Nepal narrowly escapes FATF ‘greylisting’

Published On: July 20, 2023 08:30 AM NPT By: Republica | @RepublicaNepal

The country has been granted one-year extension to revise laws and combat money laundering

KATHMANDU, July 20: Nepal has narrowly avoided being placed on the 'greylist' by the Financial Action Task Force (FATF), an international watchdog responsible for combating money laundering in countries across the world.

During the 23rd annual meeting of the Asia Pacific Group (APG) on Money Laundering under the FATF held in Canada from July 9-14, it was decided not to include Nepal in its list of sensitive countries at this time. However, Nepal has been granted an extension until October 2024 to fulfill the necessary criteria to safeguard itself from potential greylisting.

Greylisting 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 the corrective measures.

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.

In an effort to address concerns raised by the FATF, a 28-member team led by Nepal Rastra Bank Governor Maha Prasad Adhikari visited Canada on the specified dates to brief the APG forum. The international organization expressed particular concerns about the revision and effective enforcement of laws related to casinos, money laundering, cooperatives, and other relevant areas.

Due to doubts regarding the government's progress in this matter, the FATF team conducted three onsite inspections in Nepal over the past year. The Asia Pacific Group of the FATF carried out the first onsite visit on October 12-15 last year, followed by a second assessment visit from December 5-15. The third inspection took place in the last week of April 2023.

Nepal now has an additional year to work diligently on revising and enforcing crucial laws to combat money laundering effectively and maintain compliance with FATF's standards.