Nepal had initially committed to enact it (Mutual Legal Assistance Act) along with two other laws, including Acts on Controlling Organized Crime and Extradition, by 2010. But as the country repeatedly failed to fulfill its pledge, Financial Action Task Force (FATF) -- the global body -- in November 2011 had warned of tagging Nepal as a “high risk” country if it failed to comply by February second week.[break]
FATF is holding a review meeting of member countries, which includes Nepal, from February 13 to 17 in Paris. Effectively, this leaves Nepal with time till February 16 to enact all those Acts.
“But given that other two Acts are still under discussion, if the government managed to get Mutual Legal Assistance Act endorsed by February 15 and emailed the message to the FATF Secretariat by 16, it will at least do the face saving work,” said an official at the Ministry of Finance.
If that happened, top government officials that are participating in the meeting are hopeful FATF would extend the deadline for another three months, that is, till June 2012.
If that did not happen, FATF has clearly stated it will downgrade Nepal´s status into “high risk” zone. Tag of high risk will indicate the country has not taken enough steps to check illegal flow of money and terrorism financing. Such a tag erodes country´s credibility among international investors and global community as a whole.
“The risk is too high. Besides control of money laundering and terrorism financing will clean country´s own operations, serving our own interests. We hope the political leaders in parliament understand its sensitivity,” said the source.
Mutual Legal Assistance Act is a law that broadly confirms country´s commitment to exchange information, documents and proofs between the competent authorities handling cases of money laundering and terrorism financing on reciprocity basis.
What this means is; if the country enacts this law, Nepal´s AML Investigation Department can seek its counterparts in all FATF member countries to provide it documents and information on persons against whom it is investigating the case. Likewise, it will also need to provide similar information if similar agencies in those countries demanded it.
“This will ensure exchange of documents and information between courts, financial intelligence units and police, among others,” said a knowledgeable source.
Nepal was notified as “high risk” country and ran the risk of being blacklisted by the FATF a year ago after the government dragged its feet on implementing commitments it made in the international forum.
However, it had managed to escape the risk and improved its ranking after parliament on June 24 ratified UN Conventions to check terror financing and the flow of dirty money.
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