Nepal Takes Baby Step Towards Compliance with International Standards on Anti-Money Laundering Laws

Kathmandu, Nepal - A Move Towards Addressing Deficiencies

In a significant move aimed at addressing the deficiencies pointed out by the Asia Pacific Group on Money Laundering (APG), Nepal’s Law, Justice and Human Rights Committee has endorsed an anti-money laundering bill. The bill seeks to amend 19 different laws to make them compatible with international standards on anti-money laundering and combating the financing of terrorism (AML/CFT).

Critical Moment for Nepal

The development comes at a critical moment for Nepal, as it faces pressure from international agencies to address its compliance with AML/CFT standards. The APG’s recent Mutual Evaluation Report highlighted several deficiencies in Nepal’s laws and enforcement mechanisms, recommending legislative changes as a major “to-do list” to address these shortcomings.

Key Amendments Proposed

Among the key amendments proposed by the bill is the removal of a cap on deposits allowed in cooperatives, which was previously capped at Rs2.5 million. The committee has also included a provision to bar setting up new casinos within five kilometers of the international border, aimed at controlling possible cross-border crime originating from casinos.

Delayed Implementation May Lead to Greylisting

While the endorsement of the bill by the parliamentary committee is a step forward, experts warn that the delay in passing the legislation could result in Nepal’s greylisting by the Financial Action Task Force (FATF) over the next year. The FATF is the global anti-money laundering agency that sets standards on AML/CFT.

APG Criticisms and International Pressure

The APG has criticized Nepal for lack of high-level political commitment to implementing anti-money laundering laws, and for failing to take adequate action against big offenders. International agencies are also evaluating Nepal’s response to ill-gotten properties of offenders, including those involved in recent cases such as gold smuggling, fake Bhutanese refugee scams, and the Lalita Niwas case.

FATF Report and Government Advisement

The FATF is set to discuss a damning report about Nepal’s deficiencies at its next plenary meeting in late October. The Nepali government has been advised to expedite implementation of the anti-money laundering law and enhance the capacity of relevant authorities to undertake their new and modified functions.

Next Steps Needed

The endorsement of the bill by the parliamentary committee marks a crucial step towards addressing Nepal’s AML/CFT compliance issues, but experts warn that more needs to be done to address the country’s deficiencies in this area.