Failed to amend the law to prevent financial crime

KATHMANDU: Due to the failure to amend the laws necessary to prevent financial crimes, the risk of Nepal being blacklisted by the international organization Financial Action Task Force (FATF) has increased.

The bill registered in the House of Representatives on August 17 by outgoing Law Minister Gobind Sharma Koirala to amend the provisions of 16 Acts related to asset laundering has been stopped after reaching the National Assembly. The bill was unanimously approved by the House of Representatives and submitted to the National Assembly on August 29.

Since the bill was not passed before the dissolution of the House of Representatives, the entire process of the bill came to naught. “In the National Assembly, the bill was submitted to be passed even if the rules were suspended, but the bill could not proceed due to the refusal of Speaker Ganesh Timalsina,” said Koirala.

Outgoing minister Koirala said that if the bill is not passed within the deadline, there is a danger that the country may be blacklisted by the international organization Financial Action Task Force (FATF). “In order to prevent financial crimes, we needed to amend the 16 Acts related to asset laundering,” Minister Koirala said before leaving the Singha Darbar after the end of his 6-month term. , the country will have to suffer the terrible consequences of this because the only way to prevent it from being blacklisted is over.’

According to the 2016 index of Basel Committee, an international body that regulates financial institutions, Nepal is the country with the highest risk of money laundering in South Asia after Pakistan. FATF has been putting Pakistan on the “grey list” for not enacting laws to prevent money laundering.

Even after being on the ‘grey list’, if the index does not improve, that country is kept on the black list. So far, only North Korea and Iran are on the blacklist. If there is no improvement in the index, Pakistan, Syria, Burma, Jordan and other 23 countries which are currently on the gray list will soon be included in this list.

In 2010, Nepal avoided being on the gray list by making some institutional reforms. In the gray list, the World Bank, International Monetary Fund, Asian Development Bank and others will stop loans and financial assistance, foreign subsidies and aid will be stopped. Even after that, if there is no improvement, the country will be blacklisted and become a victim of global embargo.

“Our ATM cards are banned even before we go to the blacklist, we are isolated from the international community,” says Minister Sharma, “After three weeks, FATF is starting a study on Nepal’s index, we failed to make a law, now a big crisis may occur because we are going to be blacklisted.”

Outgoing Minister Koirala said that in order to save the country from international infamy, he consulted with the parties and got the bill passed by the House of Representatives in a short period of time, but could not do so due to middlemen dominating the National Assembly. “It didn’t happen as I said, I couldn’t bring a bill from the National Assembly that was prepared even by the opposition,” he said.

In addition to the Asset Laundering Act, 2064, the Bill includes the Vessel Registration Act, 2027, the Shipping Act, 2034, the Tourism Act, 2034, the Building Act, 2055, the Damasahi Act, 2063, the Securities Act, 2063, the Human Trafficking and Trafficking Act, 2064, the Mutual Legal Assistance Act, 2070, and the Prevention of Organized Crime Act. 2070, Election Commission Act 2073, House of Representatives Member Election Act 2074, Provincial Assembly Member Election Act 2074, Electronic Regulation Commission Act 2074, Criminal Code Act 2074, Cooperative Act 2074 and Foreign Investment and Technology Transfer Act 2075 were amended.

In the bill, especially, terrorism will be criminalized, financial accounting should be done every year for real estate transactions and casinos, details should be disclosed when buying shares with other people’s investment, permission must be taken for real estate transactions, legal assistance of one country to another country in the investigation of money laundering at the international level. There are other subjects to be taken.

According to the Ministry of Law, the officials of FATF have been suggesting to Nepal that laws should be made to prevent the laundering of assets by investing in cooperatives and shares, running casinos, dealing in real estate in Nepal. “A whole group of us has been working round the clock since 2010 in the process of study, research and law-making,” says Law Secretary Udayraj Sapkota, “As a result, an amendment to the law was drafted but unfortunately it could not be passed.”

Sources associated with the bill claim that the bill could not be passed due to the great pressure of those who have been laundering black money by investing in real estate, shares, casinos and cooperatives. National Assembly Speaker Timilsana, who refused to suspend the bill, responded that it could not be passed because the Ministry of Law submitted the bill in a short time.

“If there is a bill that will be so difficult for the country if it is not passed, why did the government wait for so long, bringing the bill in the National Assembly three days before the dissolution of the House of Representatives?”

He also said that the law minister did not come to meet him even once because he had to suspend the rules to pass the bill. Outgoing minister Koirala said that even if the bill could not be passed by the National Assembly, the bill should be brought through an ordinance to prevent the country from falling into the bad list.

“I have met the Prime Minister and the President and requested this situation and I have suggested to avert the disaster by bringing it even if it is an ordinance,” he said, “otherwise we will definitely face a big problem.”