Watchdog working to improve coordination with other agencies to increase anti-money laundering compliance


Mar 16, 2019-

The Department of Money Laundering Investigation has launched joint or parallel investigations with police on money laundering cases as part of effort to improve coordination among the law enforcement agencies ahead of mutual evaluation of Nepal’s compliance to standards on anti-money laundering and terrorist financing due for 2020.

The Asia Pacific Group on Money Laundering (APG), a regional anti-money laundering watchdog, is scheduled to conduct mutual evaluation of Nepal through peer review next year. Nepal is a member of the group.

A recent government report, prepared by agencies including the law and finance ministries, the Department of Money Laundering Investigation, and the Financial Information Unit, pointed to a lack of coordination among the law enforcement agencies as one of the weaknesses of Nepal in enhancing compliance related to Anti-Money Laundering and Financing of  Terrorism (AML/CFT).

Although law enforcement agencies such as police, the Commission for Investigation of Abuse of Authority (CIAA), and the Department of Revenue Investigation (DRI) file several cases in court, very few of them are sent to the anti-money laundering department to probe for possible money laundering, officials at the department say.

“During mutual evaluation, other nations and jurisdictions will look into whether law enforcement agencies in Nepal coordinate with each other in tackling money laundering and terrorist financing,” said Jeewan Prakash Sitaula, director general of the Department of Money Laundering Investition. “We have to improve our coordination through joint or parallel investigation on crimes and the proceeds of crimes to exhibit Nepal’s compliance to the AML/CFT standards.

Financial Action Task Force (FATF), the global anti-money laundering watchdog, which sets the AML/CFT related standards, has stated in one of its recommendations that there should be national coordination and cooperation.

“The countries should ensure that policy-makers, the financial intelligence unit, law enforcement authorities, supervisors and other relevant competent authorities, at the policymaking and operational levels, have effective mechanisms in place which enable them to cooperate, and, where appropriate, coordinate and exchange information domestically with each other concerning the development and implementation of policies and activities to combat money laundering, terrorist financing and the financing of proliferation of weapons of mass destruction,” the recommendation states further.

According to Sitaula, a joint investigation by the department and the Central Investigation Bureau (CIB) of police is ongoing on  a gang leader for his involvement in money laundering. Sitaula, however, refused to confirm the name of the ‘don’, reasoning that the accused and beneficiaries of his property could hide the illegal property.

However, the department says that police recommend very few cases for investigation on money laundering considering the large number of cases filed by police in courts every year.

Police officials also admit this. Nepal Police filed around 39,000 cases at the court last fiscal year. “If any one accused of crime fails to show the source of income during our investigation, we recommend such cases to the department,” said Senior Superintendent of Police Uttam Raj Subedi. “The number of cases sent to the department is relatively low compared to the number of cases we file in courts. But we cannot say there is money laundering in every financial crime.”

Police do not have the tradition of sending cases to the department, which was established in 2011. The tradition actually started after the cases related to some “notorious dons” were sent to the department for money laundering probe.

The department on May 19, 2013 filed separate cases against Deepak Manage, Chakre Milan, Parshuram Basnet, Abhisek Giri and Ganesh Lama, all known ringleaders. Except Lama, all others got clean chit from the Special Court in 2017 and 2018.

In all these cases, the department had assigned the task of investigation to the police bureau.

The bureau has also forwarded the case involving former minister Sanjaya Kumar Sah, who stands accused of murder and complicity in the 2012 Janakpur blast where five people were killed and 32 others injured. The department filed a case against him on March 30 last year on money laundering.

Police had recommended that the department probe Khadga Bahadur Bishwokarma, spokesperson for the Netra-Bikram Chand-led Communist Party of Nepal, on alleged terror financing and money laundering crimes. The department is currently probing him for illegal use of the money extorted from individuals and businesses.

“The CIB and the Department of Money Laundering Investigation are coordinating on investigations related to cases of money laundering. We sometimes do joint investigations and sometimes the department assigns us to conduct probe,” said Deputy Inspector General Niraj Bahadur Shahi, chief of the police probe bureau. “Recently, we have been investigating a case jointly.”

When it comes to coordination with the anti-corruption commission, there has not been any joint effort so far. The agencies, however, share information. For instance, the money laundering watchdog sends complaints that it receives about corrupt public officials to the commission while the anti-graft body sends illegal incomes of private individuals or firms to the department, according to officials from both sides.

According to Sitaula, the department has not been able to investigate money laundering by public officials as the corruption watchdog itself looks into such cases. “Investment of wealth earned through corruption is money laundering. The CIAA has been filing cases considering it as part of corruption,” said Sitaula.

However, CIAA Spokesperson Pradeep Kumar Koirala said the anti-corruption law has allowed the commission to file a case if a public official has amassed property by investing money earned through illegal means. The anti-graft body filed a case against Gopal Bahadur Khadka, former managing director of the Nepal Oil Corporation, on January 7, on the charge of amassing property through corruption as well as through the investment of ill-gotten money.

According to Sitaula, there has been coordination with the Department of Revenue Investigation as well. Sitaula’s office is investigating on Binod Gupta, proprietor of  Himalayan Cargo, who faces one of the largest cases of tax evasion, at the Kathmandu District Court.

On August 17 last year, the Revenue Investigation Department filed a case against Gupta and his wife Madhu Gupta, along with other 20 associates, on the charge of evading income tax and denying government revenue through fake Value Added Tax bills

Published: 16-03-2019 07:06

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