In response to concerns regarding Nepal’s compliance with international anti-money laundering (AML) and combating the financing of terrorism (CFT) standards, the Law, Justice and Human Rights Committee of the House of Representatives has endorsed the Amendments to Some Laws relating to the Anti Money Laundering and Business Promotion Bill. This move is a vital step towards aligning existing legislation with global AML/CFT standards.
Key Points:
- Critical Reforms: The decision to endorse the bill is prompted by the urgent need to address the deficiencies identified in Nepal’s compliance with international standards, as highlighted in the recent Mutual Evaluation Report by the Asia Pacific Group on Money Laundering (APG). The report emphasized the necessity of legislative changes to enhance AML/CFT policies in Nepal.
- Recommendations from the APG: The APG report recommended that Nepal pass the Amendments to Some Laws relating to Anti Money Laundering and Business Promotion Bill. It also stressed the importance of swift implementation and bolstering the capabilities of relevant authorities to effectively carry out their AML and CFT functions.
- Bill Scope: The endorsed bill proposes amendments to 19 different laws to ensure they align with international AML/CFT standards. Notably, the proposed cap on deposits in cooperatives, initially set at Rs2.5 million, has been removed during the bill’s passage through the parliamentary committee.
- Enhancing Control: The bill introduces a provision to restrict the establishment of new casinos within five kilometers of international borders, compared to the previous distance of three kilometers. This adjustment is aimed at curbing potential cross-border criminal activities originating from casinos.
- Legislative Process: While the bill has gained approval from the parliamentary committee, it still needs to pass through both houses of parliament before becoming law. The final step involves authentication by the President.
- Greylisting Concerns: The delay in passing the necessary legislation has raised concerns about Nepal’s potential greylisting by the Financial Action Task Force (FATF), a global anti-money laundering agency. To avoid this outcome, amendments to anti-money laundering laws, enforcement actions, and measures against major offenders are essential.
- International Evaluation: Nepal’s recent actions against gold smuggling, fraudulent Bhutanese refugee schemes, and the Lalita Niwas case have been noted positively. However, international agencies also consider actions taken concerning ill-gotten assets.
- FATF Plenary Meeting: The upcoming FATF plenary meeting, expected in late October, is likely to address the concerns outlined in the APG report. The APG report highlighted issues such as the absence of explicit provisions related to identifying and assessing risks arising from new technologies, as well as the lack of criminalization of certain activities.
Nepal’s commitment to addressing these deficiencies and aligning with international AML/CFT standards is crucial to ensure its continued compliance and avoid potential greylisting.
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