Our lawmakers and politicians are notoriously bad at multi-tasking and they don't work well with deadlines. They have stayed up past midnight to extend the CA's mandate on four occasions. There is an 11th hour attitude about everything.

In February, Nepal narrowly escaped being blacklisted by Financial Action Task Force (FATF), the global anti-money laundering watchdog for not endorsing three bills against money laundering: Bill on Controlling Organised Crime, Bill on Extradition and Bill on Mutual Legal Assistance, as well as other recommendations. The commitment was made two years ago.

However, the extension until June granted through some arm-twisting by European embassies in Kathmandu and strong pressure from PM Baburam Bhattarai in February has been wasted. When the International Cooperation Review Group (ICRG), an analysis wing of the global anti-money laundering body of FATF, asked for the country's progress report last week, Nepal had nothing new to show except for new directives issued by NRB in March to track the flow of dirty money. Three months since the extension, the three bills are collecting dust in the parliament. Nepal is yet to fully comply with the 49 recommendations laid down by the FATF. Asia Pacific Group (APG), the regional wing of FATF, now rates Nepal as one of the poor performers in the region.

If blacklisted, Nepal's financial system will lose its credibility as FATF has warned its member nations to take strict measures against blacklisted countries that pose substantial money laundering and terrorism financing. The letters of credit issued by local banks may or may not be honoured. Local businessmen will not be able survive the charges placed on blacklisted countries, and trade will suffer. Nepal's reputation and its economy will be hit.

It will also strain inflow of foreign investments and ties with multinationals: not good news for Nepal Investment Year 2012-13. Already, we are seeing effects. In the last two months two institutions, Citibank and WashigtonFirst Bank have denied to service accounts of the Nepal Embassy in Washington. Citibank cited that it was an institution that strictly adhered to anti-money laundering policies, and now WashigtonFirst has given similar reasons. Experts fear that such action could spread rapidly to banks in Europe, Canada and countries that are the core members of FATF. Worse, it could extend to private sector operations which would be devastating for our financial sector.

In February, the endorsement of the bills was stalled by the hardline faction of the Maoists, saying that the bills are against the national interest and are being imposed on the direction of 'imperialist forces'. The hardline faction still opposes the bills even though these compliances will help Nepal develop a healthy financial system, create a positive investment environment and boost international trade.

The FATF deadline coinciding with the constitution deadline has been unfortunate, but there is still time. Nepal's inability to endorse the bills and failure to deliver on other commitments will be tabled in the next FATF meeting, scheduled for June in Italy. The lawmakers should understand that the cost of non-compliance is high for the country's reputation and economy. FATF has already shown leniency once, we cannot use the excuse of 'political transition' to buy time again and again.

See also:
Get on with it