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FATF sets Nepal at high risk of being put on the greylist

Kathmandu: The Financial Action Task Force (FATF) has put Nepal at risk of being added to the grey list as there have been insufficiencies in the departments of law enforcement and legislation directly connected to the money laundering and terror financing accusations. As per the Kathmandu Post.

Kathmandu: The Financial Action Task Force (FATF) has put Nepal at risk of being added to the grey list as there have been insufficiencies in the departments of law enforcement and legislation directly connected to the money laundering and terror financing accusations. As per the Kathmandu Post.

As per the updates, there have been several areas for improvement to comply with the standards of the Pairs-based controlling bodies. Nepal’s legislation has been struggling to address such deficiencies related to the anti-money laundering and financing of terrorist organizations in which a minimum of 15 loopholes and weak laws have been identified.

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Furthermore, it has been predicted that the status of greylisting could seriously damage Nepal’s economy, which is largely dependent on trade and foreign exchanges, remittances, and imports. 

In addition, there could be more adverse challenges in front of an economically struggling county, such as a lack of foreign trade options, dropped ratings and a continuously shrinking economy, which would be more damaged when it could also be put on the grey list.

 

As per the sources, APG (Asia Pacific Group on Money Laundering) sent a delegation along with a FATF-style regional anti-money laundering group reached Nepal for around two weeks with the motive to assess the country’s approach and response towards money laundering and terror financing.

 

Moreover, as per the APG officials, they would only include the progress report made until December 16th in the evaluation report, which raised the risk for Nepal to be in a very vulnerable position and increased high chances of being put on the grey if not black, list.

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As per the reports, the officials also explained the seriousness of the ‘grey list’, and ‘black list’ accusations as the term ‘Blacklist’ is used for the list of “High-Risk Jurisdictions advised to a Call for Action”, and currently, Iran, North Korea and Myanmar are on the Blacklisted by the FATF. 

On the other hand, the ‘Grey listed’ countries are the jurisdictions with deficient strategies in their system to counter money laundering and terror financing.  

The sources have conveyed that Pakistan is an example of the greylisting where the economy hits the ground. The Tabadlab Private Limited, which is a think tank and advisory services organization, said in a report published in 2021 that the grey listing of Pakistan from the year 2008 to 2019 expectedly resulted in losses worth USD 38 billion in Gross Domestic Product (GDP) with the reduction related to the decreased expenditures consumption, exports along with foreign direct investment.

 

 Towards the end, the sources confirmed that Nepal was added to the grey list of the FATF from 2008 to 2014. Officials also stated that progress was made on the anti-money laundering system, adding modifications to the 2008 Anti-Money Laundering Act.  

In the end, a senior official from the Nepal Rashtra Bank added, “Nepal is at the serious risk of being put on the grey list as there are several leaks in the legislations and law enforcement which is directly connected to the money laundering and terrorist financing”.

 

Tariq Saeed

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