The unending political uncertainty could finally tie a noose around the country's financial neck<br><STRONG>SANJAYA DHAKAL</STRONG>

Feb. 7, 2011, 5:45 p.m. Published in Magazine Issue: Vol.:04 No.-16 Feb. 04, 2011 (Magh 21,2067)<BR>

Last week in Canberra, Australia, the visiting delegation of Nepali officials were red-faced.

Their trip to the regional review of the Financial Action Task Force (FATF) down under was marked by the not-so-subtle thrashing they were subjected to for Nepal’s failure in updating laws to deal with money laundering and checking financing of terror.

The FATF – an inter-governmental policy making body comprised of 36 member countries including all the important bilateral donors - could put Nepal in ‘negative list’ if it does not formulate half a dozen laws in few months.

The FATF has written a number of letters to Finance Minister in the last one year reminding Nepal to update its laws.

Nepal now has only five to six months to approve those laws.

“The parliament has to pass few acts and ratify a couple of international conventions within few months. Otherwise, the FATF can take serious action against us,” said Dharma Sapkota, chief of the Financial Intelligence Unit (FIU) at the Nepal Rastra Bank (NRB).

The central bank is the lead authority responsible for checking money laundering.

As per the FATF’s recommendations, Nepal will need to amend one act, ratify three international conventions and formulate three acts (see box) within July.

The NRB officials say they have initiated the process to carry out the recommendations. The amendment act and two bills along with three conventions have been submitted to the parliament for consideration. One bill is being formulated.

But the main obstacle is the political instability, which has almost crippled the parliament for the last seven months.

If the House is unable to act on FATF recommendations, the country could be black-listed globally.

And its consequence could be serious – very serious.

“The foreign banks may dishonor the Letter of Credit issued by Nepali banks. The donor countries may stop budgetary support or lay down stringent preconditions,” warns Sapkota.

Even more serious will be the effect on Nepal’s image abroad. It may earn the ill-repute of being a country without laws to deal with money laundering.

“Nepali nationals visiting abroad may be subjected to strict vigilance from custom and immigration authorities,” he added.

But NRB officials believe that such an unfortunate situation will not arise.

“We can address all the concerns once the parliament functions smoothly,” said NRB spokesperson Bhaskar Mani Gyawali.

And that is what is most uncertain. The parliamentarians will be busy in choosing prime minister and writing constitution in the coming several months. They can easily overlook the dark clouds hovering over the country’s financial system. One can only shudder at the likely consequences of such an overlook.
Please type your text here.
Please type your text here.

More on Economy

The Latest

Latest Magazine

VOL 12 No.17, April 19-May 2 2019 (Baisakh.06, 2076) Online Register Number: DOI 584/074-75

VOL 12 No.16,March 29-April 18, 2019 (Chaitra. 15, 2075) Online Register Number: DOI 584/074-75

VOL 12 No.15, March 15, 2019 (Chaitra. 01 2075) Online Register Number: DOI 584/074-75

VOL 12 No.14, March 01, 2019 (Falgun. 17 2075) Online Register Number: DOI 584/074-75