After a long debate and hiatus, Nepal’s parliament endorsed two UN conventions on Friday 24th June 2011: The International Convention on the Suppression of the Financing of Terrorism, 1999, and the International Convention against Transnational Organized Crime.
The move has saved the country from being blacklisted by Financial Action Task Force (FATF), a global body on anti-money laundering formed by the G-20. The Task Force had set Friday as the deadline by which to ratify the conventions.
Had the parliament failed to ratify the conventions by Friday, the global body could have blacklisted the country. In such a situation, the international community would have stopped carrying out financial transactions with Nepal.
With the endorsement of the two key UN Conventions, Nepal’s status as a country tackling money laundering and terrorism financing has also been upgraded. The parliament ratified the Conventions with a simple majority after Deputy Prime Minister and Finance Minister Bharat Mohan Adhikari tabled the proposals.
Following the endorsements, Nepal now needs to pass some bills, including one on money laundering, to avert the risk of being blacklisted altogether. The FATF has set November 2011 as the deadline for the new legislation.
“The plenary of the Financial Action Task Force (FATF), a global anti-money laundering body formed by G-20, upgraded our status following endorsement of the two UN conventions by parliament,” said Finance Secretary Krishna Hari Banskota. The upgrade means Nepal’s status will be commensurate with that of other countries, easing Nepal’s business dealings and the movement of Nepalis across the globe.
The parliament had ratified a UN convention against corruption in February 2011. The FATF had been expressing dissatisfaction over Nepal’s failure to fulfill its commitments in tackling money laundering and terrorist financing. An FATF plenary in Paris in February 2011 had told Nepal to establish and implement adequate procedures to identify and freeze terrorist assets, implement adequate procedures for the confiscation of funds related to money laundering and enact and implement appropriate mutual legal assistance legislation.
Nepal is yet to endorse a numbers of Acts, including the Act against Organised Crime, Mutual Legal Assistance Act and Extradition Act. In the FATF meeting that started on 21st June, FATF officials had told Nepali representatives to prepare a legal and institutional mechanism to tackle organised crime, terrorist financing and criminalise illegal income.
As the FATF meeting approached nearer, the government had shown more urgency in fulfilling its international commitments. On 14th June 2011, the government had decided to set up a separate department under the finance ministry to look after money laundering.