A brief study on the situation of Money Laundering in Nepal (1).pdf

1. A Term Paper on
A brief study on the situation of Money Laundering in
Nepal
Subject: Criminal law- III
Submitted by
Tika Raj Chaulagain
Roll No.: 03/075
LL.M. 3rd
Semester
Submitted to
Asst. Prof Dr. Balaram Prasad Raut
Nepal Law Campus
Kathmandu

2. 1
1. Background
Crime as an anti-social, immoral, or sinful behavior. In broad sense, crime is an act against
society state reacts against the criminal on behalf of the victim. In strict sense crime is an act
committed in contravention to criminal law. 1
It connotes in essence; therefore, Crimes are
accusation, unjustifiable and inexcusable human conduct which is restricted, punished,
prohibited and no permittable by law. Criminal law is the body of law that relates to crime
and punishment. It regulates social conduct and prescribe whatever is threating, harmful,
endangering to the health, safety, property and moral welfare of the people.
Criminology as a branch of knowledge is concerned with those particular conduct of human
behavior which is prohibited by society. Broadly speaking, criminology deals with the legal
psychiatric aspect or the medico-psychological, biological, pedagogical or sociological
aspect of criminality and the factors related therewith. Thus, criminology seeks to study the
phenomenon of criminality in its entirety.2
Generally speaking, organized crime is an act
which is committed by two or more criminals as a joint venture in a systematically
organized manner. It is an illegal act which the members of an unlawful association commit
with mutual co-operation and adventure. 3
Money laundering is an organized crime. The aim
of money laundering it to earn unlimited money by using illicit source and use terrorist
financing. It is a process of cleaning illegal earing and criminally acquired money that
conceal the origin and destination of the fund.4
Money laundering represents the act of concealing, altering or manipulating the
actual source of property which is acquired by illegal source. State machinery power is
misused from various complex and multi-cycle process from this crime. Means by which
impact a negative effect on the shape, existence, creditability, balance and development of
the country’s financial system and overall global financial system. It is a borderless crime
and has a global network. It covers the 2 to 5 percentage of the total gross domestic product
of the world. The tendency of money laundering is all over the world is increasing day by
1
MADHAV PSD. ACHARYA & GANESH B. BHANDARI, CRIMINAL JURISPRUDENCE 1, (2nd
ed.2014)
2
PROF.N.V. PRARANJAPE, CRIMINOLOGY & PENOLOGY WITH VICTIMOLOGY 21, (17th
ed. 2018)
3
Id. at 125
4
RAMHARI NEPAL, MONEY LAUNDEING AS ORGANIED CRIME: ISSUES AND PRACTICE, NEPAL LAW
REVIEW, VOL. 27 (Nov. 2018), at 378-379.

3. 2
day. Thus, money laundering is an activity aimed at making illegally obtained and, therefore
untaxed funds appear legitimate. Usually this is done by depositing such funds in numbered
but unnamed (secret) accounts in banks of a number of countries where that is still possible.5
The researcher has attempted to delineate a brief study on the situation of Money
Laundering in the context of Nepal. The study is done in doctrinal way. This study is from
secondary source including publications and website.
2. Introduction of Money Laundering
In Criminal jurisprudence, Money laundering considered as financial crime, with intention
of making illegal money turning into legal form, transferred black money into white,
cheating the government and public and giving input for criminals. A practice of engaging in
financial transaction in order to conceal the identity, sources and destination of money. It is
a transactional business.
Money laundering is the practice of engaging in financial transactions in order to conceal the
identities, sources and destinations of the money in question. In the past, the term "money
laundering" was applied only to financial transactions related to otherwise criminal activity.
As a result, the illegal activity of money laundering is now commonly practiced by average
individuals, small and large business, corrupt officials, and members of organized crime,
such as drug dealers or Mafia members.6
Laundering allows criminals to transform illegally obtained gain into seemingly legitimate
funds. It is a worldwide problem. The sale of illegal narcotics accounts for much of this
money. Those who commit the underlying criminal activity may attempt to launder the
money themselves, but increasingly a new class of criminals provides laundering services to
organize crime. This new class consists of lawyers, bankers, and accountants. Criminals
want their illegal funds laundered because they can then move their money through society
freely, without fear that the funds will be traced to their criminal deeds. In addition,
laundering prevents the funds from being confiscated by the police.7
5
FREDA ADLER et.al, CRIMONOLOGY, 06 (9th
ed. Reprint 2018)
6
Available at:
https://www.google.com/search?q=Money+laundering%2cavailable+at+www.investro.dictionary.com+&aff=test123
7
Bankers Academy training by country Nepal, available at: www. Bankersacademy.comaml.nepal

