Kathmandu. The government, which has publicly pledged to remove Nepal from the Gross List of The Financial Action Task Force (FATF) within a year, has taken a U-turn from this target.
The government has made a U-turn within a few days with the ‘Directive on Prevention of Money Laundering and Terrorist Financing, 2082’, issued on May 15 with the aim of making land-related transactions transparent.
The government, in its budget for the fiscal year 2082/83 BS, had said that Nepal would be removed from the grey list of money laundering risks ahead of schedule. Point 24 of the budget states, “It has become an important agenda of the government to increase the credibility of the economy by removing the country from the risk of money laundering ahead of schedule.” ‘
Experts say that the government has abolished some of the guidelines of the ‘Directive on Prevention of Money Laundering and Financing of Terrorist Activities, 2082’, which has opened the door to legalizing black money.
The government has removed these points in the directive on real estate transactions.
Clauses (d), (e) and (f) of Section 2 have been removed in the Directive on Prevention of Money Laundering and Financing of Terrorist Activities, 2082 BS. Similarly, both sides have to fill the Kewasi form while dealing in real estate and the Land Service Center has also removed the directive to submit the KYC form.
Similarly, the government has amended Section 5 of the original directive issued by the Department of Land Management and Authorization: Section 5 of the original directive has been replaced by the following Section 5.
Transactions to be done through banking system: In the transaction related to the purchase and sale of real estate from Rs. 1 million to Rs. 5 million, the proof of any kind of payment made through banking devices and while purchasing real estate above Rs. 5 million, the buyer has deposited good for payment cheque or bank guarantee or e-payment or other instruments of payment specified as per the guidelines of Nepal Rastra Bank or cash deposited in the bank account in the name of the seller. Both the buyer and the seller will have to certify and submit the photocopy.
The government has removed 6, 7 and 8 points from the previous guidelines. That is, now there is no need to attach bank details while dealing in real estate, no money will have to be deposited through banking channels in the revenue account and there is no need to disclose it on the paper.
Similarly, section 9 of the original directive has replaced the words ‘three crore’ with the words ‘one crore’. That is, now the details of the transaction should be sent to the Financial Information Unit: If the buyer or seller buys or sells real estate worth Rs 10 million or more once in a day or repeatedly, the office will have to send the details to the Financial Information Unit of the Nepal Rastra Bank.
The words ‘informative institution’ have been removed from section 10 of the original directive. The words ‘informative institution’ in Section 12 of the directive have been removed.
These schedules of the original directive have been removed. Such a repeal seems to have weakened the government’s policy and original objectives.
The FATF has placed Nepal on the grey list of asset purification. It has also set a deadline for making necessary reforms within the next one year. However, Nepal has also warned of blacklisting if it does not make concrete progress to prevent wealth laundering within that time.
The FATF had said that real estate transactions in Nepal have been used as a safe means of asset purification and need to be comprehensively reformed. However, the government has stopped the initiative of bringing real estate transactions into the system as an alternative to converting black money into white money within 48 hours.
In particular, under pressure from the Prime Minister’s Office, the Ministry of Land Management has backtracked from its move to link real estate transactions to the system.
प्रतिक्रिया दिनुहोस्