The refusal of two US banks to handle the accounts of the Nepal government is a serious reminder of the consequences that the country may face if it continues to delay putting in place the laws required by the Financial Action Task Force (FATF), the global anti-money laundering body. At the same time, the action of the US banks puzzles many as it comes despite the fact that Nepal is not yet a ‘high risk’ country and has also expressed serious commitment to passing the laws for fighting money laundering and curbing terrorism.
Even more surprising is the resistance seen in parliament to the passage of such laws, something that we believe doesn’t serve the interests of the country. Here are some points we have to bear in mind.
While all the 49 recommendations of FATF are crucial in themselves, the passage of three bills -- Bill on Extradition, Bill on Mutual Legal Assistance Agreement and Bill on Control of Organized Crime -- remains crucial for satisfying FATF. The proposed Extradition Bill is just a revision of the Extradition Act, which has been in place since the last three decades. It has incorporated a few new provisions as per the requirements of the global body. Likewise, the Bill on Mutual Legal Assistance Agreement contains provisions that allow for investigations and the relevant authority for exchange of documents and information concerning individuals charged with financial crimes.
Since such exchanges already take place in practice through Interpol, we believe the new provisions do not harm any core interests of the country. The third bill, on control of organized crime, is a tool for translating the UN Convention on Control of Organized Crime into action. As Nepal already ratified this convention in June, when the country was on the verge of being blacklisted by FATF, protesting the bill now is meaningless. Furthermore, the first two bills will come into effect only when the country signs the relevant treaties with other countries.
But despite all this, it is unfortunate that some political factions, mainly a section of the UCPN (Maoist), are against the enactment of this kind of legislation. Many of their lawmakers perceive this as being forced upon us. But they should understand that these proposed laws are meant for controlling financial crime and terrorism financing. Given that Nepal is mired in problems like corruption and has a huge informal economy, laws like these – which will control such aberrations - will be of more use to the country than to anyone else.
Transparency in business transactions, legitimate financial transfers, control of illegal earnings and the like will help in the attainment of social justice as well. Conversely, the cost of non-compliance will be too heavy -- both externally and internally. Therefore, we urge political leaders to act sensibly and work in the longer-term interests of the country
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