4. 3
Money laundering is the process of cleaning illegally earned proceeds into legal one.it is an
attempt where the source of income and destination of illegal proceeds is either concealed or
diverted or deviously obtained. Though the practice of money laundering is said to be
noticed existing a long ago, it was only in 1920s that the term was adopted. It was so named
when most of the people engaged in illegal earnings were found establishing shops like car
washing and laundry to mask their illegal activities in united states of America.
According to Black law Dictionary “Money laundering is the act of transferring illegally
obtained money through legitimate people or accounts so that original source cannot be
traced.8
UN defines it as “Money laundering is a process which disguises illegal profit without
compromising the criminal, who wish to benefit from the proceeds. It is a dynamic three
stages process that requires; first moving the funds from direct association with the crime,
second disguising the trial (evidence) or foil purist, and the third, and making the money
available to the criminal once again with the occupational and geographic origins hidden
from view.9
European Communities (EC) Directive of 1990 defines it as: the conversion or transfer of
property, knowing that such property is derived from serious crime, for the purpose of
concealing or disguising the illicit origin of the property or of assisting any person who is
involved in committing such an offence or offences to evade the legal consequences of his
action, and, The concealment or disguise of the true nature, source, location, disposition,
movement, rights with respect to, or ownership of property, knowing that such property is
derived from serious crime.10
8
Available at: http;//www.fatf-gaft-gaft.org.document
9
BREET F WOODS, THE ART AND SCINECE OF MONEY LAUNDERING, 56 (1st
1998)
10
Money laundering on a brief history, available at: www. laundryman_u_net.com, accessed.

5. 4
The financial Action Task Force on Money Laundering (FATF) defines term Money
Laundering as “the processing of criminal proceeds to disguises their illegal origin in order
to legitimize the ill-gotten gains of crime.”11
The term “money laundering” is said to originate form mafia ownership of laundromats in
the United States. Gangsters there were earning huge sums in cash extortion, prostitutions,
gambling and bootleg liquor. They needed to show a legitimate source for these monies. One
of the ways in which they were able to do this was by purchasing outwardly legitimate
businesses and to mix their illicit earnings with the legitimate earnings they received from
these businesses. Laundromats were chosen by these gangsters because they were cash
businesses and this was an undoubted advantage to people like AI Capone who purchased
them. AI Capone was prosecuted, though not for money laundering but for tax evasion.12
Money laundering is a kind of Cybercrime in which money is illegally down loaded in
transit. It conceals the source of the illegal money and gives that money a legitimate source
copy.13
Money laundering means the conduct/acts designed in whole or in part to conceal or
disguise the nature, location, source, ownership or control of money (can be currency or
equivalents, e g. checks, electronic transfers, etc.) to avoid a transaction reporting
requirement under state or federal law or to disguise the fact that the money was acquired by
illegal means.14
Money laundering is an act which is affected to conceal illegal earning of money
investigating in some other activities to show the property legal existence.15
The Asset (Money) laundering Prevention Act, 2008 indirectly defines money laundering as
every property which is earned through illegal or criminal means which is predicated as
legally earned property. Earning accumulated through the following means thereby investing
11
Available at: www.faft.gafi.org.
12
BIJAYA KUMAR SING, CONTROLLING MONEY LAUNDERING IN INDIA-PROBLME AND PROSPECTIVES
(available at; www.igidr.ac.in/conft/money/mfc-11/Sing_Vijay.pdf )
13
PRANJAPE, supra note, 02, at 129.
14
Lectic law library, from the law library lexicon money laundering available at: www.lectlaw.com...money laundering.
15
MADHAV PSD. ACHARYA & GANESH B. BHANDARI, CRIMINOLOGY PENOLOGY 10, (2014)

