Financial Crime World

Nepal Unveils Five-Year Strategy to Combat Money Laundering and Prevent Financial Crimes

Introduction

The Nepalese government has announced a five-year strategy to combat money laundering and prevent financial crimes in the country. The National Strategy and Action Plan on Prevention of Financial Investments in Money Laundering and Terrorist Activities aims to provide stability to Nepal’s financial system and overall economy from the risk of financial crimes.

Focus Areas

The plan, set to be implemented in the current fiscal year 2024/25, will focus on reducing financial crimes such as:

  • Corruption
  • Revenue evasion
  • Hundi
  • Cryptocurrency transactions
  • Drug trafficking
  • Organized crime
  • Criminal profit
  • Internal terrorism
  • Fraud
  • Theft
  • Counterfeit currency trading
  • Black market
  • Smuggling

Strategy Approval and Implementation

The strategy was approved by the Money Laundering Steering Committee, chaired by Finance Minister Barshaman Pun. The committee comprises senior officials from various government agencies, including:

  • Law, Justice and Parliamentary Affairs Ministry
  • Nepal Rastra Bank
  • Attorney General’s Office
  • Office of the Prime Minister and Council of Ministers

According to Mahesh Acharya, joint secretary and chief of Economic Policy Analysis Division of the Ministry of Finance, the strategy aims to improve the country’s financial system and economy by reducing financial crimes.

International Pressure

Nepal has been under pressure from international organizations such as:

  • Financial Action Task Force (FATF)
  • Asia Pacific Group (APG)

to improve its anti-money laundering measures. The APG conducted a technical assessment of Nepal’s money laundering situation in October 2022, following which the country made technical reforms to address the issue.

However, the FATF has warned that if Nepal does not improve its anti-money laundering measures, it may be placed on the “grey list” of countries with weak financial systems. This could lead to:

  • Reduction in foreign aid
  • Loans and investments
  • Challenges in international banking transactions and remittances

Amendments to Laws

To address these concerns, Nepal has amended several laws related to money laundering, including:

  • Export Import (Control) Act 2013
  • Ship Registration Act 2027
  • Land Revenue Act 2034
  • Tourism Act 2035
  • Building Act 2055
  • Securities Act 2063

The amended laws have increased the jurisdiction of the police in matters related to money laundering, regulated casinos, and included transactions carried out through electronic and digital means under the scope of money laundering.

Steering Committee Establishment

The government has established a Steering Committee under the chairmanship of the Finance Minister to coordinate and monitor efforts to prevent financial crimes. The committee will:

  • Prepare drafts of policies and programs related to money laundering
  • Create necessary mechanisms for implementation
  • Oversee all agencies involved in the fight against financial crimes

Expected Outcomes

With this strategy in place, Nepal is expected to improve its anti-money laundering measures and reduce financial crimes, thereby strengthening its financial system and economy.