APG upgrades Nepal’s ranking in fighting against dirty money

Nepal has improved its ranking in fighting against inflow of dirty money.
The 14th annual meeting of Asia/Pacific Group on Money Laundering (APG) has approved Nepal’s mutual evaluation report in implementing international standards to combat money laundering and the financing of terrorism.
“Of the total 40 plus nine compliance of Financial Action Task Force (FATF), Nepal now has fulfilled four of the recommendations,” said deputy governor of the central bank Maha Prasad Adhikari, after returning from the annual meeting — organised by India on July 18-22.
However, Nepal has to do a lot more, he said, adding that some six evaluation reports were filed to be discussed and the plenary approved Nepal’s report unanimously after a series of discussions.
The annual meeting — attended by over 350 senior government officials from Asia/Pacific region and around the world — was inaugurated by Indian finance minister Pranab Mukharji and attended by Financial Action Task Force (FATF) president Giancarlo Del Bufalo of Mexico.
The APG members undergo a mutual evaluation and prepare a Mutual Evaluation Report that presents a probing assessment of the levels of compliance with the international standards and recommend actions. The APG is an international organisation — regionally focused — consisting of 40 members and a number of international and regional observers including the UN, IMF, FATF, Asian Development Bank and World Bank.
It is closely affiliated with the Financial Action Task Force (FATF), whose secretariat is located in the OECD headquarters in Paris. All APG members commit to effectively implement the FATF’s international standards for anti-money laundering and combating the financing of terrorism, referred to as the 40 plus nine Recommendations. Part of the commitment includes implementing measures against terrorists listed by the UN in the UNSC 1267 Consolidated List.
The plenary saw some 30 progress reports, which were adopted after discussions. By the sideline of the annual APG meeting several donors meeting also took place.
The closing media conference on July 22 was attended by APG co-chair K Jose Cyriac, APG co-chair Tony Negus and APG executive secretary Gordon Hook. Nepal’s team included central bank deputy governor Maha Prasad Adhikari, Financial Information Unit — under the central bank — chief Dharmaraj Sapkota, DIG of Nepal Police and representatives from Finance Ministry and Law Ministry.
The APG was officially established as a regional organisation in 1997 at the fourth Asia/Pacific Money Laundering Symposium in Bangkok. It ensures that mechanisms are in place for international cooperation, given the international dimension to money laundering and terrorist financing.
Earlier on July 2010, the 13th Annual Meeting was held in Singapore. Nepal was evaluated in the APG’s first round of evaluations in 2005 and in the second round in 2010. Nepal became the member of the APG in June 2002. Nepal is developing its anti-money laundering strategies and combating the financing of terrorism laundering system. The country has recently amended Anti-Money Laundering Act and has established an FIU, apart from ratifying two key UN Conventions to fight against the flow of dirty money.
Although estimating the amount of worldwide money laundering is problematic, the International Monetary Fund (IMF) has estimated that between two per cent and five per cent of global GDP per year is generated annually as the proceeds of crime — in US funds that is an amount in the trillions of dollars — the largest sources of which are illicit drug manufacturing and trafficking, arms and people smuggling, corruption, fraud, extortion, kidnapping and theft.

FATF has prescribed 40 plus nine recommendations on terrorist Financing. The following are the nine special recommendations:
Recognising the vital importance of taking action to combat the financing of terrorism, the FATF has agreed these Recommendations, which, when combined with the FATF Forty Recommendations on money laundering, set out the basic framework to detect, prevent and suppress the financing of terrorism and terrorist acts.

1. Ratification and implementation of UN instrument
Each country should take immediate steps to ratify and to implement fully the 1999 United Nations International Convention for the Suppression of the Financing of Terrorism.
Countries should also immediately implement the United Nations resolutions relating to the prevention and suppression of the financing of terrorist acts, particularly United Nations Security Council Resolution 1373.

2. Criminalising the financing of terrorism and associated money laundering
Each country should criminalise the financing of terrorism, terrorist acts and terrorist organisations. Countries should ensure that such offences are designated as money aundering predicate offences.

3. Freezing and Confiscating terrorist assets
Each country should implement measures to freeze without delay funds or other assets of terrorists, those who finance terrorism and terrorist organisations in accordance with the United Nations resolutions relating to the prevention and suppression of the financing of terrorist acts.
Each country should also adopt and implement measures, including legislative ones, which would enable the competent authorities to seize and confiscate property that is the proceeds of, or used in, or intended or allocated for use in, the financing of terrorism, terrorist acts or terrorist organisations.

4. Reporting suspecious transactions related to terrorism
If financial institutions, or other businesses or entities subject to anti-money laundering obligations, suspect or have reasonable grounds to suspect that funds are linked or related to, or are to be used for terrorism, terrorist acts or by terrorist organisations, they should be required to report promptly their suspicions to the competent authorities.

5. International cooperation
Each country should afford another country, on the basis of a treaty, arrangement or other mechanism for mutual legal assistance or information exchange, the greatest possible measure of assistance in connection with criminal, civil enforcement, and administrative investigations, inquiries and proceedings relating to the financing of terrorism, terrorist acts and terrorist organisations.
Countries should also take all possible measures to ensure that they do not provide safe havens for individuals charged with the financing of terrorism, terrorist acts or terrorist organisations, and should have procedures in place to extradite, where possible, such individuals.

6. Alternative remittance
Each country should take measures to ensure that persons or legal entities, including agents, that provide a service for the transmission of money or value, including transmission through an informal money or value transfer system or network, should be licensed or registered and subject to all the FATF Recommendations that apply to banks and non-bank financial institutions. Each country should ensure that persons or legal entities that carry out this service illegally are subject to administrative, civil or criminal sanctions.

7. Wire transfer
Countries should take measures to require financial institutions, including money remitters, to include accurate and meaningful originator information (name, address and account number) on funds transfers and related messages that are sent, and the information should remain with the transfer or related message through the payment chain.
Countries should take measures to ensure that financial institutions, including money remitters, conduct enhanced scrutiny of and monitor for suspicious activity funds transfers which do not contain complete originator information (name, address and account number).

8. NGOs
Countries should review the adequacy of laws and regulations that relate to entities that can be abused for the financing of terrorism. Non-profit organisations are particularly vulnerable, and countries should ensure that they cannot be misused:
(i) by terrorist organisations posing as legitimate entities;
(ii) to exploit legitimate entities as conduits for terrorist financing, including for the purpose of escaping asset freezing measures; and
(iii) to conceal or obscure the clandestine diversion of funds intended for legitimate purposes to terrorist organisations.

9. Cash couriers
Countries should have measures in place to detect the physical cross-border transportation of currency and bearer negotiable instruments, including a declaration system or other disclosure obligation.
Countries should ensure that their competent authorities have the legal authority to stop or restrain currency or bearer negotiable instruments that are suspected to be related to terrorist financing or money laundering, or that are falsely declared or disclosed.
Countries should ensure that effective, proportionate and dissuasive sanctions are available to deal with persons who make false declaration(s) or disclosure(s). In cases where the currency or bearer negotiable instruments are related to terrorist financing or money laundering, countries should also adopt measures, including legislative ones consistent with Recommendation 3 and Special Recommendation III, which would enable the confiscation of such currency or instruments.