Nepal steps up fight against money laundering

The recent action against five alleged gangsters for amassing assets through suspected illegal means signals the government's seriousness about dealing with the menace.

By Kosh Raj Koirala for Khabar South Asia in Kathmandu

July 26, 2013
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Money laundering and corruption have a foe in the new Department of Money Laundering Investigation (DMLI), which has initiated action against five individuals accused of amassing properties disproportionate to their legitimate income. The case is the first of its kind in Nepal.

  • Rukshana Nanayakkara, acting director of Asia Pacific at Transparency International, addresses a December 2011 press conference on graft in Kathmandu. Nepal's new Department of Money Laundering Investigation (DMLI) now actively pursues individuals suspected of extortion, illegal contracts and other unlawful activities. [Prakash Mathema/AFP]

    Rukshana Nanayakkara, acting director of Asia Pacific at Transparency International, addresses a December 2011 press conference on graft in Kathmandu. Nepal's new Department of Money Laundering Investigation (DMLI) now actively pursues individuals suspected of extortion, illegal contracts and other unlawful activities. [Prakash Mathema/AFP]

Citing Clause 3 of the Anti-Money Laundering Act of 2008, DMLI demanded jail sentences ranging from one to five years for the suspects, plus confiscation of illegally acquired assets and equivalent fines.

"We have been able to reach this stage … after formulating a number of legal policies and procedures and developing law enforcement mechanisms," Director General of DMLI Surya Prasad Acharya told Khabar South Asia. "But this is just a beginning."

The suspects – Ganesh Lama, Dipak Manange, Parshuram Basnet, Chakre Milan and Abhishek Giri – were charged at the Special Court for money laundering crimes, after a lengthy investigation.

Lama was arrested July 17th and is currently in jail. Basnet, captured June 10th, was released on bail a month later. Milan has been imprisoned since 2009 for drug smuggling and other illegal activities. The other two are still at large.

According to Special Court Registrar Dhir Bahadur Chand, Lama is accused of illegally amassing Rs 270m ($2.8m); Manange Rs 147.3m ($1.5m); Basnet Rs 1163.1m ($1.2m); Milan Rs 70.7m ($732,237) and Giri Rs 29.4m ($307,539), all from unknown sources.

Turning the tide against financial crime

Nepal introduced an Anti-Money Laundering Act in 2008 and Money Laundering Prevention Rules in 2009. The DMLI was established in 2011 to fight money laundering and terrorist financing. The same year, Nepal introduced a national strategy to fight those two ills.

This June, the government endorsed two additional anti-money laundering ordinances – a Second Amendment to the Anti-Money Laundering Act 2008, and the Proceeds of Crime Bill – to comply with requirements of the global anti-money laundering body, the Financial Action Task Force (FATF).

Since its inception, the DMLI has filed 22 cases with the Special Court, which has passed verdicts on 11 of them, all in favour of the government.

Police officials believe the latest case sets a precedent that will help curb illegal activities by private individuals.

"Police efforts had not been much effective to contain their activities as anti-graft body would not look into their properties – for they do not hold public positions," Deputy Inspector General (DIG) of Police Nawa Raj Silwal Silwal told Khabar South Asia. "Their activities to monopolise contracts of various projects and extortion under political cover will now be greatly controlled."

Nagarik Daily crime reporter K.P. Dhungana said the DMLI prosecutions could inspire criminals to stash their ill-gotten gains elsewhere, rather than control their activities. "Our country does not have strong mechanism to control capital flight, as we have an open border with India," Dhungana said.

"Had the government first introduced mechanism for controlling capital flight and started cracking those possessing illegally amassed properties, this would have yielded better results."

But he expressed optimism the recently passed laws would have a positive impact. "Even politicians or businessmen amassing wealth through foul means will now come under the purview of the anti-money laundering legislations," he said.

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