With the government preparing a five-year national strategy on Anti-Money Laundering and Combating the Financing of Terrorism (AML-CFT), discussions are being held for introducing a provision that Nepali citizens should declare their property to check possible money laundering activities.

A core group formed by the government and led by joint secretary of finance ministry Mahendra Gurung is preparing a national strategy on AML-CFT which is expected to include the aforementioned provision. A source involved in the strategy drafting said the provision has not been included so far, but discussions are underway to include it in the strategy.

It was also a matter of discussion during the group’s meeting with the International Monetary Fund (IMF) delegation that visited Nepal recently. “The IMF is also positive in this regard,” said another source. The IMF is providing technical support to prepare the national strategy.

Given that the introduction of the provision is a sensitive issue, the core group is not in haste to give it a top priority. “Our priority is to prepare other infrastructure on AML-CFT,” said an official involved in the strategy drafting.

The core group is set to bring the draft of the strategy for discussion soon. “We plan to give the final touch to the strategy this year and implement it from the next fiscal year,” said a source.

According to officials, the initial draft has stressed on preparing legal, institutional and operational mechanisms to control money laundering and terrorism financing. The strategy has also proposed other strategies to strengthen the capacity of institutions looking after AML-CFT.

“There is a provision of managing special technology and human resources for the Department of Revenue Investigation (DRI) and Financial Information Unit (FIU) under the Nepal Rastra Bank,” said the source.

The NRB is in process of installing sophisticated information technology systems in FIU. Likewise, the proposed strategy has also emphasised on creating awareness on the matter among politicians and general public.

The strategy also seeks coordination among the bodies responsible for probing money laundering and terrorism financing cases, according to the source.

Nepal has been under international scrutiny for its ‘failure’ to live up to its commitments made to the Financial Action Task Force (FATF), an inter-governmental body on AML-CFT formed by the G-20.

As per the country’s commitment, the Nepali Parliament should have endorsed the Anti-Money Laundering Act-first amendment, UN Anti-Corruption Convention and Anti-Organised Crime Convention by the end of 2010. Likewise, Mutual Legal Assistance Act, Extradition Act and Anti-Organised Crime Act were also required to be passed by the Parliament.

 Recently, International Cooperation Review Group, a sub-committee under the FATF called Nepali officials in Australia to inquire about the progress made in this regard.

The FATF is holding its plenary and working group meetings from Feb. 21-25 in Paris and it is expected to warn Nepal about non-compliance with its commitments, according to officials. However, it will decide on whether to blacklist Nepal in July after its regional partner—Asia Pacific Group on Money laundering (APG)—of which Nepal is also a member, submits Nepal’s progress report to FATF.

The APG is  currently preparing a mutual evaluation report of Nepal. It is expected to make public Nepal’s initial mutual evaluation report in March. This will be a basis for FATF to decide on Nepal in July.

source: Shrestha, Prithvi, Man (2011),"Govt mulls introducing property disclosure provision", The Kathmandu Post, feb 12 2011

photo/graphics: The Kathmandu Post