The APG report has indicated the biggest weakness of Nepal in the enforcement of the laws. “The report has shown deficiencies in taking legal action against big fishes of corruption and other illegal activities,” the official said, adding, “It has also shown weakness in taking action against reporting entities, which are failing to comply with anti-money laundering measures.”
APG presented its initial report to Nepal this month to seek the government's opinion on its assessment of Nepal’s degree of compliance with anti-money laundering standards. “It may take a week or so to send the reply,” the official said. In fact, most of the deficiencies related to the legislation pointed out by the APG are the same that the government itself had admitted. In order to plug the loopholes in the laws, an amendment bill covering various laws was registered in the previous parliament. Even though the erstwhile House of Representatives had endorsed the bill, it failed to send the law to the National Assembly which resulted in vacating the entire process. The government of Nepal has identified 15 laws that need to be amended to make them compatible with the FATF anti-money laundering standards. Some of the major laws that need amendment are the Assets Laundering Prevention Act 2008, Securities Act 2007, Human Trafficking, and Transportation (Control) Act 2008, Confiscation of Criminal Proceeds Act 2014, Land Revenue Act 1978, Tourism Act 1978, Mutual Legal Assistance Act 2014, Organized Crimes Prevention Act 2014, Criminal (Code) Act 2017 and Cooperative Act 2017. The previous government under Prime Minister Sher Bahadur Deuba had even forwarded an ordinance covering amendment proposals on these laws to President Bidya Devi Bhandari, but the latter didn’t authenticate it. The government formed after the November 20, 2022 parliamentary elections has again registered the Some Nepal Acts Amendment Bill to address these deficiencies. “If the new bill is passed, around 80 percent of deficiencies pointed out by the APG with regard to the legislation will be addressed,” said the official. “It will still not address the concerns related to real estate and extraditions.” According to the official, there should be a political consensus on addressing extradition-related issues. A face-to-face interaction is expected in April before the APG prepares its final report. The report will then go to the APG plenary, which will determine whether Nepal will be under the International Cooperation Review Group (ICRG) monitoring of the FATF. “There is still hope for Nepal if the parliament passes the registered bill,” said the official. “There will be room for improvement in the enforcement of laws as well to prevent graylisting.” According to the International Monetary Fund, the consequences of ‘graylist’ is a possible future blacklisting and loss of correspondent banking with many of the world’s major banks. Correspondent banking refers to agreements between banks to provide payment services for each other. After being on the ‘graylist’ in 2008, Nepal was close to being placed on the blacklist in 2012. This forced the country to introduce new laws, regulations, procedures, and a dedicated investigation unit, which helped Nepal to be delisted from the FATF ‘graylist’ in 2014.
