Through this move, the Ministry of Land Management, Cooperatives and Poverty Alleviation is aimed at controlling illegal investments happening through unlawful transactions.

Following the Department of Cooperatives’ enforcement of the Directive on Money Laundering Prevention for Cooperatives in March 2017, the government in October 2017 decided to form a new Cooperative Act to include cooperatives under the new legal framework.

The directive has reportedly prohibited many co-operatives from indulging in fraudulent activities by imposing a fine on those involving in fake practices or not maintaining proper records of their members.

Despite this, still there are many individuals using cooperatives as a means to conduct illicit transactions, informed the Land Ministry.

“Cooperative businesses are still a safe haven for money earned by illegal means. These cooperatives have been allowing all their members to make investments without asking them to disclose the source of funds,” said the Land Ministry Secretary Gopi Nath Mainali, in his address at a program organized by the Society of Economic Journalists Nepal.

In a movie making the norms stricter, the government will soon table a new directive in the Parliament for more transparency in the cooperatives’ functioning.

“By introducing the clause through the act, the government aims to tighten the noose on such transactions in a more effective manner,” says Mainali.

One will be surprised to know that Nepal currently has 34,512 cooperatives operating in the country including 14,000 savings and credit cooperatives, who have issued deposits worth Rs 302.2 billion and loans worth Rs 274.2 billion in 2016.

Surprisingly, more than 600 cooperatives are having an annual turnover of Rs 50 million and more.

Owing to their high presence and role being played, the government identified the cooperatives sector as one of the three pillars of the Nepali economy.

And, with the formation of federal governance, 29,000 cooperatives fell under the local governments’ jurisdiction. Unfortunately, lack of an effective monitoring mechanism and manpower at the local level resulted in poor implementation of the laws and rise of irregularities in the cooperative sector.

Hope the new directive to be tabled in the Parliament will address the sector’s irregularities.

The post Cooperative Sector Under Govt. Scan in Nepal appeared first on Nepali Sansar.

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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