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Money laundering: Nepal could be blacklisted for inaction

Publication Date : 23-01-2013


Nepal could be blacklisted internationally for failing to comply with international money laundering rules and regulations.

The Financial Action Task Force (FATF), a global anti- money laundering body, could blacklist Nepal if the government fails to introduce a law against organised crime before its next plenary to be held in Paris next month. In a worst-case scenario, all banking correspondence could stop, and flow of aid and grants come to a standstill.

In his meeting with Finance Minister Barsha Man Pun yesterday, US Ambassador Peter W Bodde expressed concerns over the lack of progress in addressing the issues raised by the FATF.

“The US ambassador expressed concern and reminded the government of the deadline,” said a source privy to the recent developments.

“The blacklisting, however, falls in the purview of the global anti- money laundering body, and not the US government,” said an official. Finance Minister Pun is said to have committed to an ordinance against organised crime, which he said would be endorsed ahead of the FATF plenary, scheduled for February 18-22.

“The finance minister said that the government is ready to fulfill its obligations against money laundering. He told the US ambassador that he will meet with President Yadav to persuade him to endorse the ordinance,” said Madhu Marasini, joint secretary at the Finance Ministry.

If blacklisted, foreign banks may not approve the letters of credit issued by Nepali banks. Such a scenario will also severely diminish Nepal’s prospects of getting foreign aid and investments.

Nepal, which is currently in “the grey list”, might also be downgraded to the “dark-grey list”. Nepal narrowly escaped being blacklisted in February last year after it committed to addressing its poor oversight of money laundering.

The deadline was extended after President Yadav endorsed the Mutual Legal Assistance Act and the Extradition Treaty Act through ordinances in June last year.

The President’s Office has said it is still looking into the ordinance against organised crime forwarded by the government.

“The president could take up the issue with the political parties and hold talks on the ordinance next week,” said President’s Press Advisor Rajendra Dahal.

“We are unfortunately being distracted by political logjam.”

In its assessment of Nepal, the FATF has stated that Nepal is yet to criminalise money laundering and terrorist financing adequately and to enforce adequate measures to identify and freeze terrorist assets and confiscate them.

Other deficiencies pointed out by the FAFT are failure to enact and implement appropriate mutual legal assistance legislation; ensure a fully operational and effectively functioning of financial information unit and establish adequate suspicious transaction reporting obligations.

Last week in Hong Kong, Nepali officials present at the Regional Review Group, which is under FATF, were warned of ‘dire consequences’ if the country failed to introduce law against organised crime.


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