Nepal escapes being blacklisted, under continuous observation

Though Nepal escaped being blacklisted by the Financial Action Task Force (FATF) plenary today, the country will be under continuous observation as it has repeatedly failed to fulfill international commitments in the fight against the flow of dirty money.

The FATF plenary has kept Nepal in a status quo – improving global AML/CFT compliance ongoing process which is the grey zone – as recommended by the International Co-operation Review Group (ICRG), a body under FATF that analyses high-risk jurisdictions and recommends specific actions against them.

Earlier in the afternoon, ICRG had recommended the FATF plenary to keep Nepal in a status quo.

"Nepal has escaped being blacklisted this time thanks to the last minute approval of the Organised Crime Bill on February 15," said deputy governor of the central bank Maha Prasad Adhikari via email from Paris, where the FATF plenary was being held from February 18 and which concluded today.

"However, the next plenary and working group meeting of FATF in Oslo, Norway, on June 17-21, could be a tougher one," he added.

FATF, which is a global standard setting body for anti-money laundering and combating the financing of terrorism (AML/CFT), has asked Nepal to pass the amendment of the Assets Laundry Prevention Act, apart from the Proceeds of Crime Bill that will help in the management of seized property and give enough teeth to authorities to fight organised crime.

The meeting has shown basic concerns on Nepal's slow response to UN security council resolutions like terrorist financing, seizing, freezing and confiscation of organised crime assets, said Adhikari, adding that the country has to pass the Proceeds of Crime Bill and amend the legislation to fight money laundering to escape from public statement, which means blacklisting. "FATF has asked Nepal to implement its Action Plan that is to introduce and enact both the AML/CFT legislations — which are in the pipeline — by June."

The country has remained in a status quo also due to its earlier delays in fulfilling international commitments. The country was already placed under the high-risk and non-cooperative jurisdictions — which means almost blacklisted — in October 2012 for AML/CFT deficiencies and no substantial progress on FATF's 40+9 recommendations that can also help combat corruption.

The meeting in Paris has identified jurisdictions with strategic deficiencies in their AML/CFT system and reviewed progress made by jurisdictions which were identified at the October 2012 plenary.

Nepal personally cannot raise its voice in the FATF plenary as it is a member of the Asia/Pacific Group that represents Nepal in FATF. "The APG conveyed Nepal's reasons, role and cooperation with the APG and the constitutional problem in the delay in approving the legislations," Adhikari added.