Nepal's inclusion in FATF grey list sparks Oppn's call for Oli resignation

Nepal's inclusion in the Financial Action Task Force (FATF) grey list has sparked a political row, with the opposition CPN-Maoist Center demanding Prime Minister KP Sharma Oli's resignation.

This is the second time Nepal has been placed on the grey list, which includes countries with strategic deficiencies in their anti-money laundering (AML) and counter-terrorist financing (CFT) regimes. Nepal was on the FATF grey list from 2008 to 2014.

In a meeting of the House of Representatives on Sunday, Madhav Sapkota, MP from the opposition Maoist Center, demanded Oli's resignation for its inaction in keeping Nepal off the FATF grey list.

"The organization that monitors the money laundering and terror financing, the FATF officially has included Nepal in its grey list. Inconsistency of the government, failure to bring improvement in the financial sector and negligence towards good governance has finally reached to the point of shame. I deeply regret this and condemn it. This development signals that the government does not prioritize good governance and has utterly failed. The government must step down for the sake of moral responsibility," Sapkota said.

Sapkota also stated that the government no longer holds the trust and confidence of the people. He called on the House of Representatives to take decisive action to safeguard the honor, prestige, and dignity of the nation.

The FATF made its decision during its plenary meeting in Paris on February 17-21, citing Nepal's failure to fully implement necessary legal, policy, and structural reforms to combat money laundering and terrorist financing.

Nepal has two years to address these deficiencies and remove itself from the grey list; otherwise, it will face more international transaction hurdles and sanctions.

Nepali Congress lawmaker Arjun Narshingh KC suggested demonetisation to address the issue, proposing a ban on Nrs. 500 and 1000 banknotes. KC emphasised the need for a parliamentary discussion on the matter and investigations into corruption cases to save Nepal's international image.

"Nepal again has been enlisted in the grey list of the Financial Action Task Force (FATF). The Corruption Index made public lately by Transparency International, Nepal has moved up further; this shows that the debt of Nepal is rising along with the nation being plagued by corruption," KC said.

"This would result in the flow of the international assistance and financial management will be seriously hampered, also a parliamentary discussion over the matter is the need of time. In order to avoid these kind of trend, demonetization of 500 and 1000 rupees notes and the investigation should be carried out on the cases of corruption that has rocked the nation over time in order to save international image," he added.

Last week, Nepal's Finance Minister Bishnu Paudel had expressed commitments by forwarding a series of reforms aimed at improving its anti-money laundering and counter-terrorism financing efforts.

He also expressed a commitment to identifying and taking action against illegal payment service providers (MBTS) and hundi operators, ensuring this does not hinder financial inclusion.