Nepal’s Fight Against Money Laundering: A Review of the Progress
Kathmandu, [Date] - Nepal has been struggling with the issue of money laundering for years. Despite efforts to combat this financial crime, experts warn that the country is still vulnerable to its ill effects.
Challenges in Combating Money Laundering
- Lack of transparency, stability, and predictability in Nepal’s political system
- Frequent changes in government and absence of a strong legal framework
- Difficulty in tracking down and prosecuting those involved in money laundering
- Weak anti-money laundering system with limited effectiveness
Progress Made by the Government
In 2008, the government enacted the Assets Laundering Prevention Act, which criminalized the offense of money laundering and financing of terrorism. The Financial Information Unit was established within the Nepal Rastra Bank to monitor and report suspicious transactions.
Criticisms and Concerns
- Lack of political commitment and inadequate resources hinder effective implementation of the law
- Failure to promulgate key ordinances, including one on organized crime
- International community has been critical of Nepal’s slow progress in combating money laundering
Techniques of Money Laundering
Money launderers use various techniques to conceal the source of illegal funds, including:
- Retail business
- Charity shows
- Lottery tickets
- Casinos
- Property dealing
- Securities market and stock exchange
- Insurance sector
- Asset purchase and bending of funds
- Bank involvement
- Use of false accounts
- Shell corporation
- Establishment of companies
- False export-import involves
- Underground banking
- Electronic transfer
International Instruments
The international community has developed various instruments to combat money laundering and financing of terrorism, including:
- United Nations Convention 1988 against the illicit traffics in narcotics drugs and psychotropic substances
- Financial Action Task Force (FATF) 40 recommendations
- Special recommendation on terrorist financing
- Basel Committee recommendations
These instruments provide a framework for countries to combat money laundering and financing of terrorism effectively.
Conclusion
While Nepal has made some progress in combating money laundering, more needs to be done to strengthen its anti-money laundering regime. The lack of political commitment, inadequate resources, and failure to promulgate key ordinances are major hurdles that need to be addressed urgently.