6. 5
it in any land or property or business with coverage of legality amounts to the offense of
money laundering.16
a) Offences under the prevailing arms and ammunitions laws,
b) Offences under the prevailing foreign exchange regulation laws,
c) Offences of murder, theft, cheating, forgery documents, counterfeiting, kidnap or
abduction under the concerned prevailing laws,
d) Offences under the prevailing drug addiction control laws,
e) Offences under the prevailing national park and wild animals’ conservation laws,
f) Offences under the prevailing human trafficking and taking of hostages control
laws,
g) Offences under the prevailing cooperatives laws,
h) Offences under the prevailing forest laws,
i) Offences under the prevailing corruption control laws,
j) Offences under the prevailing bank and financial institution laws,
k) Offences under the prevailing banking crime and punishment laws,
l) Offences under the prevailing ancient monuments conversation laws,
m) Other offences that Government of Nepal prescribes by publishing in the Nepal
Gazette.
Money Laundering is a burning issue in Nepal. The voice has risen after the people’s
movement in 2008. The Money Laundering Prevention Act was promulgated in 2008. In
addition to the definition by the Act, Government of Nepal, Ministry of Finance has defined
money laundering as “that aspect of financial transactions where real origin or source of the
money or property earned by committing criminal or illegal activities is concealed. For this
attempt is made to create a new legal source in other to lander or endeavor to launder the ill-
gotten proceeds.17
Thus, Money laundering is an organized crime where the process of;
cleaning illegally earned proceeds into legal, convert black money into white. It is truly
global phenomenon. In the context of Nepal, it is a crosscutting as well as contemporary
issues.
16
Asset (Money) laundering Prevention Act, Sec. 4 (2008)
17
A BRIEF INTRODUCTION OF DEVELOPMENT OF MONEY LAUNDERING INVESTIGATION, available at:
www.mof.gov./en/on

7. 6
2.1 Sources of Money Laundering
All efforts and activities in the process of making illegally acquired of property from legal
income should be taken as a sources of money laundering. Money laundering is a financial
crime in which money is collected from various illegal activities. Although, from the global
experience, perspectives and Nepalese legal provision potential sources of money laundering
activities can be listed as;
• Terrorist acts and financial investments in terrorism
• Illicit trafficking in arms and ammunition
• Illicit trafficking in stolen and other goods
• Illicit trafficking in narcotic drugs
• Corruption and bribery, fraud
• Kidnapping
• Money banking
• Foreign exchange
• Revenue fraud
• Border smuggling
• Counterfeit currency
• Invoice manipulation, illegal banking, finance, negotiable instruments, insurance and
cooperatives are the sources of money laundering.
2.2 Areas affected by Money laundering
Generally, Money Laundering covers the areas and subject of physical, geographical,
technical, personal and organizational. It can be both personal and organizational in
nature. It is borderless crime has a global network. In the country like Nepal, it has been
found to have comparatively a negative impact and become center of attraction for
criminal. However, the affected areas of money laundering have been generalized into
the following categories;
• It degrades the Goss domestic product of country
• It reduces the transparency of governance system
• It destroys financial stability of fascial management
• It creates instability and unpredictability in revenue and taxation
• It detracts investigation system

8. 7
• It increases capital flights of nation
• It increases trade deficits in huge numbers
• It destroys regulations, supervision and legal action of government authority
• It destabilizes and disbalance foreign exchange rates
• It increases the volume of corruption parameter
• It loses the national trust and confidence
• It makes the criminal be powerful etc.
2.3 Process of Money Laundering
The steps of involvement in a money laundering scheme are directly related to the
distance that criminal desire to place between the illegally earned cash and the
laundered assists into which the cash is converted. As a rule, the most basic factor in
a laundering scheme is the conversion of cash into another assets, typically another
payment medium, so the cash can be concealed more easily and spent more freely18
.
Mainly there are four phases of money laundering, they are;19
1. Collection: it is the pre-stage of money laundering crime. Collection
indicates that of the collection of the illegal money by the criminals.
2. Placement: Placement is the depositing of funds in financial institutions or
the conversion of cash into negotiable instruments. Placement is the most
difficult step. The easiest way to begin laundering large amounts of cash is to
deposit them into a financial institution. To disguise criminal activity,
launderers route cash through a "front" operation; that is, a business such as
a check-cashing service or a jewelry store. Another option is to convert the
cash into negotiable instruments, such as cashier's checks, money orders, or
traveler's checks.
3. Layering: Layering involves the wire transfer of funds through a series of
accounts in an attempt to hide the funds' true origins. This often means
transferring funds to countries outside the United States that have strict
bank-secrecy laws. Such countries include the Cayman Islands, the
Bahamas, and Panama. Once deposited in a foreign bank, the funds can be
18
MICHALD.LAYMAN & GARY W. PORTER, ORGANIZE CRIME, 177 (1977)
19
HARI NEPAL, NAYADOT, MONEY LAUNDERING, FINANCING OF TERRORISM AND INTERNATIOANL
EFFORTS, 29 (2066)

