The Asiapost News

Dhaka, June 4, 2025 – A shocking report from Bangladesh Bank has accused Nagad Limited, a leading mobile financial services (MFS) provider, of embezzling Tk 1,711 crore (approximately $1.4 billion USD) in government social security allowances, exposing what authorities describe as a staggering case of institutional corruption.

The central bank’s investigation alleges that the funds, intended for beneficiaries of government welfare programs, were siphoned off through 41 unauthorized distributors, vanishing before reaching their intended recipients. The report, released this week, details a complex web of fraudulent practices, including the creation of fake e-money, fictitious accounts, and a deceptive reporting portal used to mislead regulators.

Fraudulent Practices Uncovered

According to the Bangladesh Bank, Nagad issued Tk 645 crore in e-money without government approval, lacking any real currency reserves to back it. This unauthorized issuance has caused significant financial losses to the state, undermining economic stability. The investigation further revealed that Nagad operated a fake reporting portal disconnected from its main server, which provided misleading data to both the central bank and the Bangladesh Postal Department, Nagad’s state partner.

Bangladesh Bank has already filed a case against Nagad, accusing the company of fraud and violations of financial regulations. The central bank claims that Nagad’s outdated software and hardware systems, which fail to meet international standards, lack essential system logs, making it impossible to gather digital forensic evidence of the alleged misconduct.

Ownership and Regulatory Concerns

Nagad, launched on March 26, 2019, as a joint venture between the Bangladesh Postal Department and Third Wave Technologies Limited (now Nagad Limited), has operated without formal approval from Bangladesh Bank, raising serious questions about oversight. The central bank argues that this lack of regulation allowed Nagad’s transactions to go largely unmonitored, creating vulnerabilities for its estimated 9 crore customers.

The investigation also flagged irregularities in Nagad’s ownership transfers. Initially, Candlestone Investments purchased shares for Tk 5 billion, which were later sold to Sigma Engineers Limited. Subsequently, 70 percent of the shares were transferred to a company in the British Virgin Islands, a move Bangladesh Bank says violates the Money Laundering and Foreign Exchange Control Act.

Court Intervention and Leadership Turmoil

Adding to the controversy, a Supreme Court stay order on May 7, 2025, halted the activities of the Bangladesh Bank-appointed administrator team overseeing Nagad. Seizing this opportunity, former Managing Director Tanvir Ahmed Mishuk, an accused figure in the fraud case, reinstated himself as MD and appointed Shafayet Alam, another accused individual, as CEO. These appointments, made without the approval of Nagad’s management board, have allowed the duo to regain control of the company’s financial and technological operations.

Bangladesh Bank warns that this development poses a severe risk to customer funds and data, as the administrator team has lost access to critical IT systems, email accounts, and e-money platforms. The central bank’s efforts to conduct a forensic audit through KPMG Advisory Services Ltd have also been stalled, with system access blocked, effectively suspending the audit process.

Broader Implications

The scandal has sparked widespread concern about the integrity of Bangladesh’s digital financial sector. Experts warn that the alleged fraud not only undermines public trust in mobile financial services but also threatens national economic stability and security. The lack of transparency and oversight in Nagad’s operations has raised questions about the effectiveness of regulatory frameworks governing fintech in Bangladesh.

“This incident is a glaring example of systemic failure—financial, administrative, and technical,” said a senior Bangladesh Bank official, speaking on condition of anonymity. “The protection of government funds and customer trust is now at stake.”

Nagad, which holds a significant share of Bangladesh’s MFS market, has yet to issue a public response to the allegations. The company’s leadership, including Mishuk and Alam, has faced scrutiny in the past, with Bangladesh Bank previously filing cases against them and 22 others for financial irregularities.

As the investigation continues, authorities are under pressure to restore accountability and prevent further misuse of public funds. The case has also drawn attention to the broader challenges of regulating rapidly growing fintech platforms in emerging markets, where innovation often outpaces oversight.

Sources: Bangladesh Bank investigation report, statements from central bank officials, and court documents.