Nepal’s Money Laundering Prevention Act of 2008: Defining Criminal Asset Laundering

Background

Enacted on January 1, 2008
Legislation to provide legal frameworks for preventing criminal asset laundering
Passed as part of ongoing efforts to combat criminal activities in Nepal

Preamble

Recognizing the importance of addressing money laundering, Nepal’s legislature enacted the Money Laundering Prevention Act, 2063 (2008), to criminalize the earning, holding, and transferring of assets derived from offenses under various laws.

Key Provisions

Definitions

The act defines the following key terms:

Investigation Officer: Personnel appointed or designated to investigate money laundering cases.
Transactions: Broadly defined to include any purchase, sale, distribution, transfer, or investment, as well as possession or handling of assets.
Non-Financial Institution: casino firms, companies, firms, or institutions (registered or not) authorized to carry out any trade or business, along with other specified entities.

Offenses and Penalties

Prohibition: Nobody is allowed to launder or cause the laundering of assets, nor should they knowingly earn assets from terrorism-related activities, tax evasion, or other stipulated offenses.
Attempts: No one should attempt, support, or provoke others to commit money laundering offenses.

Customer Identity and Transactions

Records: Banks, financial institutions, and non-financial institutions must identify their customers and document their identity, address, and other relevant information for all new business relationships and transactions exceeding the limit set by the Rastra Bank.
Retention: These records must be kept secure for at least five years.

Obligations

Government Entity: Must establish and operate a Financial Intelligence Unit.
Bank: Adhere to the Money Laundering Prevention Act guidelines, maintain records of cash transactions above a specified limit, and report suspicious transactions to the Financial Information Unit.
Financial Institution: Implement customer due diligence measures and report suspicious transactions to the Financial Information Unit.
Non-Financial Institution: Assess and mitigate money laundering risks and report suspicious transactions to the Financial Information Unit.

Coordination Committee and Financial Information Unit

Coordination Committee: A committee established to coordinate and suggest essential measures related to money laundering prevention.
Financial Information Unit: Operates within the Rastra Bank to collect and analyze related information.