Nepal has a distant chance to move up the ladder on the Financial Action Task Force's (FATF) list of member states who have pledged to stop money laundering and financing of terrorist activities within their borders.
Ever since Nepal signed on to the global anti-money laundering body in 2010, it has been fulfilling its obligations at the last minute. The Bill Against Organised Crime, passed through an ordinance in February, kept Nepal from being blacklisted and losing foreign investors. The Mutual Legal Assistance Act and the Extradition Treaty Act were also passed right before the deadline in 2012.
After Khil Raj Regmi's government passed the Anti-Money Laundering Act and the Proceed of Crime bill in June, the FATF once again kept Nepal in the 'grey' list.
Being on the grey list means that although the country has fulfilled its basic obligations, it will be put under constant surveillance. If a visiting team finds satisfactory progress, they might even recommend Nepal to be taken off the list. But if Nepal shows no progress after that, it could very well fall back.
Contrary to premature reports celebrating Nepal getting clearance within three months, Finance Ministry Joint Secretary Baikuntha Aryal says the ordeal is far from over. “There is a plenary in October and the FATF will decide whether to send a team for an onsite visit,” says Aryal. “We will know the details when and if they arrive in Nepal.”
At the FATF plenary held in Norway from 19 to 21 June, Brunei, Philippines, Sri Lanka, Thailand, and Bolivia were removed from the grey list and given a clean chit for improving their implementation of the anti-money laundering laws.
A mutual evaluation report published in July 2011, revealed money-laundering and terrorist financing in Nepal occurred through profits made from drug trafficking, human trafficking, arms trafficking, corruption, counterfeit currency, tax evasion, and gold smuggling.
Since then, Nepal has made steady progress. It has fulfilled all legal requirements and now the Finance Ministry is pushing to form acts and directives to implement these laws once it gets a list of new requirements from the FATF. “There have been talks of yet another mutual evaluation in 2015. If we could make good progress by then, Nepal could remain above the grey list for a longer time,” says Aryal.
Sunir Pandey
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