Financial Crime World

Nepal Takes Major Step to Avoid Greylisting by Financial Action Task Force

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Kathmandu: Nepal has taken a significant step towards avoiding greylisting by the Financial Action Task Force (FATF) after its lower house endorsed a bill on money laundering regulations.

Background

The FATF, an international anti-money laundering body, maintains two lists of countries - one for blacklisted nations and another for those with “strategic deficiencies” in their regime to counter money laundering and terror financing. Nepal was facing the threat of being greylisted by the FATF due to its failure to improve in several areas pointed out by the Asia-Pacific Group on Money Laundering (APG), a regional anti-money laundering body.

Addressing Deficiencies

The APG had identified legislative deficiencies in Nepal’s laws, which has now been addressed through the endorsement of the amendment bill. The bill seeks to revise 20 laws, including the Money Laundering Prevention Act-2020, Cooperative Act-2017, and Tourism Act-1978, among others.

Key Provisions

  • Gives money laundering investigation authority to competent crime investigation agencies
  • Strengthens the capacity of relevant authorities to undertake their new/modified functions
  • Criminalizes both terrorist acts and proliferation of weapons of mass destruction
  • Requires non-profit organizations to report suspicious transactions to the Financial Intelligence Unit at the Nepal Rastra Bank

Next Steps

However, officials emphasized that legislation alone would not be enough to save the country from falling into the greylist. “Along with legislation, enforcement of laws should also be strong and visible,” an official said.

The bill has addressed more than 80 percent of the deficiencies identified by the APG, officials said. Nepal now needs to show a marked improvement in both legislations and law enforcement by October this year to avoid being greylisted again.

History

Nepal was on the greylist of the FATF from 2008-2014 before making progress in its anti-money laundering regime. The country is expected to continue improving its laws and enforcement to avoid falling into the greylist again.

Conclusion

The endorsement of the bill is a significant step towards avoiding greylisting by the FATF. However, officials will now focus on improving enforcement, particularly prosecution of powerful individuals involved in crimes. With the bill expected to become a law soon, Nepal can take pride in its efforts to strengthen its anti-money laundering regime and avoid falling into the greylist again.