Stirred by the Panama Papers revelations of money stashed away in tax havens, the Department of Money Laundering Investigation (DoMLI) and the Metropolitan Police Crime Division (MPCD) of the Nepal Police signed a memorandum of understanding (MoU) on Monday to establish effective coordination to control money laundering and terrorist financing in the country.

They have also formed a coordination committee consisting of the director general of the DoMLI, chief of the MPCD and information officers of the DoMLI and the Crime Division, the DoMLI said in a press release.

As per the MoU, they will exchange information, identify areas where there is a risk of money laundering and terrorist financing and enhance the capacity of their personnel to control such activities.

The two organizations also agreed to cooperate when conducting investigations into issues under their jurisdictions and generate the necessary resources from domestic and international sources.

“Additional tasks will also be carried out based on mutual understanding,” the DoMLI said.

The DoMLI and the MPCD were prompted to sign the MoU for closer cooperation in the wake of the Panama Papers exposé which showed the myriad ways in which the world’s rich and powerful use secretive offshore tax regimes to hide their money.

Senior Superintendent of Police Sarbendra Khanal, chief of the MPCD, said this was an effort to systematise the exchange of information between investigating bodies.  

Last Wednesday, the DoMLI held a meeting with the Financial Information Unit (FIU) of Nepal Rastra Bank, Nepal Police, Ministry of Finance and Department of Revenue Investigation to discuss issues related to money laundering and terrorist financing.

As per officials, they decided to step up surveillance of foreign direct investment (FDI) based on the origin and the individuals involved in bringing it. The concerned government authorities will also try to find out whether any Nepal linkage has been mentioned in the Panama Papers as per their understanding.

According to the Department of Industry, 20 percent of the total FDI commitments that Nepal received in the last fiscal year were from locations considered to be tax havens.

The FIU, which monitors the receipt and analysis of suspicious transaction reports and other information related to money laundering, also directed banks and financial institutions last week not to conduct transactions with shell banks or companies and inform it if any such dealings have ever taken place.