Kathmandu: High volume of illicit cash flow. Suspicious transaction. No declaration of the source of money. Loopholes everywhere. Weak and compromised regulatory mechanisms.
The situation has raised a real risk of Nepal being blacklisted for money laundering. Indicating the seriousness of the dirty money, Gagan Kumar Thapa, General Secretary of the ruling Nepali Congress, also raised the issue at Nepal’s parliament on Tuesday.
In the House of Representatives (HoR) on Tuesday, Thapa said that Nepal, which had earlier avoided being blacklisted, is at the risk of being blacklisted this time.
Thapa also demanded that the government inform the parliament about the efforts carried out to prevent Nepal from being blacklisted over money laundering. “The government, at the earliest, must inform the parliament about the situation of Nepal in 40 lists related to money laundering,” said Thapa.
Despite the concerns regarding flow of the dirty money in the country, Nepal has not yet been able to come up with effective mechanisms to identify criminal activities and bring the offenders to book.
Quoting experts, Thapa informed the parliament that widespread tax evasion, increasing corruption, and criminalization [criminal activities] have put the overall assessment of Nepal in a risky situation. “If blacklisted, Nepal’s international banking transaction would be halted, and banks will not be allowed to open letter of credit (LC) for imports,” claimed Thapa.
Nepal is a member of the Asia Pacific Group (APG) under the Financial Action Task Force (FATF). “The APG is evaluating the situation of Nepal in October and November, based on legal safeguards, its implementation, and effectiveness. Due to the lack of laws related to money laundering, poor implementation of already-formed laws, widespread tax evasion, increasing corruption and criminalization, Nepal is at high risk in the assessment,” said Thapa.
To find and stop money laundering and the funding of terrorism globally, the FATF was founded in 1999. Nepal belongs to its associate organization, APG, which looks into its member nations in the region.
In 2010, an APG working committee concluded that Nepal’s efforts to control money laundering were not effective enough and put Nepal on an international monitoring list. Nepal was later removed from the monitoring list after the government established a Money Laundering Investigation Department and created legal structures and adopted policies to prevent money laundering.
This time, APG is expected to evaluate Nepal on the implementation of 40 suggestions and 11 results that it made in 2010.