August 8: Although the government has directed cooperatives with an annual turnover of more than Rs 100 million to report about money laundering through the goAML software developed by the United Nations Office on Drugs and Crime Control (UNODC) as a response to money laundering and terrorist financing, only a handful of such organisations have been found to be associated with the GoAML software.

Although there are around 3,000 cooperatives with an annual turnover of more than Rs 100 million, only 400 were affiliated to GoAML as of last fiscal year.

As the number of cooperatives affiliated to GoAML has remained discouraging, the Department of Cooperatives under the federal government on Monday issued instructions to the cooperatives to join the GoML system.

The department said that it instructed the cooperatives to join the system following repeated request from the Financial Information Unit of Nepal Rastra Bank to bring the cooperatives under the GoAML system.

The department, for the first time in December 2077, had instructed the cooperatives with a turnover of more than Rs 100 million to connect to the GoAML software of the Financial Information Unit of NRB and report suspicious transactions.

However, the cooperatives have been refusing to give information  about possible money laundering.

Deputy Registrar of the Department of Cooperatives Tolraj Upadhyay said that despite the department's constant warnings, the cooperatives failed to comply with the directive. Upadhyay said that the department would monitor and take action against such cooperatives.

Membership in GoAML is mandatory for banks and financial institutions, insurance companies, share brokers, remittance companies and other companies, but in the case of cooperatives, it is mandatory only for organizations with a turnover of more than Rs 100 million.

According to the anti-money laundering directive, if a person transacts more than Rs 1 million in a day or several times a day, the cooperative organization must send the details of such transaction to the Information Center. Similarly, no matter how much money is transacted, if it is suspicious, there is a provision to report it to the center. Last year, the department took action against more than half a dozen organizations for not following the guidelines.

International organizations related to money laundering have been putting pressure on Nepal to tighten regulations on money laundering saying that there is risk of money laundering in cooperatives. For this reason, the government has also started preparations to create another tier of regulator for monitoring cooperatives.