Nepal MER 2023 Anti-Money Laundering & CTF Measures PDF
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Summary
This document is a mutual evaluation report on anti-money laundering and counter-terrorist financing measures in Nepal, published in September 2023. The report assesses AML/CFT measures in place in Nepal as of December 2022, providing recommendations for improvements in financial crime prevention. The report focuses on various facets of financial crime prevention and includes tables and chapters on key topics like risks, legal policies, and investigation procedures.
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Anti-money laundering and counter-terrorist financing measures Nepal Mutual Evaluation Report September 2023 The Asia/Pacific Group on Money Laundering (APG) is an inter-governmental organisation consisting of 42 members in the Asia-Pacific region, as well as organisations, and observers fro...
Anti-money laundering and counter-terrorist financing measures Nepal Mutual Evaluation Report September 2023 The Asia/Pacific Group on Money Laundering (APG) is an inter-governmental organisation consisting of 42 members in the Asia-Pacific region, as well as organisations, and observers from outside the region. Under Article 1 of the APG Terms of Reference 2019, the APG is a non-political, technical body, whose members are committed to the effective implementation and enforcement of the internationally accepted standards against money laundering, financing of terrorism and proliferation financing set by the Financial Action Task Force. This document, any expression herein, and/or any map included herein, are without prejudice to the status of, or sovereignty over, any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. Under the APG Terms of Reference, membership in the APG is open to jurisdictions which have a presence in the Asia-Pacific region. For more information about the APG, please visit the website: www.apgml.org This report was adopted by the APG membership in July 2023 and contains a summary of the anti‐ money laundering (AML)/counter‐terrorist financing (CTF) measures in place in Nepal as at December 2022. Citing reference: APG 2023, Anti-money laundering and counter-terrorist financing measures – Nepal, Third Round Mutual Evaluation Report, APG, Sydney https://apgml.org/members-and-observers/members/member-documents.aspx?m=a6c4a803-0e15- 4a43-b03a-700b2a211d2e © September 2023 APG No reproduction or translation of this publication may be made without prior written permission. Applications for permission to reproduce all or part of this publication should be made to: APG Secretariat Locked Bag A3000 Sydney South New South Wales 1232 AUSTRALIA Tel: +61 2 5126 9110 E mail: [email protected] Web: www.apgml.org Cover image: Chungba Sherpa © Nepal Tourism Board TABLE OF CONTENTS Executive Summary.................................................................................................................................... 3 Key Findings............................................................................................................................................... 3 Risks and General Situation....................................................................................................................... 5 Overall Level of Effectiveness and Technical Compliance...................................................................... 5 Priority Actions.......................................................................................................................................... 10 Effectiveness & Technical Compliance Ratings...................................................................................... 11 Preface....................................................................................................................................................... 12 CHAPTER 1. ML/TF RISKS AND CONTEXT......................................................................................... 14 ML/TF Risks and Scoping of Higher-Risk Issues................................................................................... 15 Structural Elements................................................................................................................................. 20 Background and other Contextual Factors............................................................................................. 21 CHAPTER 2. NATIONAL AML/CFT POLICIES AND COORDINATION............................................... 35 Key Findings and Recommended Actions.............................................................................................. 35 Immediate Outcome 1 (Risk, Policy and Coordination)........................................................................ 36 CHAPTER 3. LEGAL SYSTEM AND OPERATIONAL ISSUES............................................................... 42 Key Findings and Recommended Actions.............................................................................................. 42 Immediate Outcome 6 (Financial intelligence ML/TF)......................................................................... 46 Immediate Outcome 7 (ML investigation and prosecution)................................................................. 55 Immediate Outcome 8 (Confiscation)..................................................................................................... 59 CHAPTER 4. TERRORIST FINANCING AND FINANCING OF PROLIFERATION................................ 65 Key Findings and Recommended Actions.............................................................................................. 65 Immediate Outcome 9 (TF investigation and prosecution).................................................................. 67 Immediate Outcome 10 (TF preventive measures and financial sanctions)....................................... 72 Immediate Outcome 11 (PF financial sanctions)................................................................................... 75 CHAPTER 5. PREVENTIVE MEASURES............................................................................................... 78 Key Findings and Recommended Actions.............................................................................................. 78 Immediate Outcome 4 (Preventive Measures)...................................................................................... 79 CHAPTER 6. SUPERVISION.................................................................................................................. 88 Key Findings and Recommended Actions.............................................................................................. 88 Immediate Outcome 3 (Supervision)...................................................................................................... 90 CHAPTER 7. LEGAL PERSONS AND ARRANGEMENTS.................................................................... 103 Key Findings and Recommended Actions............................................................................................ 103 Immediate Outcome 5 (Legal Persons and Arrangements)................................................................ 104 CHAPTER 8. INTERNATIONAL COOPERATION............................................................................... 111 Key Findings and Recommended Actions............................................................................................ 111 Immediate Outcome 2 (International Cooperation)........................................................................... 112 TECHNICAL COMPLIANCE ANNEX................................................................................................. 119 Recommendation 1 - Assessing Risks and applying a Risk-Based Approach......................................... 119 Recommendation 2 - National Cooperation and Coordination................................................................ 122 Recommendation 3 - Money laundering offence..................................................................................... 123 Recommendation 4 - Confiscation and provisional measures................................................................. 