9. 8
moved through accounts of "shell" corporations, which exist solely for
laundering purposes. The high daily volume of wire transfers makes it
difficult for law enforcement agencies to trace these translations.
4. Integration: Integration involves the movement of layered funds, which are
no longer traceable to their criminal origin, into the financial world, where
they are mixed with funds of legitimate origin.20
2.4 Rationality to prevent money laundering
Money laundering is an economic and organize crime. It does not benefit anyone. It is a
threat to the individual, family, society and the nation. Therefore, prevention should be
done of money laundering on the following grounds and reasons;
• To identify suspicions inactions and bring accused in the legal way through
investigation and prosecution,
• To criminalized offence and prevent investment in terrorist activities,
• To brings the perpetrators of money laundering under the way of law and punish
them,
• To confiscate property acquired through money laundering and terrorist
financing
• To exchange assistance, cooperation, collaboration with national, regional and
international forum in laundering sectors,
• To Create an environment where criminals will not commit illegal activities in
the future
• To develop the national, regional and international economy in a healthy manner
etc.
3. Legal measure against money laundering
3.1 International measures against money laundering21
Money laundering issue was not so widespread until the early 2012 before which there were
not so remarkable incidents noticed on money laundering and security threats on the
financial institutions. In the global context, the Financial Action Task Force (FATF) was
20
Bankers Academy training by country Nepal, available at www. Bankersacademy.comaml.nepal.
21
ACHARYA, supra note 15, at, 186.

10. 9
established in 1989 as an inter-governmental body by the Ministers of its member
jurisdictions in order to set standards and promote effective implementation of legal,
regulatory and operational measures for combating money laundering, terrorist financing
and other related threats to the integrity of the international financial system. In the context
of globalization of economy international community have raised concern combating money
laundering and terrorist financing. The first measure in this concern came out against drug
trafficking and trading. Major international measures as to money laundering can unlisted as
following ways;
A. United Nations convention against Illicit Trafficking in Narcotic Drugs and
Psychotropic substance 1988: This convention is also known as Vienna
conventions named after the city in which it was signed. 169 countries were party to
the convention. This convention came into force on 11 November 1990. This
convention has not used the term money laundering, the sprit and international
cooperation is closely associated like that of money laundering business. As per the
sprit this convention in Nepal has enacted and amended Narcotic Drug control Act
2033 BS.
B. International Convention against organized Crime 2000: This Convention is also
known as Palermo Convention named after the city in which it was signed. This
convention was signed by 147 countries and ratified by 82. It came into force on 29
September 2003. This convention criminalized money laundering and includes all
serios crime as predicate crime.
C. International Convention for the suppression of Financing of Terrorist 1999:
This convention came in to force on 10 April 2002 with 132 countries signing the
convention and 112 countries ratifying it. This convention criminalize terrorism,
terrorist organization and terrorist acts. This convention further provides that any
collection of fund or investment being channelized in any kind of terrorism be
declare as offense.
D. Global Program against Money laundering: The UN global program money
laundering is within the UN office of drug and crime. It is a research and assistance
project with the goal of increasing the effectiveness of international actions against
money laundering by offering technical expertise, training and advice to member
countries.
E. The financial Action Task Force on Money Laundering: The G-7 countries and
European Union (EU) initiated FATF was established in 1989. It is a policy making

