Anti-Money laundering measures: Govt forwards two ordinances to Cabinet

KATHMANDU, MAY 06 -

The Ministry of Finance has forwarded two ordinances on anti-money laundering—Second Amendment of the Anti-Money Laundering Act 2008 and the Proceed of Crime Bill—to the Cabinet for latter’s approval. The two Acts have to be introduced at the earliest to avoid any possible blacklisting by the Financial Action Task Force (FATF), the global anti-money laundering body.

The FATF has given June 2013 deadline to introduce the Acts, warning severe consequences in the event of Nepal’s failure to do so. “The Cabinet has forwarded bills to its bill committee for discussion,” said Tek Prasad Dhungana, joint secretary at the Law Ministry. After the Cabinet ’s nod, the ordinances have to be endorsed by the President before they become law.

Nepali officials are scheduled to visit Thailand on Tuesday to attend a meeting of the Regional Review Group (RRG) of the FATF. A team led by Law Secretary Bhesh Raj Sharma will hold talks with RRG representatives on Thursday.

Other members of team are Nepal Rastra Bank (NRB) Deputy Governor Maha Prasad Adhikari, joint secretary of the Law MinistryTek Prasad Dhungana, Director General of the Department of Money Laundering Department Surya Prasad Acharya and NRB Assistant Director Hari Kumar Nepal.

“We have made good progress in these two Acts and in strengthening the Department of Money Laundering Investigation. Regulatory authorities such as Securities Board of Nepal and Insurance Board have issued anti-money laundering,” said Dhungana. “Therefore, we are in a good position to put forth our arguments.”

“If these bills are endorsed before our departure to Thailand, we will be in more comfortable position to negotiate at both the face-to-face and the FATF plenary latter.”

The proposed amendment to the anti-money laundering Act has provisioned increasing the scrutiny of financial transactions of politically exposed persons (PEPs) in line with the FATF’s revised recommendation in 2012.

It has defined PEP as one who has held the position above the secretary level in government offices. As per the order of precedence recently prepared by the government, the President, Vice-president, Prime Minister, Chief Justice, Chairman of the Parliament, ministers, lawmakers, army chief, chiefs of constitutional bodies, vice-chairman of the National Planning Commission, Nepal Rastra Bank governor and vice-chancellors of universities rank above the secretary level.

“It has also been proposed that PEPs’ list could be expanded on recommendation of the High-Level Coordination Committee on Money Laundering headed by the finance secretary later,” said Dhungana.

The government was forced to bring these officials under greater scrutiny in the wake of the new FATF recommendation called for enhanced due diligence of domestic PEPs along with PEPs from international organisations and their families and close associates.

The amendment to the Act has proposed making the customer due diligence (CDD) a requirement in case the amount being electronically transferred is more than Rs 75,000, according to Dhungana. A firm engaged in electronic transfer of the amount has to maintain record of sender, his account number, date of birth and name of the beneficiary.

The proposed amendment has made a provision which requires an individual holding foreign currencies and precious metals exceeding a certain amount to declare that to the concerned authorities.

Among other provisions in the amendment include the Foreign Ministry should inform about terrorists and terrorist organisations declared by the United Nations Security Council to the country to prevent their investment and flow of money inside the country.

The draft amendment will also define predicate offenses of money laundering as crimes. Predicate offenses are activities that would lead to money laundering, such as corruption, tax dodging, organised crimes and human trafficking. Given the existing Acts not covering the full list of crimes defined as predicate offense by the FATF, the proposed amendment to the Act has incorporated them, according to the officials.

On the other hand, the proposed ‘Proceed of Crime Bill’ has provisioned a separate entity for looking after the property confiscated from individuals allegedly involved in money laundering and terrorist financing activities. As the country has no separate law to deal with property earned through money laundering activities, the FATF asked Nepal to formulate the Act.

The office will have the authority to seize, freeze and confiscate illegally-earned property. The proposed entity will be responsible for not only managing seized property suspected of being acquired through money laundering activities, but also the property that is earned as a result of predicate offenses of money laundering such as corruption, organised crime, human trafficking and trafficking of endangered species.

Source: The Kathmandu Post