The new regulatory aims to bring in transparency and curb illegal money flow in the trading of precious metals.

The latest decision is coming after the concerned authorities reported irregularities in the sector and sought legal intervention to monitor transaction flow in the sector.

Following this, the National Coordination Committee formed to check money laundering in collaboration with various government agencies proposed to form a regulatory body to check money laundering.

“The committee headed by Finance Secretary recently recommended the government to pick the regulator from among the three agencies— Inland Revenue Department, Department of Revenue Investigation and Department of Commerce and Supply Management. The Cabinet should decide on the regulator,” informed Department of Money Laundering Investigation (DoMLI) Director General Jiwan Prakash Sitaula.

Current Scenario
It’s really surprising to know that Nepali bullion sector lacks a regulatory despite running billions worth transactions in the trading process.

In the current scenario, banks report to Nepal Rastra Bank (NRB) in case of suspicious transactions around Rs 1 million.

“The move to appoint regulator in bullion market aims to implement ‘Know Your Customer’. It would identify people who do gold transactions and monitor those who invest illegal earned money in gold,” says Binod Lamichhane, DoMLI Spokesperson.

How New Regulatory Helps?
According to Binod, the new regulatory also aims to follow recommendations of the Financial Action Task Force (FATF), a global anti-money laundering body.

FATF is basically an inter-governmental agency that mandates effective implementation of regulatory, legal and operational measures to curb money laundering and terrorist financing.

In line with FATF recommendations, the Money Laundering Prevention Act also mandates bullion traders to have records of customers doing Rs1 million or above worth precious metal transactions in a day.

However, FATF’s 2015 study states that criminals use gold as an alternative to move their illegal assets by overcoming the existing regulatory against money laundering activity.

This is a serious concern for Nepal considering the country’s vulnerability to gold smuggling.

According to the statistics, Nepal saw around 3.79 tons of smuggled gold worth Rs 17.01 billion in the last one-and-a-half-year period during July 2015-February 2017. Surprisingly, the value of smuggled gold then was literally 61 percent of the total legally-imported gold during that period.

Considering the statistics and the existing scenario, Nepal would definitely a regulatory that can tackle the illegal transactions in its bullion sector that involves trading of precious metals.

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Nepal hosted the 21^st plenary of the Asia-Pacific Group on Money Laundering (APG) event, which saw more than 500 participants from more than 50 nations.

The event saw key discussions on measures to tackle money laundering and terrorist financing, wherein, experts pitched for usage of advanced technology across the regulatory mechanism to tackle illicit flow of money.

As an inter-governmental anti-money laundering body, APG is part of a global network of similar international bodies such as Financial Action Task Force (FATF).

Speaking at the conference, Head of FATF Delegates Kristen Alma said FATF would take necessary steps to tackle virtual currency as they expand further as a safe and secure payment method.

“The FATF will also continue to work on financial and regulatory technologies to combat illicit financing and increase financial inclusion and potentially reduce regulatory and supervisory cost,” says Alma.

The five-day plenary being held between July 21-27, 2018 will also see the discussions on governance, mutual evaluation reports and policy matters, informed APG.

Nepal’s View for Money Laundering
In his address at the event, Nepal Finance Minister Yubaraj Khatiwada said technology advancements made money laundering easier than before with the real-time money transfers driven by new multi-service institutions.

Pitching for strict measures to tackle the same, Khatiwada said that the regulatory needs to adopt a high-tech and intelligent approach to track illegal financial transactions associated with digital payments and virtual mode of payments.

Equally important would be capacity development of informers or reporters, investigators, prosecutors, judges, and enforcement agencies to reduce the risks related to money laundering and terrorist financing, says the Finance Minister.

As part of the conference, Nepal’s Department of Money Laundering Investigation highlighted that it has won nearly 80 percent of the money laundering cases it filed at the Special Court.

While the department has so far filed 40 cases in total, the Court cleared 21 out of 25 cases in favor of the state, showing the success rate of 84 percent.

Some of those cases involving some ‘notorious’ dons got a clean chit, the department added.

Despite the failures in high-profile cases, Nepal has been successful in dealing with 90 percent of the reported cases.

I have information from the colleagues that there is almost 90 percent success rate in court cases. This shows our growing capacity to tackle such kind of illegal activities, says Khatiwada.

He further informed that the government has already implemented key measures to tackle such illicit activities.

“A number of laws and regulations have been enacted; AML/CFT National Strategy and Action Plan have been implemented; structural and institutional setup has been built; and AML/CFT regulatory & supervisory regimes have been operationalized,” the minister informed.

The Minister informed that the government has also brought the Department under the ambit of PMO from the Finance Ministry as part of its strategy to strengthen the regulatory mechanism.

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