Nepal has an outside chance to move up the ladder on the Financial Action Task Force’s (FATF) list of member states who have pledged to stop money laundering and financing terrorist activities within their borders. Ever since Nepal signed on to the global anti-money laundering body in 2010, it has been fulfilling its obligations, but at the very last minute.
The Bill Against Organised Crime, passed through an ordinance in February, kept Nepal from being blacklisted and losing foreign investors at the last hour. The Mutual Legal Assistance Act and the Extradition Treaty Act were also passed right before the deadline in 2012.
After Khil Raj Regmi’s government passed the Anti-Money Laundering Act and the Proceeds of Crime bill in June, Nepal once again finds itself in FATF’s ‘grey’ category. This means that although the country has fulfilled its basic obligations, it remains under constant surveillance. If a visiting team finds Nepal’s progress in the next few months satisfactory, it might recommend FATF to take us off the list. But if we fail to show further progress after that, we will be back to square one.
Contrary to premature reports celebrating Nepal getting clearance within three months, Baikuntha Aryal, joint secretary at the Finance Ministry says the ordeal is far from over. “There is a plenary in October and FATF will decide whether to send a team for an onsite visit,” he says. “We will know the details when and if they arrive in Nepal.”
At the FATF plenary held in Norway from 19 to 21 June, Brunei, Philippines, Sri Lanka, Thailand, and Bolivia were removed from the grey list and given a clean chit for improving implementation of anti-money laundering laws.
A mutual evaluation report published in July 2011 revealed that money-laundering and terrorist financing in Nepal occurs through profits made from drug trafficking, human trafficking, arms trafficking, corruption, counterfeit currency, tax evasion, and gold smuggling. Since then, the country has made steady progress and fulfilled all legal obligations.
The Finance Ministry is now pushing the government to create acts and directives to implement these laws once it receives the list of new requirements from FATF. “There are talks of yet another mutual evaluation in 2015. If we continue to make steady progress till then, we could break out of the grey list,” says Aryal.
Sunir Pandey
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