House scrambles to revise anti-money laundering laws as grey-listing loomsUrgent need to address concerns pointed out by Asia Pacific Group on Money Laundering.
A parliamentary committee has endorsed an anti-money laundering bill, in a baby step to amending the existing legislations to make them compatible with international standards.
The Law, Justice and Human Rights Committee of the House of Representatives on Wednesday endorsed the Amendments to Some Laws relating to the Anti Money Laundering and Business Promotion Bill with a few changes.
The development comes at a critical moment for the country as there is an urgent need to introduce legislations to address many deficiencies pointed out by the recent Mutual Evaluation Report about Nepal prepared by the Asia Pacific Group on Money Laundering (APG) regarding the country’s compliance to the standards regarding anti money laundering and combating the financing of terrorism (AML/CFT) policy.
By pointing out many deficiencies of Nepal, the report recommended legislative changes as a major ‘to do list’ to address the shortcomings.
“Nepal should pass the Amendments to Some Laws relating to Anti Money Laundering and Business Promotion Bill. When passed, Nepal should expedite implementation and significantly enhance the capacity of impacted competent authorities to undertake their new and/or modified anti money laundering and combating terrorist functions,” the report has advised.
The bill endorsed by the parliamentary committee has sought to amend 19 different laws to make them compatible with international standards on AML/CFT.
“While passing the bill, we have removed the proposed cap on deposits to be kept in the cooperatives,” said Lawmaker Bimala Subedi, chairperson of the house committee. Earlier, the government had proposed to cap the deposit amount allowed in cooperatives at Rs2.5 million.
“We removed the cap because it is a matter of individual’s choice how much money one wants to deposit in any financial institution,” said Subedi. As the cooperatives are poorly regulated in the country, the cap was proposed to minimise risks to the depositors.
Likewise, the committee also included a provision in the bill to bar setting up new casinos within five kilometres of the international border. As per the existing law, such distance has been maintained at three kilometres.
“The move aims to control possible cross border crime originating from casinos,” Subedi said. The amendment bill has proposed many other amendments to several laws to address deficiencies in AML/CFT.
Even after endorsement of the bill from the house committee, the bill needs to be passed by both houses of parliament. The bill becomes law after its authentication by the President.
The APG has described the delay in passing the legislation by Nepal's parliament as a lack of high-level political commitment.
“Amendments to anti-money laundering laws, actions by enforcement agencies to implement the amended laws, and action against big offenders by the state are necessary to avoid Nepal’s greylisting by the Financial Action Task Force (FATF) over the next one year,” said a government official having deep knowledge on money laundering.
The FATF is the global anti-money laundering agency which sets standards regarding AML/CFT. “Though recent government action against gold smuggling, fake Bhutanese refugee scam and Lalita Niwas case are positive, international agencies also evaluate what action was taken with regards to the ill-gotten properties of the offenders,” the said the government official.
FATF’s next plenary is likely to be held in late October , which the Nepali officials say would discuss a damning report about Nepal’s deficiencies pointed out by the APG report.
The APG report has pointed out the lack of adequate and proper legislations and enforcement of the laws.
For example, there is no explicit provision in the Money Laundering Prevention Act or other legislation requiring the government of Nepal to identify and assess risks arising from new technologies, according to the APG report.
Nepal does not explicitly criminalise the financing of travel of individuals who travel to a state other than their states of residence or nationality for the purpose of the perpetration, planning, or preparation of, or participation in, terrorist acts or the providing or receiving of terrorist training, the report says.
The APG has also pointed out many shortcomings in targeted financial sanctions against those involved in terrorist activities.