Nepal may escape blacklisting

Nepal might escape black listing from Financial Action Task Force (FATF) – a global anti-money laundering agency -- as the Parliament today passed the much awaited Anti-Money Laundering Bill (first amendment).
"Apart from giving executing agencies legal teeth, it has paved the way for approval of two other bills – Mutual Legal Assistance Bill and Extradition Bill,” according to theFinance Ministry officials. The Task Force could also consider our request and not black list us as Nepal has fulfilled one of commitments.
The government has tabled it yesterday in the Parliament after Statutory Committee under parliament has cleared it on Friday.
However, Nepal still needs to approve two other Bills – Mutual Legal Assistance Bill and Extradition Bill, apart from two UN conventions –Convention on Suppression of Financing of Terrorism and Conventions against Organised Financial Crime.
The regional review meeting of FATF in Macau on May 13 has asked Nepal to submit the progress report by June 21 before its plenary takes place on June 23-25.
"The Act -- that has formed a coordination committee led by finance secretary -- has also defined up to five years jail term and penalty of up to Rs 500,000 for such crime,” according to the Bill that has defined money earned through tax evasion, earnings made from arms trade, flouting of foreign exchange law, robbery, dacoit, fake documentation, drugs peddling, human trafficking, banking and organised financial crime under money laundering.
The Bill has also made all the regulatory agencies more responsible apart from Financial Information Unit under the central bank that will now issue directives and Revenue Investigation Department that will investigate suspected activities.
Nepal has requested for deadline extension to meet the requirements as the country is passing through transitional period.
Financial Action Task Force had given June 7 deadline -- after Nepal failed to meet the first deadline of December 2010 -- to fulfill its commitments on Anti-Money Laundering and Terrorist Financing.
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 causes 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.
There are 36 members of FATF currently and Nepal falls under Associate Member – Asian Pacific Group – that has 40 countries including Nepal.
The purpose of the Asia Pacific Group on Money Laundering is to ensure the adoption, implementation and enforcement of internationally accepted anti-money laundering and counter-terrorist financing standards set out in the FATF's 40 recommendations and eight special recommendations.