11. 10
advisory body comprising of experts to improve legislative measures, monitor
financial investment and give awareness to law enforcement agencies. It works in
collaboration with international bodies. FATF has 40 recommendations to be
adopted, pursued by members countries to come to the level of international standard
against terrorism. This task force has three primary functions they are as;
1. Monitoring members progress in implementing anti money laundering
measures
2. Reviewing and reporting in money laundering trends, techniques and
counter measures
3. Promoting the adaption and implementation of FATF anti money
laundering standard globally.
F. Asia Pacific Group on Money Laundering (APG): Asia Pacific Group on Money
Laundering (APG) is an autonomous and collaborative international organization
founded in 1997 in Bangkok, Thailand consisting of 41 members. APG members are
committed to the effective implementation and enforcement of internationally
accepted standards against money laundering and the financing of terrorism. Nepal
became the member of APG Group in June 2002.
G. The Egmont Group of Financial Intelligence Units: In order to combat money
laundering the governments have created agencies to scrutinize reports submitted by
the financial institute. Such agencies are commonly referred to financial intelligence
units. They provide information between financial institutions and law enforcement
agencies. The purpose of this unit is to promote international cooperation through
exchange of information and the advancement technology developed so far.
3.2 Nepalese legal provisions against money laundering:
Money laundering in Nepal is carried out through bank services. Money launderers Receives
a letter of credit (L/C) by the bank to import goods. The importer is required to submit a
copy of the bill of entry within a specific period from the date of issuance of the L/C. But a
forged bill of entry is presented to the bank to transfer the foreign Currency against a non-
existent import. The L/C scandal is one of the examples of Money laundering. In cases
detected by the L/C commission 92 firms transferred US 35 million to third countries. The
investigation revealed that in many cases no import had taken place, the parties of the L/C
also could not be traced. The money deposited in the bank at the time of the issuance of the
L/C was in cash. The bank secrecy law is not applicable to the investigation of corruption

12. 11
and money laundering cases.22
The specialized legal and institutional mechanism for
controlling of Money laundering in Nepal can be categorized as following headings;
1. Legal and Policy Measures:
1.1 Constitution of Nepal (2072): Right to Property, Article 25 Clause 2 (the state shall
not, except in the public interest, acquire, requisition, or create any encumbrance on
the property of any person),23
shall not be applicable if property acquired through
illegal means.
1.2 Muluki Criminal Procedure code, 2074: Criminal Procedure Code, Section 116,
enlisted the money laundering crime as; not to be withdrawal case after being
registered in the court. And, Section 159 sub section 4 specified that offender of the
money laundering; not action may be taken to pardon, suspend, alter or reduce the
sentence imposed on the offender.24
1.3 Asset (Money) Laundering Prevention Act, 2008: The preamble of the Act clears the
objectives of the Act “whereas, it is expedient to provide for illegal provisions to
prevent laundering of criminally earned money(assets), the legislature-parliament has
enacted this Act”. Nepal drafted the Act not because of its voluntary volition but
because of international pressure. The act is mostly based on the guidelines of FATF
40 and other special 9 recommendations. With its amendment in different time the
subject of money laundering has extended. The main aim of the Act is to control and
combat money laundering in Nepal and supervise the possible money laundering crime
and prevent. 25
Criminalization of Money laundering as predicted offence.26
Not to
commit offence of terrorist financing.27
Special provision for identification of
politically exposed person.28
Regulatory actions and sanctions.29
To keep under
custody for investigation and inquiry.30
Enlisting a terrorist, terrorist group or terrorist
22
Money laundering seminar on AML available at www.acan.org.np,21st
23
CONSTITUION OF NEPAL, Art. 25, Clause 2 (2015)
24
Muluki Criminal Procedure Code, Sec. 116/159 (2017)
25
NEPAL, supra note 04, at, 382-283.
26
Asset (Money) laundering Prevention Act Sec.2
27
Id. 4
28
Id. 7B
29
Id. 7V
30
Id. 17

