Financial transactions of politically exposed persons (PEPs)—who may represent a higher risk of corruption by virtue of the positions they hold—may face greater scrutiny, with the government doing homework to amend the Anti-Money Laundering Act to include such a provision.
The proposed second amendment to the Act is in line with the revised recommendations put forth by the Financial Action Task Force (FATF), a global anti-money laundering body. The FATF has sought an enhanced due diligence of both foreign and domestic PEPs, PEPs from international organisations and their family and associates.
The previous recommendation had only talked about foreign PEPs. “We will incorporate the provisions that are compatible with the FATF recommendations in the amendment,” said Law Ministry Secretary Bhes Raj Sharma.
However, endorsing a bill that scrutinises the political class will be a herculean task, as the final decision makers are the politicians. “We have to make the law compatible with international standards. But politicians are the ultimate decision makers,” said Sharma, who is also a member of the Anti-Money Laundering National Coordination Committee.
A technical team within the law ministry is currently drafting the amendment. Initial recommendations put forth by the team on the amendment were discussed in the meeting of the coordination committee on Sunday.
As per the new FATF recommendation, tax crimes such as smuggling should also be brought under the anti-money laundering regime. The FATF has given Nepal until June 2013 to amend the Act. The FATF has said in its report despite having the Act in place, Nepal has failed to criminalise money laundering and terrorist financing.
Finance Secretary Shanta Raj Subedi said although preparations are under way, the components to be inclu-ded in the Act are yet to be determined.
Another official participating in the meeting said discussions were held on incorporating enhanced measures in high-risk areas and measures to be taken to maintain more transparency on the ownership and control of legal persons and legal arrangement or about the parties to wire transfer in the amendment.
Dharma Raj Sapokota, chief at the Financial Information Unit (FIU) of the central bank and secretary of coordination committee, said based on FIU’s records, real estate, shares and foreign exchange transactions are riskier areas where vigilance should be upped.
During Sunday’s meeting, officials also discussed how to get the ordinance on Organised Crime endorsed, preparation of a separate Act to freeze and confiscate property of those involved in money laundering and terrorist financing and upgrading automation of FIU.
Sapkota said the law secretary has been asked to arrange an appointment with the Prime Minister to discuss the ordinance on Organised Crime.
Posted on: 2012-12-31 08:49