The government has taken steps to tighten control over financial crime by granting the Department of Money Laundering Investigation (DoMLI) additional jurisdiction under a new regulation. This modification to the Asset (Money Laundering) Prevention Act of 2008 alters how investigations are conducted, allowing DoMLI to examine a broader range of cases and operate more independently. One of the most significant changes is the removal of the previous requirement that money laundering charges be linked to a specific underlying offense. Investigators may now proceed even if the predicate offense has not yet been identified. The restructuring also addresses a long-standing gap in Nepal's enforcement system. Until now, more than 40 separate agencies—including the police, customs, tax authorities, forest offices, and anti-corruption bodies—could independently initiate money laundering investigations. In theory, this suggested stronger enforcement. In practice, it created confusion, overlap, and uneven accountability. Institutions often worked in parallel, weakening overall responsibility.The new law re-centralizes that authority under DoMLI while broadening the range of offenses that may trigger investigations. Smuggling, tax evasion, customs and excise violations, and both direct and indirect tax offenses now clearly fall within its scope. The legislation also focuses more directly on financial market misconduct. Insider trading, market manipulation, banking fraud, foreign exchange offenses, insurance fraud, and abuse of financial instruments are now explicitly included as punishable offenses.
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If left unchecked, such violations erode trust in financial institutions and have the potential to distort entire markets. The regulation also allows cases to be transferred directly to the Special Court, which should reduce procedural delays that often hinder financial crime prosecutions. This move is both timely and necessary. Financial crime is rarely committed in isolation. It often involves multiple transactions, shell companies, forged documents, and jurisdictions with weak regulatory enforcement. Money laundering, for instance, is commonly concealed through inflated invoices, trade misinvoicing, unauthorized money transfer channels, or falsified financial records. Market abuse, including insider trading and price manipulation, operates in similar ways. When information gaps exist and oversight is weak, illicit gains become easier to achieve. Bringing these powers under a more centralized framework signals a stronger commitment to financial oversight. It also reflects growing recognition that economic crimes are not isolated incidents but systemic threats that undermine investor confidence, government revenue, and public trust. As Nepal’s banking and capital markets become more complex, fragmented oversight becomes less effective. A single investigative authority can, in theory, respond more swiftly and consistently.
However, stronger laws do not automatically ensure fair enforcement. Evidence from many countries shows that expanded investigative powers can be misused for selective action. In politically charged environments, money laundering investigations may be influenced by external pressures or used to target specific individuals. This risks turning legal tools into instruments of power rather than justice. The expanded authority of DoMLI must therefore be matched with transparency, independent oversight, and clear procedural safeguards. Investigations should be grounded in credible evidence, not speculation or personal influence. If implemented effectively, this reform could significantly strengthen Nepal’s approach to combating money laundering. It enhances enforcement capacity at a time when financial crimes are becoming more complex and harder to trace. However, if misused, it risks becoming another layer of political leverage disguised in refined legal language.
