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Nepal Struggles to Combat Money Laundering, Hawala Remains Major Concern
Despite efforts to curb money laundering and hawala activities in Nepal, the problem persists, with illegal funds flowing into the country through various means.
The Growing Problem of Money Laundering
According to a report by the Attorney General’s office, money laundering and hawala activities have increased significantly in recent years. Hawala, a common method of money laundering, involves transferring funds illegally without carrying cash. The network of hawala operators is widespread, with agents located almost everywhere around the world.
Illicit Funds Flowing into Nepal
The influx of Nepalese workers abroad has provided an opportunity for hawala operators to launder money through remittances. A significant portion of these remittances comes from the Gulf and South-East Asian countries, far exceeding that received through legal banking channels.
Challenges in Combating Money Laundering
Experts say that bank secrecy laws are a major obstacle in combating money laundering. In Nepal, the policy of requiring disclosure of source funds exceeding Rs 5 lakh deposited into a bank account has not been implemented, allowing illegal money to be safely deposited.
Lack of Specific Legislation
The Prevention of Corruption Act, 2002, provides for freezing of bank accounts and fines on banks that fail to disclose details. However, there is no specific legislation addressing the problem of money laundering in Nepal. The Foreign Exchange (Regulation) Act, 1962, has attempted to regulate transactions and prevent illegal activities, but experts say it needs to be strengthened.
Investigation and Prosecution
According to statistics released by the Department of Revenue Investigation, the number of cases investigated and prosecuted is nominal. However, experts believe that there are many more cases of tax evasion in Nepal that are not being investigated properly.
Recommendations
To combat money laundering and hawala activities effectively, the following recommendations have been made:
- Strengthen the Prevention of Corruption Act, 2002, to include specific provisions addressing money laundering.
- Implement a policy requiring disclosure of source funds exceeding Rs 5 lakh deposited into a bank account.
- Enhance cooperation between law enforcement agencies and banks to detect and prevent money laundering activities.
- Conduct thorough investigations into tax evasion cases and prosecute those found guilty.
- Establish a special task force to combat hawala activities and money laundering in Nepal.
Statistics
- Number of cases related to violations of foreign exchange regulations tried by trial courts: 248
- Conviction rate: 56%
- Rate of conviction in cases involving hawala activities: 41%
- Amount of illegal funds seized: Rs 145.36 million
By [Your Name], Kathmandu