Anti-Money Laundering and Counter-Terrorism Financing Laws in Nepal

Anti-Money Laundering and Counter-Terrorism Financing Laws in Nepal are the legal framework that aims to prevent and combat the crimes of money laundering and terrorism financing in Nepal. Money laundering is the process of concealing or disguising the origin, source, location, ownership or control of money or assets that are derived from criminal activities. Terrorism financing is the process of providing or collecting funds, directly or indirectly, with the intention or knowledge that they will be used to carry out terrorist acts or support terrorist organizations.

The main laws that regulate anti-money laundering and counter-terrorism financing in Nepal are:

•  The Money Laundering Prevention Act, 2008 (2063), which provides the definition, scope and punishment of money laundering and terrorism financing offences in Nepal. The act also establishes the Asset (Money) Laundering Investigation Department (ALID) under the Ministry of Finance as the competent authority to investigate and prosecute money laundering and terrorism financing cases. The act also empowers the Nepal Rastra Bank (NRB) to issue directives and guidelines to banks and financial institutions to implement anti-money laundering and counter-terrorism financing measures.

•  The Money Laundering Prevention Rules, 2009 (2066), which provide the procedural details for implementing the Money Laundering Prevention Act, 2008. The rules also prescribe the roles and responsibilities of various agencies and institutions involved in anti-money laundering and counter-terrorism financing activities, such as the Financial Information Unit (FIU), the Department of Revenue Investigation (DRI), the Department of Money Laundering Investigation (DMLI), etc.

•  The Anti-Money Laundering/Combating Financing of Terrorism (AML/CFT) Directives, 2010 (2067), which provide the operational guidelines for banks and financial institutions to comply with anti-money laundering and counter-terrorism financing requirements, such as customer due diligence, transaction monitoring, record keeping, reporting, training, etc.

The main institutions that regulate anti-money laundering and counter-terrorism financing in Nepal are:

•  The Financial Information Unit (FIU), which is a unit under the NRB that collects, analyzes and disseminates financial information related to money laundering and terrorism financing. The FIU also maintains a database of suspicious transactions reports (STRs) and threshold transactions reports (TTRs) submitted by banks and financial institutions. The FIU also cooperates and exchanges information with domestic and foreign counterparts.

•  The Asset (Money) Laundering Investigation Department (ALID), which is a department under the Ministry of Finance that investigates and prosecutes money laundering and terrorism financing offences in Nepal. The ALID also seizes, freezes and confiscates the proceeds of crime related to money laundering and terrorism financing. The ALID also cooperates and exchanges information with domestic and foreign counterparts.

•  The Department of Revenue Investigation (DRI), which is a department under the Ministry of Finance that investigates tax evasion, smuggling, customs fraud and other revenue-related offences that may generate proceeds of crime for money laundering and terrorism financing. The DRI also cooperates and exchanges information with domestic and foreign counterparts.

•  The Department of Money Laundering Investigation (DMLI), which is a department under the Office of the Prime Minister and Council of Ministers that investigates corruption-related offences that may generate proceeds of crime for money laundering and terrorism financing. The DMLI also cooperates and exchanges information with domestic and foreign counterparts.

•  The Nepal Rastra Bank (NRB), which is the central bank and the monetary authority of Nepal. The NRB supervises and regulates banks and financial institutions to ensure their compliance with anti-money laundering and counter-terrorism financing measures. The NRB also issues directives and guidelines to banks and financial institutions to implement anti-money laundering and counter-terrorism financing measures.