Nepal Takes Major Step to Avoid Greylisting by Financial Action Task Force
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 anti-money laundering.
Background
The FATF, an international body tasked with combating money laundering and terrorist financing, is expected to decide whether to blacklist or greylist Nepal based on its compliance with FATF’s standards. The country was facing the threat of being greylisted due to deficiencies in its laws and regulations, according to a mutual evaluation report by the Asia-Pacific Group on Money Laundering (APG).
Deficiencies Addressed
The endorsed bill aims to address these deficiencies by revising 20 existing laws, including:
- Money Laundering Prevention Act-2020
- Cooperative Act-2017
- Tourism Act-1978
The bill also seeks to give money laundering investigation authority to the pertinent crime investigation agency.
International Pressure
Nepal has been facing pressure from the international community to strengthen its anti-money laundering regime after being removed from the FATF’s greylist in 2014 following a series of reforms. The country is now under increased scrutiny, with the FATF plenary scheduled for February 2025, and officials say it must show marked improvement in both legislation and law enforcement by then.
Key Provisions
The bill passed by the lower house allows:
- Even agencies where complaints were registered to conduct investigations into money laundering
- Address deficiencies related to terrorist financing and proliferation of weapons of mass destruction
- Criminalize both terrorist acts and proliferation of weapons of mass destruction
- Require non-profit organisations to report suspicious financing to the Financial Intelligence Unit at the Nepal Rastra Bank
Official’s Remarks
“Nepal has to show a marked improvement in both legislations and law enforcement by October this year to avoid being greylisted by the FATF’s plenary,” said a senior official at the Nepal Rastra Bank. “Along with legislation, enforcement of laws should also be strong and visible.”
Conclusion
If enacted, the bill will help Nepal avoid greylisting by the FATF. However, officials emphasize that enforcement is also crucial to ensure compliance with international standards. The country must show marked improvement in both legislation and law enforcement by October this year to avoid being greylisted.