Is forex trading legal in Bangladesh

Forex trading in Bangladesh is strictly regulated by the Bangladesh Bank and permitted only through authorized institutions. Residents can legally engage in spot forex transactions for purposes like trade, education, or medical expenses via banks like Sonali Bank or Agrani Bank. However, speculative trading through margin accounts, derivatives, or unlicensed offshore platforms is banned under the Foreign Exchange Regulation Act, 1947, and subsequent directives such as FE Circular No. 16 (2021).

Bangladesh’s central bank prohibits online forex brokers offering leveraged CFD trading, restricting access to platforms like Binance and OctaFX. Internet service providers (ISPs) actively block such sites, and penalties for violations include fines up to 25% of the transaction value or imprisonment. In December 2023, forex reserves stood at $21.5 billion, reflecting tighter controls to stabilize the Bangladeshi taka (BDT).

Non-residents and foreign nationals working in Bangladesh may trade forex legally under specific exemptions, provided transactions are routed through approved channels. Local residents using international brokers risk account freezes, tax audits, and criminal charges. The Bangladesh Securities and Exchange Commission (BSEC) does not license forex brokers, leaving investors unprotected in disputes involving offshore entities.

To comply, prioritize banks for currency exchange and avoid unregulated platforms. Verify brokers through regulatory bodies like the UK’s FCA or Australia’s ASIC, but note that even licensed international brokers operate illegally within Bangladesh. For remittances, use banking channels with documentation like invoices or admission letters. Informal forex markets (“kerb market”) remain active but carry significant legal and financial risks.

Is Forex Trading Legal in Bangladesh?

Forex trading through international brokers is illegal for individuals in Bangladesh. The Bangladesh Bank strictly regulates foreign exchange transactions under the Foreign Exchange Regulation Act, 1947. Residents cannot trade currencies on global platforms without prior approval.

Authorized entities: Only licensed banks and financial institutions can facilitate forex transactions for trade, remittance, or investment purposes.
Individual restrictions: Buying/selling foreign currencies for speculative trading violates Bangladesh Bank guidelines.
Penalties: Unauthorized forex trading may lead to fines, account freezes, or legal action under the Money Laundering Prevention Act.

Avoid unregulated forex brokers offering services in Bangladesh. For legal investment options, consider the Dhaka Stock Exchange or government-approved savings instruments. Monitor Bangladesh Bank circulars for updates on regulatory changes.

What Defines the Legal Framework for Forex Trading in Bangladesh?

Forex trading in Bangladesh operates under strict regulations enforced by the Bangladesh Bank. The Foreign Exchange Regulation Act, 1947 (FERA), and subsequent guidelines from the central bank outline permissible activities. Non-bank entities or individuals are prohibited from engaging in forex trading unless licensed.

Key regulations:

Bangladesh Bank’s Guideline No. FE-01 (2014) restricts forex transactions to authorized dealers (banks) and money changers.
Foreign Exchange Transaction Guidelines (2018) bar residents from speculative forex trading or using offshore platforms without prior approval.
Under FERA Section 23(1), unauthorized forex trade can result in fines up to ৳10,000 or imprisonment for up to two years.

Authorized entities must comply with:

Documented proof of overseas income for remittance purposes (e.g., export earnings).
A daily forex purchase limit of $10,000 for individuals via regulated banks.

Enforcement actions:

Bangladesh Bank revoked licenses of 20 money changers in 2022 for violating forex guidelines.
Use of unapproved apps like MetaTrader 4/5 for trading may lead to prosecution under FERA Section 23(3).

Recommendations:

Confirm a broker’s Bangladesh Bank approval before opening any forex account.
Use bank wire transfers or registered remittance channels (e.g., bKash regulated partners) for transactions.
Report unlicensed platforms to the Bangladesh Financial Intelligence Unit (BFIU).

How Do Bangladeshi Authorities Enforce Penalties for Unauthorized Forex Activities?

The Bangladesh Financial Intelligence Unit (BFIU) and Bangladesh Bank prosecute unauthorized forex trading under the Foreign Exchange Regulation Act, 1947. Penalties include fines up to BDT 2 million, imprisonment up to 5 years, and confiscation of assets tied to illegal transactions.

Enforcement measures:

Real-time monitoring of cross-border transactions exceeding $10,000 via the Electronic Funds Transfer Network (EFTN).
Blocking access to unlicensed forex platforms, including 32 websites shut down in 2023.
Direct冻结 bank accounts under Section 23(3) of the Foreign Exchange Regulation Act if funds lack proper documentation.

The Criminal Investigation Department (CID) conducts raids on entities offering “foreign investment” schemes without Bangladesh Bank approval. In 2022, 17 individuals received prison sentences for operating crypto-forex hybrid platforms violating Anti-Money Laundering guidelines.

To avoid penalties:

Reject unsolicited offshore forex investment offers–report them to the BFIU hotline (16236).

Trade only through banks or BFIU-authorised dealers listed on Bangladesh Bank’s website.

Submit Form C for inbound/outbound forex transfers exceeding $12,000 annually.