13. 12
organization.31
Punishment in the offence of money laundering or terrorist financing:-
any individual who has committed the offence of money laundering and terrorist
financing shall be imprisonment with minimum 2 years to 20 years. Likewise, the fine
shall be five times of the amount stipulated in the charge or 10 million.32
And Property
related with the offence of ML/TF to be confiscated.33
1.4 The government has also made Money Laundering prevention rules, 2073 to make
more comprehensive to achieving the aim of Money laundering Act. Furthermore, our
parliament/government enacted so many laws in this regard e.g., Extradition Act,
2070 (This law relation to proceeding against the absconding accused or the culprit),
Mutual legal Assistance Act, 2070, Mutual legal Assistance rules, 2070, Organized
crime prevention Act, 2070 and Criminal Conspiracy and resource (Stop, Control and
Seizure) Act 2070 etc. These existing laws directly and indirectly contributing to the
prevention of money laundering in Nepal.
2. Institutional Measures:34
2.1 Law enforcement agencies:
o Office of Investigation of Money laundering: There shall be separate
investigation department on money laundering headed by graduated officer of
first-class rank under the government.
o Revenue Investigation department and under these agencies
o Inland revenue department and under these agencies
o Revenue department and under these agencies
o Nepal Police, CIB Unit
o Commission of investigation abuse of authority
o Forest department
o National Park and wildlife reservation department
o Foreign employment department.
2.2 Indicative entities:35
31
Id. 29F
32
Id. 30
33
Id. 22
34
ANNUAL PROGRESSIVE REPORT, DEPARTMENT OF MONEY LAUNDERING, 04 (F/Y 2074/075)
35
Id. 4

14. 13
o Entities of financial sector organization: e.g., Bank, Insurance company,
Nepal stock exchange NEPSE, Cooperatives organization, Postal saving bank,
Employment provident fund, Citizen investment fund, retirement fund etc.
o Entities of Non-Financial sector organization: Casino, Real estate Dealer,
Traders of valuable metal, Auditor, Notary Public, lawyer etc.
2.3 Financial Information Unit 36
: There shall be a FIU under NRB with a view to
collect information and make analysis upon it in order to control money laundering.
The governor appoints the chief of such Unit from among the persons holding first
class rank.
2.4 Coordination Committee37
: In order to coordinate among financial institutions and
help the government to frame policy, there shall be coordination committee
comprising of five high officials of different ministries, the coordinator being
secretary of Finance Ministry.
2.5 Other competent Authorities38
:
• Industry department
• Household and small industry department
• Department of commence
• Office of company registrar
• Department of land reform and management
• Department of Transport management
• Social welfare council
• Office of special attorney general
• Special court.
36
Asset (Money) laundering Prevention Act Sec.9 (2064)
37
Asset (Money) laundering Prevention Act Sec. 8 (2064)
38
REPORT, supra note 33, at, 5.

15. 14
4. Details of Complaints, Investigations and Cases in Department up to FY 2074/07539
:
Complaints
received in the
department
Complaints under
Initial
Investigation
Complaints
under
investigation
Complaints
registered
in the court
Complaints in
TAMELI
Complaints
sent to other
bodies
Cases
decided by
special
courts
Decision as per
the demand of
Department
(Full & Partial)
1588 849 208 42 489 79 33 28
5. Role of Supreme Court of Nepal: Some of the most important decision handed by the
supreme court of Nepal are as follows:
• In Sunil Jaisawal v. GoN40
: In this case the supreme court declared and held that to
carry Money from one place to another place itself is not the crime but source of
such money also has to be illegal and unidentified.
• Dada Tasi lama v. Gov41
: In this case the Supreme court strongly said that the source
must be identified whether it belongs to the any individual or any organization
otherwise the accused from whom the money has been seized will be presumed to be
the owner of the money.
6. Problem of Money laundering:
After 14 years criminalization of money laundering in Nepal no concreates and big
achievements have been made in this direction. Expressly or implicitly increasing such types
of crime now a days. Probably, due to the white color nature this types crime mostly
committed by influential people and groups so, prevention of such crime is becoming more
and more challenging. The Criminal network and nexus of money laundering is spreading
across boundless and unlimited ranges. Resolving such situation and complexities is very
difficult task itself. In these Nepalese contexts, state has made various law, policy, structure
and institution but its effective implementation, coordination, and building capacity seems to
be somewhat weak. Nepal is facing so many problems in terms of prevention of money
laundering can be presented as follows;
• The legal provision has not been implemented effectively. Money laundering act may
not give clear, concise definition what money laundering mean? Another part, this act
also ambiguity about the extent of crime of money laundering,
39
REPORT supra note 33, at,16.
40
Sunil JAISWAL V. Govt. of Nepal, NKP, 2070, Vol 9, D.No. 9054.
41
Dada Tasi Lama v. Govt. of Nepal, NKP, 2072, vol 11, D.No. 4999

