House clears Act that will stop financial crimes

Added At:  2011-05-25 12:21 AM  

Last Updated At: 2011-05-25 12:21 AM

http://www.thehimalayantimes.com/fullNews.php?headline=Nepal+may+escape+blacklisting+&NewsID=289194

KATHMANDU: The Parliament today passed the much-awaited Anti-Money Laundering Act (first amendment), keeping Nepal’s hopes alive that the country would not be blacklisted by the Financial Action Task Force, a global anti-money laundering agency.

“Apart from giving legal teeth to executing agencies, it has paved the way for approval of two other acts — Mutual Legal Assistance Bill and Extradition Bill,” according to officials at the Ministry of Finance. “FATF could also consider our request and not blacklist us as Nepal has fulfilled one of the commitments.”

The government tabled the Act yesterday following clearance from the parliamentary Statute Committee on Friday.

However, Nepal still needs to endorse two other Bills — Mutual Legal Assistance Bill and Extradition Bill — apart from two UN conventions —Convention on Suppression of Financing of Terrorism and Convention against Organised Financial Crime. The regional review meeting of FATF in Macau on May 13 had asked Nepal to submit the progress report by June 21, just ahead of its plenary scheduled for June 23-25.

“The Act — that has formed a coordination committee led by finance secretary — has also defined up to five years jail term and penalty of up to Rs 500,000 for such crime,” according to the Act that has defined money earned through tax evasion, earnings made from arms trade, flouting foreign exchange law, robbery, dacoity, fake documentation, drugs peddling, human trafficking, banking and organised financial crime under money laundering.

The Act has made all the regulatory agencies more responsible and they can, through the Financial Information Unit under the central bank, seek issuance of directives as per which the Revenue Investigation Department will investigate suspected activities.

Earlier Nepal had requested deadline extension to meet the requirements citing country’s transitional phase and FATF had given June 7 deadline — after Nepal failed to meet the first deadline of December 2010 — to fulfil its commitments on Anti-Money Laundering and Terrorist Financing.

Nepal’s failure to meet the deadline could earn Nepal a tag of blacklisted in 170 countries.

Under international laws, though blacklisting carries no formal sanction, it causes intense financial pressure and Nepal may find it difficult to get foreign aid from international organisations like the World Bank and International Monetary Fund. Foreign banks may not trust the letters of credit issued by Nepali banks creating difficulties for Nepali businessmen at the international level. Nepali businessmen may also be subjected to harassment at foreign customs offices, with authorities there not allowing Nepali goods to go through the green channel.