The Bangladesh Bank will now maintain a database of beneficial ownership (UBO) information of banks to increase transparency in ownership structures – a move, prompted by past abuses, that aims to promote accountability and strengthen the financial system protect the future against similar risks.


Banks will have to submit UBO information to Bangladesh Bank within the next ten days and thereafter on a quarterly basis, according to a circular issued on December 1, with immediate effect.


For the first time, the central bank has issued guidelines on “Ultimate Beneficial Owners and disclosure of ownership structure of banks”, detailing the reporting format and procedures for identifying beneficial owners.






The Google News business standard

Stay informed and follow The Business Standard’s Google news channel





The first dataset must be submitted to the Bangladesh Bank by March 31, 2025. In addition, any changes in beneficial ownership must be reported to the central bank as soon as the entity, and thus the bank, is notified of the change, the circular said. .


Previously, there was no mechanism to identify the ultimate beneficiaries. As a result, some business groups acquired ownership of multiple banks by creating shell companies.


For example, during the previous regime, Saiful Alam Masud, owner of controversial business conglomerate S Alam Group, indirectly controlled eight banks through ownership in the names of several shell companies, violating the Bank Company Act, which allows an individual to own a banking company. directorship at only one bank.


He gained control of Islami Bank and Social Islami Bank through shell companies with no real business operations. Although both banks were actually under S Alam’s control, his ownership could not be traced on paper.


Saiful directly owned only one private commercial bank, but placed his son, brother and other company officials as representatives in other banks where he owned. As a result, Bangladesh Bank was unable to check the single borrower exposure limit for loans taken indirectly by S Alam Group.


The group took loans of at least Rs 1 lakh crore from its banks, both directly and indirectly, abusing its ownership influence. This loan corruption eventually led to the collapse of all banks controlled by S Alam.


In this context, the central bank has introduced a guideline to identify the ultimate beneficiaries of bank ownership.


According to the circular, UBO information will be widely used to identify banking-related persons and entities, calculate the exposure of a single borrower, large loans and significant shareholdings, prior checking before the issuance of a license, appointment of a director, etc.


In addition, Bangladesh Bank may use the information for prudential regulation and supervision, as well as other cases, if justified.


Banks will need to ensure the utmost accuracy and reliability in determining ownership structure, through an appropriate assessment process, where applicable.


Banks must maintain a database of UBO information and keep detailed records of all identification procedures and decisions.


Bangladesh Bank may conduct regular and special or unexpected inspections as necessary.


The Managing Director/Chief Executive Officer, Head of Equities Department and Corporate Secretary of the banks will be held responsible for complying with this circular and reporting all required UBO information to Bangladesh Bank.


Syed Mahbubur Rahman, Managing Director and CEO of Mutual Trust Bank (MTB), welcomed the central bank’s initiative to ensure transparent ownership structures.


However, he told TBS: “It will be a challenge for us to guarantee ultimate ownership in certain cases. We will have to do extensive research before submitting the report to the central bank. In addition, verifying all the information on its own may not be feasible, so the central bank’s guidance and support will be essential, otherwise it will be difficult for the bank to take full responsibility.”


What happens if the UBO regulations are violated?


Any violation of the instructions of this circular will result in penalty under the Bank Company Act, 1991, the circular said.


If Bangladesh Bank has reason to believe that a bank’s ownership structure is not sufficiently transparent or does not reflect reality, it has the right to consider the structure as non-transparent.


In such cases, the bank may be asked to adjust its ownership structure to ensure transparency. In addition, Bangladesh Bank may require all direct and indirect shareholders to provide relevant documentation to verify their suitability and reliability. Enforcement measures can also be applied if necessary.


Banks have been asked to present this circular at the next board meeting for the information of the board members.


Why BB issued the directive


Explaining the purpose of the directive, Bangladesh Bank in its circular stated that non-transparency in the ownership structure of a bank hinders the reliable identification of beneficial owners, the assessment of suitability of owners, the verification of the capital quality of the bank, and hinders the control of the bank’s capital quality. correct identification of all related parties.


Complex ownership chains and layers make it difficult for regulators and supervisors to trace the beneficial owners, especially when shares are owned by legal entities. This opacity creates a significant barrier to both the soundness of individual banks and the overall stability of the banking sector.


Against this backdrop, financial sector regulators and supervisors in many jurisdictions are placing increasing emphasis on increasing transparency in banks’ ownership structures.


The circular also states that an effective regulatory and supervisory framework should aim to ensure transparent ownership structures and prevent unsuitable persons from directly or indirectly acquiring control or influence over banks, both at the banking licensing stage and beyond.


As part of implementing global best practices and increasing transparency in ownership structure of banks, Bangladesh Bank issues this guideline to be strictly followed by banks and thereby helps Bangladesh Bank in effective supervision and regulation of individual banks and the banking system. a whole.


Who qualifies as a UBO?


UBO refers to the natural person(s) who directly and/or indirectly owns or controls 2% or more shares of the bank or has influence over a legal entity on behalf of whom financial transactions are carried out.


This also includes the persons who exercise ultimate control over the bank or any legal entity in the ownership structure of the bank if, according to the directive, this legal entity directly and/or indirectly owns or controls 2% or more shares of the bank.


Non-transparent ownership structures include excessive layers of ownership (e.g. chains of holding companies), often complicated by cross-holdings between legal entities, the residence of owners in foreign jurisdictions that do not support effective cross-border supervisory cooperation, complex use of available legal entities and arrangements (e.g. special purpose vehicles, trusts) aimed at separating legal and beneficial ownership, and the use of formal and informal nominee shareholders and directors, shell companies and other instruments that do not allow the ultimate beneficial ownership of the company clearly identifiable bank.


While non-transparent shareholder structures typically use a chain of legal entities to create a corporate veil, this is not always the case. A bank may have multiple nominal shareholders, each with relatively small shareholdings, acting jointly to gain control in the interests of an undisclosed UBO.


Criteria for identifying non-transparent UBOs


According to the directive, a bank’s ownership structure should be considered non-transparent if it fails to identify all beneficial owners (UBOs) and any ultimate legal entities in the ownership chain that do not have UBOs.


Furthermore, the structure would be considered non-transparent if the structure does not allow the identification of all direct and indirect major shareholders, or of those with significant controlling influence in the bank.


The relationships between the individuals involved in the chain of ownership mentioned above should also be clear; if these relationships are not present, the structure is considered non-transparent.


The ownership documents must also be accurate; if they contain incorrect information, the structure can be considered non-transparent.


If Bangladesh Bank has reason to believe that the ownership structure of the bank does not reflect reality, it has the right to request additional documents from the bank or from any person in the ownership structure.


In addition, if the Bangladesh Bank considers that a person listed as a UBO is a nominal owner acting on behalf of another person, this would also make the structure non-transparent.


Finally, if Bangladesh Bank finds that at least two UBOs, who jointly own or control at least 5% of the bank’s shares, have an unsatisfactory financial position or if the legitimacy of their funds cannot be confirmed, the ownership structure will be be considered non-compliant. -transparent.




Sitemap of kzufognivs.3stairs.ru

Cannabis News RSS Feeds: Weedrss.com

1000+ unique media and news posts every 24 hours…

Published 2 hours ago
Published 7 hours ago
Published 13 hours ago
Published 16 hours ago
Published 17 hours ago
Published 17 hours ago
Published 20 hours ago
Published 21 hours ago
Published 21 hours ago
Published 21 hours ago
Published 22 hours ago