Where regulatory change comes from
Financial institutions in Bangladesh receive a steady flow of new requirements. Bangladesh Bank issues circulars through its departments on loan classification and provisioning, capital, liquidity, foreign exchange and payment systems. The Bangladesh Financial Intelligence Unit sets expectations for anti-money laundering and counter-terrorist financing under the Money Laundering Prevention Act 2012 and the Anti-Terrorism Act 2009. BSEC regulates capital market intermediaries and listed institutions, and the Insurance Development and Regulatory Authority supervises insurers. The annual Finance Act then adjusts tax rates and withholding provisions.
Because many circulars take effect quickly, it helps to agree in advance who interprets new requirements, who approves policy changes and how system changes are tested. Compliance teams should then record each change, assess its effect on policies, systems and reporting, and confirm implementation, keeping evidence that supervisors and auditors can review.
Prudential and reporting items to track
The items with the largest financial effect are usually changes to loan classification and provisioning, the rules on rescheduling and restructuring loans, capital adequacy and liquidity ratios, and regulatory reporting formats. Banks also need to manage the differences between Bangladesh Bank's prudential requirements and IFRS, and explain them clearly in their financial statements. Where institutions are public interest entities, the Financial Reporting Council's oversight of financial reporting adds a further layer of review.
AML, technology and customer protection
Know-your-customer and customer due diligence, transaction monitoring, sanctions screening and suspicious transaction reporting to the BFIU remain areas of close supervisory focus. Periodic independent testing of the AML programme gives the board evidence that it works in practice, not only in policy documents. As more services move to agent banking, mobile financial services and apps, institutions should check that monitoring rules cover new products and channels from launch.
Bangladesh Bank also sets expectations for ICT security, outsourcing of technology services and customer complaint handling. Each new digital product should pass a technology risk and compliance review before it goes live.
Tax obligations specific to the sector
Banks and finance companies act as major withholding agents, deducting tax on interest paid to depositors and on payments to suppliers, and they deduct VAT at source on qualifying payments. As taxpayers, they are subject to sector-specific corporate tax rates, and the tax treatment of loan loss provisions and written-off loans is a recurring area of difference with the NBR. Keeping records that link each provision and write-off to its regulatory and accounting basis supports both the audit and any later tax assessment.
RRH's Internal Control & Compliance Review work tests regulatory and AML compliance against current requirements. Our Corporate Tax Services team manages returns, withholding compliance and appeals, and our IT Advisory team assesses technology controls against supervisory expectations.
Related RRH services: Internal Control & Compliance Review, Corporate Tax Services and IT Advisory.