Blacklisting fears still haunt Nepal

Nepal has not completely escaped possibility of being blacklisted by Financial Action Task Force – a global anti-money laundering body – though it has requested for deadline extension to meet complete criterion.
The regional review meeting of Task Force that concluded yesterday in Macau asked Nepal to submit its final report by June 21, though Nepal has to keep reporting its progress on Anti-Money Laundering and Terrorist Financing regularly prior to the new deadline too.
The report will be submitted in the June 20-24 working group meeting that will decide either t blacklist or not Nepal.
Central bank governor Dr Yubraj Khatiwada – who led the Nepali team – requested to extend the deadline as Nepal is passing through transitional period.
He also hoped that the international community will understand Nepal’s current situation and extend deadline to help organisational reform and pass the Bills that are under discussion in the parliament.
“Due to political transition, the parliament – that has to approve the Bills – could not meet regularly, delaying the approval of Anti-Money Laundering Act (first amendment), Mutual Legal Assistance Bill, UN Convention Against Organised Crime and UN Convention Against Terrorist Financing,” he said, appraising Nepal’s progress first hand.
“The Financial Information Unit under the central bank has asked banks and financial institutions, cooperatives involved in financial transactions, insurance companies, Nepal Stock Exchange, remittance companies, money changers, casinos, lawyers, auditors, precious stones and metal dealers to report it suspected transactions,” he said, adding that the Unit has also received some 440 suspected cases last year.
The team led by Central Bank governor had Law Secretary Madhav Poudel, finance secretary Krishnahari Baskota, secretary from the Prime Minister’s office Trilochan Uprety and central bank’s Financial Information Unit director Hari Nepal returned today.
Financial Action Task Force has given June 7 deadline to Nepal after it failed the first deadline of December 2010 to fulfill its commitments on Anti-Money Laundering and Terrorist Financing.

The Parliamentary Statute Committee has since last week started discussions on the Anti-Money Laundering (amendment) Bill that is pending in Parliament for last one year. It could take some more time to ratify due to political deadlock.
If Nepal could not meet the deadline, it will be blacklisted in 170 countries, though under international laws, the blacklisting carries no formal sanction, it cause intense financial pressure as Nepal will find it difficult to get foreign aid from international organisations like the World Bank and International Monetary Fund.
Foreign banks may not trust the letters of credit issued by Nepali banks creating difficulties for Nepali businessmen at the international level. Nepali businessmen may have to face harassment at foreign customs offices, with those authorities not allowing Nepali goods to go through the green channel. Nepalis may also face hassles while undergoing immigration procedures in other countries.
Including Nepal, Angola, Bolivia, Ethiopia, Kenya, Myanmar, Nigeria, Sri Lanka, Syria, Trinidad & Tobago, and Turkey have to take sufficient action to implement significant components of their action plan by June 2011. The FATF will identify them as being out of compliance with its agreed action plans and will take the additional step of calling upon it to consider the risks arising from the deficiencies associated with the jurisdiction.