‘Move will encourage inflow of illicit funds’


Aug 10, 2016-

The Securities Board of Nepal’s (Sebon) decision to scrap a committee it had formed to study a possible entry of illicit money in the capital market might encourage those involved in the illegal practice, stakeholders have said.

The stock market regulator had scrapped the committee on Monday.

The formation of the panel has been blamed for the recent market losses. The benchmark index slid to as low as 1675.91 points on Monday from an all-time high at 1881.45 points on July 27.

Headed by Sebon Executive Director Paristha Nath Poudyal, the committee was supposed to study suspicious transactions in the capital market and find whether the Sebon guidelines on anti-money laundering are followed, and recommend reforms measures to be taken as per the new Anti-Money Laundering Act.

A senior Nepal Rastra Bank (NRB) official termed the annulment of the committee “unnatural”. “This gives a message that there will not be any investigation into the flow of illicit money in the capital market,” said the official.

Sebon officials, however, said the scrapping of the committee does not prevent it from carrying out investigations. “We will continue to probe the matter as a part of our regular job,” said Sebon Spokesperson Niraj Giri.

He said the regulator had to scrap the committee amid rumours that it was formed to conduct raids for investigation. “There are many other agencies formed for investigation and taking action,” he said.

According to Sebon officials, they are not receiving any details about the suspicious transactions from stockbrokers and merchant bankers although these market players have to report about such transactions as per the anti-money laundering directive.

The brokers and merchant bankers, however, have been reporting about transactions worth over Rs1 million made by an individual or a company.

Massive investments in the secondary market in recent months has invited suspicion about a possible inflow of black money.

The NRB official said the lack of a system with brokers and merchant bankers to report about the suspicious transactions might be a reason why the Sebon and NRB’s Financial Information Unit (FIU) are not receiving such details. “Such a system can be established through a software installation or manual monitoring,” said the NRB official. “As a regulator, the Sebon is responsible for ensuring that.”

An FIU official said even bullion traders and casinos are also not reporting about suspicion transactions amid confusions about who are their regulatory bodies.

Gyanendra Poudel, spokesperson for the Department of Money Laundering Investigation, said as Sebon is one of the bodies responsible for monitoring and informing about suspicious transactions, it could do so by either forming a study team or through regular administrative process.

“The scrapping of the study committee does not mean that it has stopped probe into money laundering activities,” he said, adding the department was not adequately informed about the formation and scrapping of the panel.

Nepal Stock Exchange rebounds

KATHMANDU: The Nepal Stock Exchange (Nepse) index jumped 84.51 points on Tuesday, ending an eight-day losing streak following reports that a planned probe into alleged black money in the capital market had been abandoned.

Stocks soared after the Securities Board of Nepal (Sebon) scrapped a committee that had been formed to investigate possible use of illicit funds to buy shares. Nepse had to apply the circuit breaker just an hour and 12 minutes into trading on Tuesday after the bourse started overheating. Trading was suspended for the rest of the day after the index surged more than 5 percent. The Nepse had dived 88.81 points on Monday, the highest single-day loss, as the market succumbed to strong selling pressures.

Stockbroker Kumar Paudel said the market witnessed an unusual rise in the index after Sebon dissolved the probe committee. “Heavy demand pulled the market up, resulting in three circuit breakers and eventually a halt in trading,” he said.

However, an analyst said that the wild swings in the stock market were totally artificial and pre-planned by major players and brokers. (PR)

Finance Minister concerned

KATHMANDU: Deputy Prime Minister and Finance Minister Krishna Bahadur Mahara on Tuesday expressed concern about heavy fluctuations in the stock market in recent days. During an informal meeting at the Finance Ministry, Mahara said: “The government is positive about the development of the capital market.” Amid massive fluctuations in the market, the minister met Securities Board of Nepal Chairman Rewat Bahadur Karki on Monday. (PR)


Published: 10-08-2016 08:49

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