Kathmandu, July 5

Following the revelation from the Swiss National Bank (SNB) — central bank of Switzerland — regarding funds parked in Swiss banks a few days back, where Nepalis have also parked 322.88 million Swiss francs (Rs 35.72 billion), the government has been asked to form an investigation committee to identify and locate those who have parked funds illegally in Swiss banks.

Nepalis cannot transfer funds to foreign banks as the ‘Act Restricting Investment Abroad, 1964’ has barred Nepalis from taking away funds from Nepal. Such money is parked in Swiss banks through illicit flow of capital through hundi, over-invoicing in imports and other means.

After the data from SNB was made public, which shows the funds parked in Swiss banks increased by four folds in a decade from 86.22 million Swiss francs in 2008 to 322.88 million Swiss francs in 2017, former prime minister and Chairman of Naya Shakti Party Baburam Bhattarai had tweeted, “The issue of illegal flow of money to foreign banks was also raised in the past. The recent report shows Nepalis parking 322.88 million Swiss francs in Swiss banks. The government has to form a high-powered investigation committee to find the truth.”

Swiss banks are preferred by depositors due to the privacy they maintain in the favour of the accountholders and it is reported that the illicit money earned through bribery, fraud, tax evasion, ransom, human trafficking, drugs and arms/ammunition trafficking, smuggling and other illegal means could have been parked in Swiss banks. Increase in funds parked in Swiss banks means the illicit flow of funds is on the rise, according to economists. “This is risky for the country.”

Some legal professionals have said that politicians, businessmen, bureaucrats, criminals and influential people who have amassed their wealth through illegal means seek secret places to park funds and since Swiss banks are renowned for maintaining the secrecy of their clients, it is natural for such people to park funds in Swiss banks.

Meanwhile, the government has said that it is difficult to identify the accountholders in the Swiss banks as Nepal does not have ‘mutual legal assistance treaty’ with Switzerland. Jeevan Prakash Sitaula, director general of the Money Laundering Investigation Department, said that the department had corresponded with the Swiss National Bank following the data leak from HSBC Bank in Switzerland. “However the Swiss central bank refused to provide information citing the lack of mutual legal assistance treaty.”

The Swiss banks have not provided the data even to the Egmont Group — a group that comprises the head of Financial Intelligence Units of member countries to look into money laundering activities.

The reason that funds from across the world are parked in Swiss banks is because of their secrecy and this is a concern for the Financial Action Task Force (FATF), as per Sitaula.

FATF is an inter-governmental body established in 1989 by the ministers of its member jurisdictions that set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to integrity of international financial system.

Sitaula, however, said that the issue will be discussed during the meeting of the National Coordination Committee led by finance secretary and comprising secretaries of the Ministry of Law, Ministry of Foreign Affairs and Ministry of Home Affairs, inspector general of police and deputy governor of Nepal Rastra Bank. The committee is a high-powered body established for coordination and issues direction on issues related to money laundering prevention.