Pending Bills on Anti-Money Laundering: Nepal asked to enact laws by June to avoid blacklisting

NEW DELHI, MAY 09 -

Nepal has been asked to enact necessary laws against money laundering within June to avoid being blacklisted by the Financial Action Task Force (FATF), a global

anti-money laundering body.

Nepal received such a warning at the regional review group meeting of the FATF’s International Cooperation Review Group (ICRG) held in New Delhi on Tuesday.

Nepal has not been able to endorse three crucial bills on anti-money laundering—Bill on Controlling Organised Crime, Bill on Extradition and Bill on Mutual Legal Assistance—due to strong objection from lawmakers of the ruling Maoist party. “We should bring these laws before June this year. Or else, we will be blacklisted,” said Trilochan Uprety, secretary at the Prime Minister’s office, after the meeting.

The FATF’s preliminary meeting is scheduled to be held in Italy in the second week of June, and Nepal has to bring these laws before the meeting to avert blacklisting. Nepal may have to endorse the bills through ordinance to meet the deadline as political parties may more focus on other issues after May 27, the deadline for constitution promulgation.

At Tuesday’s meeting, Nepal sought leniency from the FATF, citing the country’s critical political situation. “We explained the group that Nepal is now focused on the historical task of constitution writing,” said Uprety. “We told them that the country will focus on economic issues and the laws related to anti-money laundering after May 2.”

If blacklisted, Nepal’s financial system will lose its credibility as the FATF has warned its member countries to take stringent measures against countries failing to address their anti-money laundering deficiencies. Among some consequences include non-acceptance of the letters of credit by foreign banks. Officials say even if foreign banks hold transactions with Nepali banks, the business will be costly and Nepal will have to struggle to get foreign aid and investment.

When asked whether the group was convinced with Nepal’s explanation, Uprety said until Nepal endorses the three bills, the risk of being blacklisted continues to remain elevated.

Nepal had to make immense diplomatic efforts to save it from being blacklisted in the FATF’s February plenary, with Prime Minister Baburam Bhattarai himself intervening in the issue.

Then, Bhattarai had asked some of foreign diplomats to help put on hold the FATF’s plan to blacklist Nepal after a section of the UCPN (Maoist) party came heavily against the endorsement of the three bills.

During Tuesday’s meeting, ICRG officials from the United States, Australia, India, Macau and Hong Kong inquired about Nepal on a range of issues related to the laws on anti-money laundering. According to Uprety, issues related to strengthening of the Financial Institution Unit (FIU) also featured during the meeting.

Source: The Kathmandu Post