Govt agencies lag behind private firms in reporting suspicious transactions

KATHMANDU, JAN 08 -

The private sector has been found more enthusiastic about reporting suspicious financial transactions to the central bank’s Financial Information Unit (FIU) compared to government agencies.

The Company Registrar’s Office (CRO) is the only government agency complying with the rule that says suspicious transactions should be reported regularly to FIU. Land revenue offices (LROs) started sending information about doubtful financial dealings and transactions beyond the limit only a few months ago.

“Fifty-three out of 83 LROs, including all from the valley, are reporting regularly in recent times,” said FIU chief Dharma Raj Sapkota. “The government agencies should have set an example for the private sector by complying with set rules, but this has not happened.”

Private sector entities such as banks and financial institutions (BFI), stockbrokers and insurance agents are regularly reporting to FIU about suspicious as well as over-the-limit transactions. Cooperatives and remittance companies have also started to do so.

As per the FIU directive based on the Anti-Money Laundering Act, apart from CRO and LROs, other 10 government agencies and offices under them are required to report to FIU on a regular basis. The government authorities are the Department of Customs, Inland Revenue Department, Department of Transport Management, Department of Commerce and Department of Industries.

The Department of Education, Department of Immigration, Postal Service Department and Metropolitan cities, Sub-Metropolitan cities and municipalities are other government authorities that are required to report to FIU.  “The Department of Industries sent some information initially, but stopped since last year,” said Sapkota. “No other offices have bothered to report to us.”

According to Sapkota, FIU sent requests four times to the Department of Customs through the Finance Ministry to report regularly about undervaluation and smuggling, but to no avail. “Other offices too are not responding to our requests,” said Sapkota. 

As per the FIU directive, customs offices are required to submit information about undervaluation, cross-border smuggling of goods and non-compliance of revenue provisions, among others.

However, Madhusudan Pokharel, Deputy Director General at the Department of Customs, said sending the most of the sought information will be meaningless. “As there are thousands of cases of under-invoicing and smuggling on a daily basis, FIU would not be able to classify them properly,” he said, stressing the need for holding discussions on specific information that are to be sent to FIU.

However, FIU has already issued directives to the authorities, mentioning the required information as per the international practices. As per the directives, Inland Revenue offices will have to submit information about tax evasion, non-payment of tax, non-credible tax, among others.

However, Tankamani Sharma, Director General of Inland Revenue Department (IRD), said he was not sure whether they could furnish the sought information as per the existing laws. “Some information should be kept secret even from the finance minister,” he said, adding that he is ready to discuss about what type of information IRD should provide.

From the private sector, casinos, lawyers, auditors and high-value metal and stone traders have been found defiant to report to FIU. “About two dozen money changers have, however, reported to us, saying they didn’t witness over-the-limit transactions,” said Sapkota.

BFIs and money changers are required to report about transactions over Rs 1 million.

Source: Kantipur