Nepal on verge of FATF Greylist for money laundering: Reports

Nepal: The Global Anti-terrorist organisation, FATF may soon Greylist Nepal for its incapacitive legislature and enforcement of laws against money laundering and terror funding, as Kathmandu Post reported.

Nepal has so far been unable to comply with the standards of the Paris-based regulatory body that works on anti-money laundering and terror funding while enlisting 15 such inefficient laws. The impacts of being greylisted would deteriorate the already struggling economy of Nepal since it heavily relies on foreign assistance, remittances and imports.

The countries in the Greylist find it difficult to benefit from trade opportunities, a decline in ratings, leading to the economic collapse of the country. The delegation of the Asia Pacific Group on Money Laundering (APG), a FATF-kind of regional anti-money laundering unit, visited Nepal for two weeks to assess the country’s response to money laundering and terror funding.

The APG’ S report will encompass the progress made till December 16 in its mutual evaluation, which might lead Nepal to be greylisted, if not blacklisted. The ‘Blacklisted’ countries subjected as HighRisk Jurisdictions subject to an urgent Call for Action, which currently includes North Korea, Iran and Myanmar.

While Greylist implies countries with strategic incapabilities against money laundering and terror funding, following being listed as “Jurisdiction under increased monitoring by FATF”, the country must develop a specific set of actions within the specified time period, although greylisted countries are not sanctioned. However, these countries may get inhibited from receiving benefits from the international banking system. 

Nepal has previously been on FATF’s Greylist from 2008-2014. Following its progress made in terms of the anti-money laundering regime that includes reforms in the Anti-Money Laundering Act, 2008 and the enactment of other laws, it was removed in 2014.

A senior official from Nepal Rastra Bank stated that Nepal is really close to being greylisted, considering the deficiencies in both legislation and enforcement of the money laundering and terror funding laws. 

So far, 15 laws have been identified that require amendments to comply with FATF money laundering standards. 

The secretary at the Prime Minister’s Office, Dhan Raj Gyawali stated that “We initiated the process of amending them, but before the amendments could happen, the tenure of the erstwhile House of Representatives expired. “

The major laws that require to be amended are enlisted as follows: Assets Laundering Prevention Act-2008, Land Revenue Act-1978, Tourism Act-1978, Securities Act-2007, Criminal (Code) Act-2017, Human Trafficking and Transportation (Control) Act-2008, Organized Crimes Prevention Act-2014, Confiscation of Criminal Proceeds Act-2014, Mutual Legal Assistance Act-2014, and Cooperative Act-2017. 

The proposed amendments made laws stringent, however, the bill remained confined to the House of Representatives. An ordinance on the incorporation of these amendments was sent to President Bidya Devi Bhandari to approve in November, but it lapsed with the election of a new House of Representatives. 

The NRB official stated, “If the ordinance was approved by December 16, prior the APG team’s field visit, Nepal would not have been greylisted. The APG will only include the progress made till that date, which can be damaging for Nepal.”

This report will be sent to the APG plenary, which will determine if Nepal will be under the International Cooperation Review Group(ICRG) monitoring of the FATF.