Remote VASP serving residents in Bangladesh

In Bangladesh, cross‑border foreign exchange transactions are governed by the Foreign Exchange Regulation Act, 1947 (as amended), which remains in force and is administered by Bangladesh Bank. Bangladesh Bank has stated via circulars that cryptocurrencies/virtual currencies are not legal tender in Bangladesh and has warned against their use, but there is no explicit, publicly available provision in the Act itself or authoritative judicial ruling that categorically deems every cryptocurrency transaction—especially solely by virtue of being a “currency”—to be a violation of the Foreign Exchange Regulation Act, 1947. Rather, potential violations would arise where such transactions fall within regulated foreign exchange or cross‑border payment activities without required Bangladesh Bank permission.

Money Laundering Prevention Act, 2012 (MLPA): The BB has highlighted the significant risks of money laundering and terrorist financing associated with the anonymity and unregulated nature of cryptocurrencies. While not specifically mentioning "virtual assets," engaging in transactions that facilitate money laundering through any means would fall under this act.

Bangladesh Bank circulars and warnings remain in full regulatory force and are actively enforced, but they are not static or final; they are frequently amended, consolidated and sometimes superseded by newer circulars and legal instruments as the regulatory framework evolves.

FE Circular No. 15 of 2017 (December 24, 2017): This was one of the earliest and most direct prohibitions. The BB warned against dealing in virtual currencies like Bitcoin, stating they are not legal tender, are not approved by the BB, and carrying out transactions with them could lead to violations of FERA and MLPA.

Circular No. 34 (of 2021) on Foreign Exchange Transactions (October 14, 2021): This circular reiterated the ban, explicitly stating that "virtual assets" (including cryptocurrencies like Bitcoin, Ethereum, Ripple, Litecoin) are not legal tender and are not permitted for transaction or exchange within Bangladesh. It also warned about associated risks and legal consequences.

Cryptocurrency Exchanges: Operating an exchange for buying, selling, or trading cryptocurrencies is prohibited.

Custody Providers: Providing custody services for virtual assets is not permitted.

Payment Processors: Engaging in payment processing or facilitating transactions involving cryptocurrencies is prohibited.

Neither a registration nor a licensing regime exists for virtual assets in Bangladesh.

The current approach is one of outright prohibition and warning against engaging in any activities related to cryptocurrencies.

There is no application process for virtual asset licenses in Bangladesh because such licenses are not issued.

Under Bangladesh’s Money Laundering Prevention Act (MLPA), Section 4, individuals convicted of money laundering are subject to a statutory imprisonment range of 4 to 12 years, with the precise term within that range determined by the court based on the nature, severity, and value of the offense.

Warnings to Financial Institutions: Bangladesh Bank has repeatedly issued warnings to all banks and financial institutions against dealing in, facilitating, or promoting cryptocurrencies. These warnings serve as an instruction to financial institutions to block transactions related to crypto.

Prohibition on Use and Exchange: Law enforcement and regulatory bodies have acted against individuals and groups involved in unauthorized foreign exchange transactions or money laundering using cryptocurrencies. For instance, there have been reports of arrests for operating illegal crypto exchanges or facilitating crypto transactions that violate the Foreign Exchange Regulation Act, 1947, and the Money Laundering Prevention Act, 2012. These are generally broader criminal charges, not specific securities violations related to crypto.

General warnings and circulars issued by the Bangladesh Bank (BB) reiterating the illegality and risks.

Criminal investigations into cryptocurrency-related fraud and illegal remittance schemes are active in Bangladesh, but there is insufficient recent evidence to confirm significant arrests of individuals involved.

Violation Type: Engaging in cryptocurrency transactions, which is considered illegal under existing foreign exchange regulations (Foreign Exchange Regulation Act, 1947) and anti-money laundering laws (Money Laundering Prevention Act, 2012). BB states crypto carries high risks of money laundering, terror financing, and capital flight.

Violation Type: Fraud, money laundering, operating illegal financial schemes, breach of Digital Security Act.

No, the FATF Travel Rule has not been adopted in Bangladesh. This is because the underlying activity of dealing in virtual assets itself is considered illegal and unauthorized by the central bank and the government.

N/A. Since the Travel Rule has not been adopted, there is no effective date.

FATF Mutual Evaluation Report (MER) for Bangladesh:

Key Finding (from the MER): The report highlights that Bangladesh has not taken steps to regulate or license VASPs because virtual assets are not permitted in the country. It states that the regulatory framework for virtual assets is non-existent as financial institutions are prohibited from providing services to VAs, and VAs themselves are prohibited.

Entity Targeted: General public, financial institutions, and implicitly, anyone involved in cryptocurrency. Violation Type: Engaging in cryptocurrency transactions, which is considered illegal under existing foreign exchange regulations (Foreign Exchange Regulation Act, 1947) and anti-money laundering laws (Money Laundering Prevention Act, 2012). BB states crypto carries high risks of money laundering, terror financing, and capital flight. Penalty Amount: N/A (for a warning), but the underlying laws carry severe penalties (fines, imprisonment, asset forfeiture) for non-compliance. Outcome: Public awareness campaigns, continued illegal status of crypto, discouragement of financial institutions from dealing with crypto. This forms the basis for criminal prosecutions.

Entity Targeted: Individuals running illegal multi-level marketing (MLM) schemes using crypto, conducting "digital hundi" (informal remittance) via crypto, or engaging in crypto-related scams. Violation Type: Fraud, money laundering, operating illegal financial schemes, breach of Digital Security Act. Penalty Amount: Varies upon conviction (fines and imprisonment). Asset seizures occur during arrest. Specific penalty amounts are not publicly available at the time of arrest or often even immediately after conviction. Outcome: Arrests, ongoing investigations, disruption of illegal schemes, seizure of assets. Violation Type: Money laundering, violation of Foreign Exchange Regulation Act, illegal hundi operations. Penalty Amount: Varies upon conviction. Outcome: Arrests, disruption of illegal remittance networks.

Entity Targeted: Websites, apps, and platforms (including potentially crypto exchanges) deemed illegal or operating against national interests. Violation Type: Operating without license, facilitating illegal financial activities (which crypto trading falls under), or other violations of telecommunication laws. Penalty Amount: N/A (penalty is the blocking of access). Outcome: Restricted access to various online platforms, making it harder for Bangladeshi citizens to access crypto services directly.

Outcome: Arrests, ongoing investigations, disruption of illegal schemes, seizure of assets.

Outcome: Restricted access to various online platforms, making it harder for Bangladeshi citizens to access crypto services directly.