सम्पत्ति शुद्धीकरण निवारणसम्बन्धी कानून परिपालनामा चुकेपछि
The fourth TAG_OPEN_div_62 plenary meeting of the FATF concluded on Friday concluded that although Nepal is making efforts for reforms, it is still insufficient and further reforms are needed.
In February TAG_OPEN_div_60 2025, Nepal made high-level political commitments to the FATF and the Asia Pacific Group (APG) to strengthen the effectiveness of its anti-money laundering mechanism. Although some steps have been taken to improve it, Nepal needs to initiate efforts for strategic reform and implement it by making a clear action plan.
The FATF also said that there is a need to have a clear understanding of the risks of money laundering and terrorist investments.TAG_OPEN_div_58 The committee also suggested adopting measures for reforms by carrying out risk-based inspection of sectors such as commercial banks, cooperatives, casinos, jewelry shops and real estate, identify and prevent illegal transactions including hundi and enhance capacity of bodies dealing with money laundering and make investigation and prosecution process efficient.
Nepal was on the FATF’s ‘grey list’ in February last year for failing to comply with the anti-money laundering law.TAG_OPEN_div_56 The FATF had taken this decision because of the lack of structural and practical reforms despite significant progress in the formulation of laws related to anti-money laundering. It also pointed out that Nepal’s investigation and prosecution on anti-money laundering cases was very weak.
This is the second time Nepal has been placed in the FATF’s grey list.TAG_OPEN_div_54 Earlier, Nepal was excluded from this list in 2014. At that time, the direct oversight of the FATF was removed after the roadmap for regulatory reform was prepared and implemented.
The Asia TAG_OPEN_div_52 Pacific Group on Money Laundering (APG) had submitted a report to the FATF about three years ago on ‘Mutual Evaluation’ on Prevention of Money Laundering and Terrorist Financing in Nepal.
The annual plenary meeting of the APG held in Vancouver, Canada from July 9 to July 14, 2023 approved Nepal’s mutual evaluation and accordingly, the FATF in October 2023 gave Nepal a one-year observation period.TAG_OPEN_div_50 It identified 40 areas of improvement. During the monitoring period, it was believed that Nepal would implement the work suggested by the FATF and prevent it from going to the potential grey list. But Nepal was finally included in the list after failing to make significant improvements even during the one-year monitoring period.
Among the issues pointed out by the FATF were that Nepal was at high risk of money laundering due to its failure to come under the ambit of non-financial sector regulation, Nepal has not been able to track the financial investment in terrorist activities, Nepal has been seen weak in investigation and investigation related to money laundering despite high risk and failure to implement it despite the scope of legal reform TAG_OPEN_div_48 ।
Likewise, Nepal was advised to pay attention to high-level commitments, mobilization of adequate resources, and inter-agency coordination for legal reform and institutional capacity building to combat money laundering.TAG_OPEN_div_46 Although there was some progress in the implementation of these suggestions, Nepal could not avoid being included in the list.
The APG report states that Nepal has not been able to identify the financing of terrorist activities through activities linked to political activities.TAG_OPEN_div_42 The assessment also concluded that non-financial businesses and professions could not be brought under the ambit of regulation.
Although Nepal is at high risk in money laundering cases, its investigation, investigation and prosecution are very weak.TAG_OPEN_div_40 Similarly, Nepal’s weakness was the failure to implement the laws related to anti-money laundering at the grassroots level.
Nepal Rastra Bank (NRB) is the regulator of financial institutions in Nepal.TAG_OPEN_div_38 However, there is no separate regulatory body for non-financial professions and businesses. The APG had also challenged the investment of politically exposed persons and beneficial ownership in banks and financial institutions. On the other hand, the tools associated with AML CFT are underused in small financial institutions and these systems are not based on modern technology.
Experts say that if Nepal is on the grey list of money laundering, it will have a serious impact on the country’s financial system.TAG_OPEN_div_36 Being in the grey list sends a message that financial crimes are on the rise in the country, which undermines international confidence in Nepal. As a result, the relationship with the international banking system will deteriorate, obstructing foreign trade and complicating the transaction process.
TAG_OPEN_div_34 On the other hand, the remittance system is affected by the increase in hundi transactions. There is also a possibility of a decline in foreign aid and foreign direct investment. This has a negative impact on the overall economy. Weakening of the financial credit can put the property of Nepali citizens and the government at risk. This accelerates capital migration. Ultimately, the size of the informal economy expands and the effectiveness of the country’s fiscal and monetary policies decreases. As a result, economic stability weakens and hampers the country’s development in the long run.
The fourth TAG_OPEN_div_32 plenary meeting of the FATF reviewed Algeria, Angola, Bulgaria, Burkina Faso, Cameroon, Côte d’Ivoire, Democratic Republic of Congo, Kenya, Laos (PDR), Monaco, Mozambique, Namibia, Nigeria, South Africa, South Sudan, Syria, Venezuela and Vietnam. Meanwhile, Bolivia, Haiti, Lebanon, the Virgin Islands and Yemen have delayed reporting their progress, the FATF said. Burkina Faso, Mozambique, Nigeria and South Africa were removed from the list.
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