Source disclosure rule unlikely to be relaxed for share traders
KATHMANDU, FEB 13 -
The government may not raise the ceiling of share transactions allowable without disclosing the income source as Nepal faces a risk of being blacklisted by the Financial Action Task Force (FATF), a global anti-money laundering body.
The Securities Board of Nepal (Sebon) had forwarded a proposal to the Ministry of Finance (MoF) a month ago asking it to relax share transactions in a bid to boost the stock market which has been in the doldrums for the last three years.
The government is unwilling to approve Sebon’s plan after the FATF warned of possible blacklisting during the recent review meeting of Nepal’s progress in complying with Anti Money Laundering and Combating Financing on Terrorism (AML/CFT) held in Australia.
“As we are facing a risk of being blacklisted, there is hardly any possibility of endorsing such a proposal that may displease the global anti-money laundering body,” said a senior Finance Ministry official.
The High-level Financial Sector Coordination Committee meeting headed by the finance minister decided to make the central depository system operational and expand the presence of the Nepal Stock Exchange in other parts of the country, but it disregarded Sebon’s proposal.
The stock market has continued to wallow despite a series of measures taken to lift the capital market by the government, its regulator Sebon and the central bank. The Nepse index has remained in the year’s lowest for the last few days consecutively. Stock investors have been insisting that flexibility in the income source disclosure provision would attract investors in the stock market. Investors are required to show their source of income when making investments of more than Rs 1 million.
An FATF plenary is being held in Paris from Monday, and there is a possibility that Nepal’s status might be downgraded if the country’s representatives fail to convince the meeting about the progress made.
Stock investors have been demanding that the income disclosure requirement be scrapped after the government freed land and home buyers from revealing where their money came from.
Meanwhile, there has been some progress in reporting suspicious deals and transactions which are worth more than the limit. Nepal Rastra Bank’s Financial Information Unit (FIU) which has been assigned to obtain such information stated that cooperatives, money changers and money transfer agencies have started reporting specific transactions as required by law.
“After we issued a circular to cooperatives with transactions of more than Rs 10 million, 151 of them have reported in,” said Dharma Raj Sapkota, chief of the FIU. According to him, about 90 money changers and a number of remittance companies are also submitting info to the FIU.
However, Sapkota complained that mostly government agencies have not been complying with the reporting requirement. According to the FIU, the Company Registrar’s Office is the only government office reporting regularly while the Land Revenue Offices have also started reporting more frequently.
Source: Kantipur
