KATHMANDU, June 6: In an effort to avoid the country from being greylisted by the Financial Action Task Force (FATF), the Ministry of Finance (MoF) has prepared a five-year strategy to tackle the problems related to money laundering.
A committee led by Finance Minister Barsha Man Pun on Wednesday endorsed the strategy, while it will come into force after it will get final approval from the Cabinet. According to the MoF, the government has planned to implement the strategy entitled ‘National Strategy and Work Plan on Prevention of Financial Investment in Money Laundering and Terrorist Activities,’ from the next fiscal year.
Mahesh Acharya, joint-secretary of the MoF, said the strategy has underlined main focus on minimizing financial offenses like corruption, revenue leakages, hundi and trading of crypto currencies. Likewise, the strategy also incorporates addressing the issues related to narcotic trading, organized crime, illegally earned benefits, internal terrorism, burglaries, cheating, transaction of fake currencies, black market and smuggling, and forgery.
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The government has been under pressure to introduce legislation to address many deficiencies pointed out by the Mutual Evaluation Report about Nepal prepared and unveiled by the Asia Pacific Group on Money Laundering (APG) of the FATF in September, 2023. Pointing out the delay in passing the legislation by Nepal's parliament, the APG had warned to put Nepal in the greylist, if the country fails to enforce a number of laws on time.
Highlighting a number of deficiencies of Nepal, the APG’s report recommended urgent legislative changes as a major ‘to do list’ to address the shortcomings. The report has even stressed on the need to expedite implementation of the laws along with significantly enhancing the capacity of the authorities concerned.
The FATF is the global anti-money laundering agency which sets standards to enforce countering actions against money laundering, terrorism financing and proliferation financing. Expressing its commitment to amend the necessary anti-money laundering laws, Nepal had urged the agency to provide a grace period of one year before keeping the country in the greylist.
Citing urgency in this matter, the government also endorsed the Anti Money Laundering and Business Promotion Bill in February. In addition, the government also amended a number of laws including Land Tax Act 1977, Tourism Act 1978, Building Act 1998, Nepal Rastra Bank Act 2002, Securities Act 2007 and Human Trafficking and Transportation Control Act 2007.
Similarly, necessary provisions were introduced also in the Insurance Law (Amendment Bill) 2023, Cooperatives Act 2017, Foreign Investment and Technology Transfer Act 2019, Electricity Regulatory Commission Act 2017 and Prevention of Organised Crime Act 2013 to make them compatible with international standards on anti money laundering and combating financing of terrorism.
A country falling under the greylist might face several consequences in its economy and financial system. Greylisting can restrict cross-border transactions, lead to difficulties for a state obtaining credit, and limit inward foreign investment. In addition to economic consequences, black listing and greylisting damages a country's reputation and reduces its international standpoint.
