July 6: Nepal is in high risk of being listed in the gray list of countries involved in money laundering due to the delay in formulating strong anti-money laundering laws amid political instability.

Although the government has started the work of amending the law, it has not been implemented for a long time. The delay is due to political instability.

The Asia Pacific Group (APG) warned that Nepal will be subject to international monitoring if a strong anti-money laundering law is not enacted. The APG made its intentions clear in a preliminary assessment report submitted to the Office of the Prime Minister and Council of Ministers in early February.

The political leadership did not show much interest in making a strict law on money laundering. The government had registered a bill in the House of Representatives on February 10 to amend more than a dozen laws through the amendment of Some Nepal Acts to make a strong law related to money laundering through fast track. So far, the bill has not been passed by the parliament and is yet to become a law.

A strong law would not necessarily have avoided Nepal being under international scrutiny, but it would have sent a message to the international world that the government is serious about preventing illegal money from becoming legal.

Due to the lack of strong laws, Nepal is likely to fall in the gray list of Financial Action Task Force (FATF) and APG. A high-level government team is also lobbying to avoid the risk. For that, a jumbo team is going to discuss the matter with the evaluators of Financial Action Tax Force (FATF) in Canada.

According to high-level sources, a team of around 30 officials will go to Canada under the leadership of Nepal Rastra Bank’s Governor Maha Prasad Adhikari. The team will include Prime Minister's Office Secretary Udayraj Sapkota, Law Secretary Dhanraj Gyawali along with the central bank's Executive Director Dev Kumar Dhakal and Financial Information Unit's Dirgha Rawal.

The team will also have representatives from the Prime Minister's Office, Ministry of Foreign Affairs and Ministry of Finance. Likewise, Deputy Attorney General as well as representatives from the Central Investigation Department, Asset Laundering Department, Judgment Implementation Unit, Securities Board of Nepal, Nepal Insurance Authority will also be included in the team.

Employees of the Ministry of Foreign Affairs will also be in the team. The discussion will be held in Canada from July 9 to 14. It has been learnt that the team is preparing to fly to Canada next Thursday.

Nepal will land in the "grey list" in September if the government officials do not come up with a strong response. If it falls in the "grey list", it will affect the country’s foreign trade, credit and investment.

FATF has accused Nepal that the legal provision of the Extradition Act is not sufficient, it has not worked on the law to control organized crime, it has not paid attention to the provisions in UN’s Convention against Corruption, Financial Crimes and Terrorist Activities.

Nepal faces an uphill battle to satisfy the board of FATF about the progress and improvements made so far.

Currently, 21 countries from Syria to the UAE are included in the gray list. Most of the countries are from Africa and the Gulf region.

If the countries in the gray list do not make any improvement, they will eventually be blacklisted. Since Nepal has not made a strong law, it will be very difficult for the Nepali authorities to counter those accusations.