16. 15
• The Institution arrangements involved in this sector could been progressively run.
Involving institutions (Department, CIAA, CBI) could not be made capable,
competent and resourceful.
• The department could not be established as an independent and autonomous body.
Which is controlled and influenced by prime minister and office of prime minister.
• The Criminal network and nexus of money laundering is spreading across boundless
and unlimited so, in such situation effective coordination and partnership has not
been in proper way at the national and international levels.
• In our society increasing the number of with luxurious life people, in this
circumstance and situation the role of concerning body and society itself could not be
expected.
• Lacking and inadequate; Information management system, effective and capable
human resource management, appropriate institutional structure and network, proper
working procedures and inter and intra institutional exchange of cooperation.
• Typically, lack of coordination between financial information unit and Money
laundering investigation department. Both agencies operated in own way not in
supportive, cooperative and collaborative each other’s,
• The department organizational structure only at the central level. At, Provincial &
local level there is no separate entity and any organization structure regarding
Investigation, prosecution and execution for money laundering crime,
• There is no provision to show the source of money at the time of opening a bank
account, there is loophole in money laundering because money launders can make
small deposits in dozens of banks,
• Due to the open exchange of Indian currency, that shows Nepal has become a
destination country for Money launders,
• The growing distortion of informal economy and show economic trends creates
another challenge to controlling and prevention of Money laundering crime,
• Unhealthy competition between bank and financial institution to add customers and
increase deposits. Such ineffective manner makes also threat to prevention of Money
laundering crime,
• Lastly, unable to regulate opening accounts in banks and financial institutions outside
the country.

17. 16
7. Suggestion
The following suggestion have been adopted to address the issues and crime of Money
laundering in Nepal;
• A clear and unambiguous definition of ‘Money Laundering’ should be mentioned in
the Act,
• To Make it mandatory provision mentions the sources of income during the time of
opening an account in Bank and Financial institutions,
• For hearing cases; to make an arrangement for separate tribunals and appellate
tribunals accordance with federal structure,
• To make effective law and control the Hundi, Dhukuti, informal economy, shadow
economy,
• To control unlimited transitions of Indian currency and transaction of counterfeit
currency within the country,
• To equip and providing up to date training, orientation to the concerning authority,
employee involved in the investigation, prosecution and execution of money
laundering crime,
• To implement the recommendations given by FATF in the best and utmost interest of
Nepal,
• Single effort of any state could be sufficient to control and prevention of money
laundering crime thus, requires national, regional, and global cooperation,
coordination and partnership and information sharing mechanism should be needed.
8. Conclusion:
Today’s Money laundering is becoming a heinous economic crime in word. Nepal is not
untouched and isolated from this crime. It is a borderless crime and has a global network.
“Money laundering cannot be controlled without control other organized crimes and
financial sectors cannot be kept in balance and healthy without controlling money
laundering crime”. Thus, it is interrelated, multifaceted organized crime. Terrorist acts,
financial investment in terrorism, illicit trafficking in arms and ammunition, narcotic
drugs, corruption, kidnapping smuggling are the main sources of money laundering. It
has been found to have comparatively a negative impact and become center of attraction
for criminal in Nepal. A Purifier/launder making money concealing, altering or
manipulating the actual source of property which is acquired by illegal source by
adopting the certain process like; collection, placement, layering, integration.

18. 17
This type of organized crime does not benefit anyone and threats to the individual to state
level.
Therefore, prevention should be done by national, regional and global partnership,
cooperation and coordination. To prevent and control this types of organized crime Nepal
is making legal, institutional, operational arrangement and also involvement, affiliation
with global network like, FATF, APG and Egmont. Now the question arises; All those
efforts are enough? Sufficient? Of course, there is so many shortcomings and lacking.
The whole world has taken it seriously to controlling and preventing such types of crime.
Finally, conclusion can be drawn for prevention and controlling of Money laundering by;
effective implementation of existing legal provision, enabling the capacity of
organization mechanism, effective coordination between concerning authority and global
partnership is the way for solution.

19. 18
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