KATHMANDU, May 8: Nepal is set to get negative marks when the regional group of the global anti-money laundering (AML) body reviews the country this week, as it has not made any headway in complying with the conditions set by Financial Action Task Force (FATF) during the last meeting.
The Asia Pacific Group (APG), the regional hand and mind of the FATF that recently called a face-to-face meeting of about a dozen poorly complying countries, has set May 8 as the date for grilling Nepali officials. Based on how the country defends its position, the Group will make recommendations for action to FATF plenary due next month in Rome.
“Unfortunately, except for the new directive on tracking flow of dirty money that Nepal Rastra Bank (NRB) put in place in March, we do not have a single progress to cite and defend our position,” said a member of the high-level AML coordinating committee.
Going by the commitments that Prime Minister Baburam Bhattarai personally made in writing to FATF in February, Nepal is required to enact the three laws related to money laundering at the earliest and also step up actions against financial criminals.
However, as the government and lawmakers busy themselves in the last leg of constitution drafting, they have not yet taken any step to fulfilling those commitment.
The parliament, wherein remains the three crucial bills -- Extradition Bill, Mutual Cooperation Bill and Bill to Control Organized Crime, remains prorogued since over a month. Still worse, the Baidya faction of the UCPN (Maoist) continues to oppose their enactment.
“And the performance of the Department of Anti-Money Laundering - supposed to investigate and control flow of illegal money - has been no better as Ministry of Finance has consistently changed its director general,” said the source.
Given the situation, Nepali team that is scheduled to be led by Law Secretary in the face-to-face meeting has little cases on hand to defend the country.
Nonetheless, it will brief the APG officials on latest progresses made on the political front, like completion of the peace process, formation of new cabinet and political leaders´ commitment to get the constitution in place by May 28, inferring that such developments has created positive environment for enactment of the bills.
“They know Nepal is committed to fight dirty money and terrorism financing and understand why the country has lagged behind so far. We are hopeful the meeting will not be that bad,” said the MoF official.
The situation is not that hopeless also because the country still has more than a month to get the bills enacted,” said a MoF official, referring to the deadline pledged by the FATF in February.
The country had been at risk for about a year of being blacklisted by the FATF - something which could leave severe political and economical ramifications, but escaped the action in February after Bhattarai personally committed in writing to enact three crucial laws soon and step up actions against flow of dirty money.
As the government is calling the parliament´s meeting soon, officials are hopeful it will get the three bills enacted as soon as the country gets the new constitution and the political transition ends.
“Well that´s the last hope for us. If we missed the June deadline this time we will certainly face the wrath of the international community and will be blacklisted,” said the source.
Records show, Nepal has so far fully complied with just 1 of the 49 recommendations laid down by FATF. It has grossly flouted 33 recommendations, while remaining recommendations have only been partially complied.
If the government fails to honor its commitments and the country is downgraded by FATF from present ´grey´ zone, the international community would instantly disregard letters of credit and payments issued by Nepali traders. While that will seriously jeopardize country´s trade and economy, donors too would stop issuing aid and foreign investors would probably be encouraged to pull out their investments.