Public enemies: The anti-money laundering agenda needs to be made the country major agenda
KATHMANDU, MAR 12 -
Money laundering refers to the washing clean of illegal property; washing the dirt off to make black money white. The Financial Action Task Force (FATF), an inter-governmental global anti-money laundering body, has defined it as “the process by which large amounts of illegally obtained money (from drug trafficking, terrorist activity or other serious crimes) is given the appearance of having originated from a legitimate source”.
The nexus between illegally earned money, terrorist activities and the arms trade suddenly came to the fore in the aftermath of the terrorists attack on the twin towers of the World Trade Centre in New York in 2001. The campaign against money laundering was intensified since then.
The government of Nepal formed a five-year strategy to eradicate money laundering on Nov 14, 2011. It has made a work plan on money laundering. The strategy shows that Nepal is moving forward to realise its commitments in this sector. The Special Court has been assigned to look into the cases falling within the ambit of the Anti-Money Laundering Act.
Weak investigation None of the cases filed, or cases in which arrests have been made, have been initiated with the help of intelligence provided by the Department of Money Laundering Investigation and Financial Information Unit (FIU) of Nepal Rastra Bank. The organisational structure of the department has to be strengthened, it should have stronger investigation and inquiry capabilities. There are no deep and extensive studies on the source of property. Hence, the government should focus on addressing the weaknesses of the present organisation.
The investigator not only requires knowledge of the issue but also adequate resources. The structure of the department reveals a dominance of revenue officers who have so far been involved in issues relating to taxes, customs and duties. Given that the people accused of crimes of money laundering may have prior connections with these people, it might impact the investigation. Hence the department should be developed as an independent constitutional body.
The people who work in the revenue department have friendly relations with business people. These relations do not explicitly harm the people but harm the state. Since the people are not directly affected, there are no complaints. Refusing to carry out the tasks ordered by those in power may translate into blockades in terms of career development of the staff. This cannot be denied in the present Nepali context. Only a constitutional provision can empower the staff and office bearers to survive internal or external pressure and nepotism.
Under such circumstances, it is important that this department with more extensive rights than the Commission for Investigation of Abuse of Authority (CIAA) be made independent, neutral, effective and capable.
Recommendations A strong investigation team comprising of experienced, capable, neutral team-mates empowered with modern equipment needs to be set up in the department. There is a need to have a group of technical and judicial experts on electronic transactions, banking and financial systems. The Money Laundering Investigation Department should be somewhat like the Central Investigation Bureau (CIB) cell of the Nepal Police. The department should be alert that the criminals are always ahead of government bodies and the police.
The CIB has submitted 36 cases of illegal operations and excessive property to the department for investigation, but none of them has completed the investigation. The Financial Information Unit of the central bank has referred 499 cases to the department as being suspicious businesses, but the department has only investigated 110 of them. High-level police officers complain that the department is not serious about conducting investigations.
In order to investigate the source of information of money laundering cases, Section 9 of the Anti-Money Laundering Act 2008 has provided for the Financial Information Unit of Nepal Rastra Bank. The act allows the FIU to take information on legal and illegal sources of transactions within the financial bodies of Nepal. They undertake inquiries and if the need be, inform the department.
The Anti-Money Laundering Act has given wide jurisdiction to the department allowing it to enter areas where the CIAA has been denied entry. The controversies concerning constitutional office bearers, judges, army officers, NGO officials and the private sector also fall within the ambit of this act. This act also applies to people who can be impeached under the offence of money laundering.
Since the department’s jurisdiction is very wide, its investigation must be excellent, and the office bearers should also be independent and capable. The department should be beyond the intervention of government bodies, high level officials or politics. A weak organisation cannot live up to the expectation of the law and the constitution of the state. Nepal’s money laundering policy is internationally monitored. The government should ensure that the policy passes the international test.
Constitutional body Since the Money Laundering Investigation Department is under the Ministry of Finance, there is an immense possibility that the prime minister, finance minister, chief secretary, finance secretary or political actors may try to meddle in the work of the department. Since such intervention impact the work of the department negatively, the department should be maintained as an independent constitutional body. Otherwise, it cannot accomplish its stated objectives.
As the department’s jurisdiction is more extensive than the CIAA’s regarding some issues, the government should focus on how to make the Money Laundering Investigation Department more effective. If it is not made a constitutional and independent body, no one can save Nepal from turning into a safe haven for corrupt people. Therefore, a provision for creating a Money Laundering Investigation and Elimination Commission in the form of a constitutional body should be inserted in the new constitution. Nationalising money earned illegally and freeing the country of smuggling and corruption will give life to the agenda of the People’s Movement, hence the anti-money laundering agenda needs to be the country’s major agenda.
(Karki is the chairman of the Special Court.)
Source: Kantipur
