White from black

Nepal is yet to effectively tackle money laundering. There is no dearth of those who hide and disguise the true ownership of the proceeds of illegal financial deals so the generated cash enters the legitimate financial sector as undistinguishable from that of the other sources. Banking laws have been strengthened in recent years and anti-money laundering statutes have also been written. But as the patchwork in effect designed to stop the malpractice is not effective enough to plug the flaws in the anti-money laundering legal regime, the tacky launderers, often in complicity with the bank staffs, operate with impunity. Mega scale money laundering activities, for example, occur in the west African nations where political insecurity combined with security scams prop up the malpractice beyond one’ imagination. Nigeria, plagued by similar scams, had to introduce the notorious 419 anti-fraud legislation which has gone on to become a sobriquet for money laundering operations all over the globe.

Apart from the illegal nature of the money and the financial windfall to those working in such rackets, the cash flows of the kind disturb normal economic equation. Although Nepal’s record in this sector is impressive, it is still far from impeccable. International banking and money transfer laws have been instrumental in pressuring nations, including Nepal, and other least developed ones, in coming out with clear anti-money laundering measures. It is important for the government to monitor transactions, maintain records, and train staff on awareness and report of dubious accounts and the holders’ activities. But lean and efficient banking and enhancing the credibility of the banking systems will go a long way in fighting the illegal practice. Monitoring aside, strong internal policies, financial intelligence and mutual legal assistance will augment the system’s capability to deal with the problem. However, the strongest tool to empower banks to contain illegal transactions such as this is to enact a sound anti-money laundering law, which the present monetary policy proposes to enact. Although similar proposals are afloat for a considerable period of time, no umbrella anti-laundering act has materialised. Devising one may prove a turning point in the fight against illegal cash flows into the country.