Virgin Islands.
Courts have moved to freeze both domestic and foreign assets, though recovery remains legally complex.
Other groups under investigation follow comparable trajectories. Sikder Group is accused of diverting over 300 billion taka through a mix of real and fictitious identities, with assets traced across the United States, United Kingdom, Singapore and Thailand.
Nabil Group allegedly diverted more than 150 billion taka, while Summit Group and Orion Group face asset freezes and account seizures linked to offshore transfers. The common denominator is the interaction between domestic credit expansion and weak controls on cross-border financial flows.
The political overlay is unavoidable. Investigations explicitly link these financial networks to individuals associated with Sheikh Hasina’s administration, including family members and senior political allies.
Authorities have traced overseas assets connected to these networks in multiple jurisdictions, including the UK, US and Gulf states. In parallel, courts have issued orders freezing hundreds of properties and dozens of bank accounts linked to politically exposed persons and affiliated business groups.
Dire consequences
The structure of the flows suggests a layered system. Trade misinvoicing provides the initial channel for moving funds out. Banking sector exposure, particularly through state-influenced lending, supplies liquidity.
Offshore jurisdictions and real estate markets then absorb the capital, often under beneficial ownership structures that obscure ultimate control. Each layer reinforces the other, creating a feedback loop between domestic financial fragility and external capital flight.
From a macroeconomic perspective, the consequences are measurable. Over-invoiced imports inflate demand for foreign exchange, contributing to pressure on reserves.
Under-invoiced exports suppress recorded earnings, distorting trade balances and fiscal receipts. The result is a structural gap between reported economic performance and underlying financial reality.
The scale of the leakage also complicates Bangladesh’s development trajectory. The country’s transition toward middle-income status depends on sustained investment in infrastructure and industrial upgrading.
Yet tens of billions of dollars—equivalent to multiple years of public development spending—have effectively been exported through illicit channels. The opportunity cost is not theoretical; it is embedded in underfunded systems and delayed projects.
Recovery, meanwhile, is likely to be slow and partial. Asset tracing across jurisdictions requires legal cooperation, evidentiary thresholds, and political will in multiple countries.
Bangladesh has already initiated processes to engage foreign legal firms and international institutions to assist in repatriation, but precedent suggests that only a fraction of illicit flows are typically recovered.
The challenge now is less about identifying the problem than dismantling the incentives that sustained it. Without structural changes in customs enforcement and banking governance, as well as in ensuring political accountability, the underlying mechanisms of capital flight will remain intact.
Bangladesh’s recent economic narrative has been shaped by its visible gains. The less visible outflows, now quantified with increasing precision, may prove just as consequential in determining its future trajectory.
Faisal Mahmud is a Dhaka-based journalist and analyst.