KATHMANDU, Jan 28: High-ranking government officials have hinted that Nepal will be having a tough time avoiding falling into the 'greylist' of the Financial Action Task Force (FATF) during the upcoming review to be conducted by the international watchdog.
The FATF is an international organization that looks after combating money laundering in countries across the world. Two weeks ago, a high-level government team led by the Governor of Nepal Rastra Bank (NRB) Maha Prasad Adhikari attended the FATF meeting held in the Philippines. According to a government official, in a face-to-face meeting, the representatives of the FATF however expressed high concern over the dismal progress report of Nepal.
Speaking at a program entitled ‘Money Laundering Prevention National Day 2081’ on Monday, Chief Secretary Ek Narayan Aryal said the government appeared weak in implementing the commitments to prevent money laundering and other reforms although it expedited enforcing necessary laws related to prevention of money laundering in the country. “Our weakness has been revealed on the part of implementing laws and timely reporting,” said Aryal.
Avoid FATF grey-listing
Greylisting of the FATF entails the international organization keeping a close watch on the government of a country concerning cases of money laundering. This action plan is implemented after identifying deficiencies in the country's mutual evaluation, followed by an observation period with a defined timeframe for implementing corrective measures.
In July 2023, Nepal narrowly escaped being placed on the greylist by the FATF. During the 23rd annual meeting of the Asia Pacific Group (APG) on Money Laundering under the FATF held in Canada from July 9-14, 2023, Nepal was granted an extension until October 2024 to fulfill the necessary criteria to safeguard itself from potential greylisting.
Despite Nepal's repeated commitment to combat the use of suspected black money in various sectors, the country has failed to enact effective measures to address the issue promptly. The slow pace of development in enforcing laws against money laundering has put Nepal at the risk of entering the gray zone again.
NRB Governor Adhikari said the recent meeting did not yield good results in wiping out the risks completely. “We hold a good position on the front of timely amendments to necessary laws. Although the first two assessments yielded positive results, our position on the third assessment is not on par with the requirement. We need to do necessary work to be removed from the critical status,” Adhikari added.
Time and again, the Asia Pacific Group on Money Laundering (APG) has been pointing out the lack of adequate supervision in non-financial sectors such as real estate, bullion trade, cooperatives, and the casino sector of the country as high-risk sections for money laundering.
If Nepal falls in the critical zone, the country may face problems such as a lack of trade opportunities and international financial transactions, while facing a downgrade in overall country ratings. It might lead to further damage to the country's economy and reputation.
