Nepal buys time to pass three pending bills
KATHMANDU, FEB 18:
Due to international lobbying, Nepal has escaped blacklisting by the Financial Action Task Force (FATF) — the global anti-money laundering watchdog — but only for a short time till the next plenary.
FATF plenary meeting that concluded today in Paris has however blacklisted 15 other countries. The meeting that started on February 13 decided on Nepal’s fate today, a source at the central bank said, adding that there was a high possibility of Nepal being either downgraded to ‘high-risk zone’ or blacklisted (the public statement) from the current risk zone but international lobbying has saved the country.” “Nepal has sought a two-month extension to pass the three pending bills that are key to fighting money laundering,” the source added.
Prime Minister Dr Baburam Bhattarai had lobbied with Kathmandu-based envoys of FATF member countries that can have a say in the global anti-money laundering watchdog for a time extension for one last time.
But Nepal has to fulfill its commitment and pass the three pending bills — Mutual Legal Assistance Bill, Extradition Bill and Bill Against Organised Crime — that are among the major commitments to FATF in fighting the flow of dirty money till the next face-to-face meeting — in two months — that will forward the proposal to the plenary that will be held in June, on Nepal’s final decision. “If the country is not able to pass the bills, it will certainly be blacklisted in the June meeting,” the source said, adding that nothing can save the country then.
Due to the UCPN-Maoist, the country has been failing to fulfill the international commitment, despite repeated pressure and time extension.
However, the UCPN-Maoist-led government tabled the bills in the House on February 13 and was supposed to start discussions today, despite pressure from its own lawmakers who fear it could be used against them, but the discussion could not take place.
Prime Minister Dr Bhattarai today morning called speaker Subash Chandra Nembang and requested him not to start discussions on the bills today, due to the internal rift within UCPN-Maoist. Had the government and opposition started discussions today, we were set to obstruct the House, according to UCPN-Maoist leader CP Gajurel, who is close to vice chairman of UCPN-Maoist Mohan Baidhya. “The party is against the bills and wants the government to take it back from the House.”
However, the main opposition Nepali Congress, has asked the government to amend the Extradition Bill as the government has removed six key offences related to organised crime from the bill. The NC is but for the passing of the bills that are vital to check the flow of dirty money and create an investment friendly environment.
The government’s failure in fulfilling its international commitment in fighting the flow of dirty money is going to cost the country dearly apart from the financial sector that is going to feel the heat the most and the flow of foreign investment.
Similarly, donors will also include more stringent conditions for aid and grants once the country is blacklisted. The financial sector will be hit hard as it will not have any international transactions, in case of failure in approving the bills. The country will lose its international market as the cost of exports will rise making Nepal’s exports expensive.
Earlier, Nepal had committed to FATF to approve these bills coupled with other reforms by December 2011, but the country — passing through a transition phase — has not been able to keep its promise.
Political commitment necessary
In February 2010, Nepal made a high-level political commitment to work with FATF and APG to address its strategic AML/CFT deficiencies. The FATF has determined that certain strategic AML/CFT deficiencies remain. Nepal should continue to work on implementing its action plan to address these deficiencies, by adequately criminalising money laundering and terrorist financing under recommendation 1 and special recommendation II; establishing and implementing adequate procedures to identify and freeze terrorist assets under special recommendation III; implementing adequate procedures for the confiscation of funds related to money laundering under recommendation 3; enacting and implementing appropriate mutual legal assistance legislation under recommendation 36; ensuring a fully operational and effectively functioning Financial Intelligence Unit under recommendation 26 and establishing adequate STR reporting obligations for money laundering and FT under recommendation 13 and special recommendation IV. The FATF encourages Nepal to address its remaining deficiencies and continue the process of implementing its action plan.
Source: THT
