September 1: Stakeholders have expressed concern that Nepal might fall in the grey area in terms of anti-money laundering efforts. They argue that the country is likely to fall in the grey area during next year’s evaluation by international observers because of the failure of the government to amend and implement the laws needed for anti-money laundering drive.

Speaking at a meeting of the Finance Committee of the House of Representatives on the topic of anti-money laundering efforts in the international level and Nepal’s stance, Governor of Nepal Rastra Bank Maha Prasad Adhikari on Tuesday told the lawmakers that the legislature parliament endorses laws but the implementation part is weak in Nepal.

“The parliament passes necessary laws but we are weak in implementing the laws,” said Adhikari, adding, “The evaluation team can make an on-site visit and learn about the laws and their implementation. Therefore, we need to focus on this issue.”

The Financial Action Task Force (FATF) is the international body responsible to oversee activities related to money laundering and financing terrorism. The Asia Pacific Group on Money Laundering under the FATF will monitor the anti-money laundering efforts of Nepal next year. It was supposed to evaluate Nepal’s position in 2020 but the schedule was postponed due to the Covid-19 pandemic upon Nepal’s request.

Governor Adhikari warned that Nepal might fall in the grey area as the parliament has passed 15 acts related to anti-money laundering effort but the implementation of those laws is weak.

When Nepal was listed in the grey area in 2010, the country faced problems in opening bank accounts in American banks. Adhikari says that it will be difficult for the country to deal with international transactions if it falls in the grey area once again.

After it was listed in the grey area in 2010, Nepal pledged to curb money laundering activities and also promised to amend related laws. Following its commitment, the international body removed Nepal from the grey list in 2014. However, Nepal has not been able to formulate laws as per its commitment.

Law Secretary at the Prime Minister’s Office Dhanraj Gyawali admits that the country has not been able to amend laws as per the instructions of FATF. Nepal needs to amend 15 different laws related to money laundering in the next one month if it is to avoid falling in the grey area.

Gyawali said that the prime minister has been requested to take initiatives to amend those laws as soon as possible.

Secretary at the Ministry of Law Udaya Raj Sapkota said that the country needs to move on to plastic economy from cash economy in order to curb money laundering.

Corruption, tax evasion, financial crime and hundi business pose high risk to the government’s efforts in curbing money laundering, says Dirgha Bahadur Rawal, chief of the Financial Information Unit of the ministry.