FATF skeptical on Nepal’s efforts on money laundering preventions; carried out three onsite inspections last year

Published On: April 30, 2023 09:13 PM NPT By: Republica | @RepublicaNepal

KATHMANDU, April 30: The snail pace development in enforcing laws necessary to prevent money laundering has taken Nepal to a risk of landing into a gray zone of the Financial Action Task Force (FATF).

Being suspicious in the work progress due to the government’s slow pace in this matter, the FATF team has carried out three onsite inspections of Nepal in the past one year. According to government officials, a FATF team last week conducted the third round of onsite inspection.

Over the past one year, the Asia Pacific Group of the FATF on October 12-15 conducted an onsite visit. The international organization visited the country on December 5-15 to carry out a second assessment. If the country fails to meet the needful criteria prescribed by the international organizations, they might keep the nation under their blacklists, experts say.

Although Nepal had stepped up measures to amend the existing Money Laundering Prevention Act 2008 and related regulations to ensure effective checking of the transactions of black money, it has remained in limbo due to various reasons. Apart from this, Nepal has been looking forward to amend other 17 acts related to Nepal Rastra Bank, land tax, tourism, mutual legal assistance, prevention of organized crime and foreign investment and technology transfer, among others.

The NRB has made it mandatory for the banks and financial institutions to report any suspicious transactions immediately to the regulator. In December 2022, the central bank also set up a separate unit named ‘Money Laundering Prevention Supervision Division’ to look after the cases of money laundering.

In February, the government also registered amendment proposals to these laws at parliament to take them forward through a fast track. But, the proposals have remained undecided even in the past three months.

According to an official at the Department of Revenue Investigation, the FATF is scheduled to unveil its report in mid-September 2023. “As Nepal is yet to finish a lot of tasks, it is likely that the report will not come in favor of the country in this matter,” the official said.

Previously, the FATF kept Nepal in a gray list in 2010. Later on, the country moved out of the lists in 2014 after it expressed commitment to enforce stern measures to check possible money laundering.