126 Anti-money laundering and counter-terrorist financing measures in Nepal 2023 1 Recommendation 5 - Terrorist financing offence.................................................................................... 127 Recommendation 6 - Targeted financial sanctions related to terrorism and terrorist financing.............. 129 Recommendation 7 – Targeted Financial sanctions related to proliferation............................................ 133 Recommendation 8 – Non-profit organisations....................................................................................... 135 Recommendation 9 – Financial institution secrecy laws......................................................................... 138 Recommendation 10 – Customer due diligence...................................................................................... 139 Recommendation 11 – Record-keeping................................................................................................... 143 Recommendation 12 – Politically exposed persons................................................................................. 144 Recommendation 13 – Correspondent banking....................................................................................... 145 Recommendation 14 – Money or value transfer services........................................................................ 146 Recommendation 15 – New technologies................................................................................................ 147 Recommendation 16 – Wire transfers...................................................................................................... 149 Recommendation 17 – Reliance on third parties..................................................................................... 151 Recommendation 18 – Internal controls and foreign branches and subsidiaries..................................... 152 Recommendation 19 – Higher-risk countries.......................................................................................... 153 Recommendation 20 – Reporting of suspicious transaction.................................................................... 154 Recommendation 21 – Tipping-off and confidentiality........................................................................... 154 Recommendation 22 – DNFBPs: Customer due diligence...................................................................... 155 Recommendation 23 – DNFBPs: Other measures................................................................................... 157 Recommendation 24 – Transparency and beneficial ownership of legal persons................................... 158 Recommendation 25 – Transparency and beneficial ownership of legal arrangements................. 163 Recommendation 26 – Regulation and supervision of financial institutions........................................... 165 Recommendation 27 – Powers of supervisors......................................................................................... 172 Recommendation 28 – Regulation and supervision of DNFBPs............................................................. 173 Recommendation 29 - Financial intelligence units.................................................................................. 177 Recommendation 30 – Responsibilities of law enforcement and Investigative Authorities.................... 179 Recommendation 31 - Powers of law enforcement and Investigative Authorities.................................. 180 Recommendation 32 – Cash Couriers...................................................................................................... 181 Recommendation 33 – Statistics.............................................................................................................. 183 Recommendation 34 – Guidance and feedback....................................................................................... 184 Recommendation 35 – Sanctions............................................................................................................. 185 Recommendation 36 – International instruments.................................................................................... 190 Recommendation 37 - Mutual legal assistance........................................................................................ 191 Recommendation 38 – Mutual legal assistance: freezing and confiscation............................................. 193 Recommendation 39 – Extradition.......................................................................................................... 194 Recommendation 40 – Other forms of international cooperation............................................................ 195 Summary of Technical Compliance – Key Deficiencies......................................................................... 200 Glossary................................................................................................................................................... 210 EXE Anti-money laundering and counter-terrorist financing measures in Nepal 2023 2 EXECUTIVE SUMMARY EXECUTIVE SUMMARY 1. This report provides a summary of the AML/CFT measures in place in Nepal as at the date of the on-site visit 5 to 16 December 2022. It analyses the level of compliance with the FATF 40 Recommendations and the level of effectiveness of Nepal’s AML/CFT system, and provides recommendations on how the system could be strengthened. Key Findings 1. Nepal completed its second National Risk Assessment (NRA) in 2020, and, overall, competent authorities and the private sector have a varied and developing understanding of ML risks and a limited understanding of TF risk. The National Coordination Committee (NCC) is overseeing Nepal’s national AML/CFT policies and implementation, which are focused on strengthening Nepal’s AML/CFT legislative frameworks and institutions, building the capacity of relevant competent authorities, and operational activities targeting Nepal’s highest threats and vulnerabilities. However, high level commitment, greater resources, operational-level prioritisation, and cooperation is needed for Nepal to effectively combat its ML and TF risks. 2. The Financial Intelligence Unit (FIU) is housed within the Nepal Rastra Bank (NRB) with good resources, strong operational independence, policies and procedures for all its functions and memorandum of understandings (MOUs) with relevant agencies. The FIU is making significant efforts to enhance all FIU functions through the ongoing implementation of goAML, but financial institutions’ (FIs) STR reporting needs improvement and there is no reporting from Designated Non-financial Businesses and Professions (DNFBPs). Key LEAs are making reasonable use of financial intelligence. 3. The Department of Money Laundering Investigation (DMLI) is the sole ML investigative agency. While referrals to DMLI are not fully consistent with Nepal’s risk profile, it has investigated 58 ML cases with 45 prosecution cases and 32 natural persons convicted of ML. The vast majority of these convictions are self-laundering related to banking offences, which are rated high-risk in the 2020 NRA and are predicate crimes of focus in the National Strategy and Action Plan. However, Nepal has few ML investigations, prosecutions, and convictions for other high-risk predicate crimes. 4. Nepal is pursuing some high-level confiscation-related policy objectives. However, this is yet to translate into institutional-level policies and procedures by Law Enforcement Agencies (LEAs), or confiscation results in line with Nepal’s risks as the value of recovered confiscation orders is low. Nepal has ten successful non-conviction based confiscation cases related to ML. Anti-money laundering and counter-terrorist financing measures in Nepal 2023 3 EXECUTIVE SUMMARY 5. While Nepal has two TF cases, Nepal has a limited ability to identify potential TF in line with its risks mainly due to non-integration of TF into Nepal’s broader counter-terrorism strategies, lack of operational-level cooperation, and non-recognition of the financing of domestic political activities having the elements of terrorism as TF. 6. Nepal’s legal framework to implement Targeted Financial Sanctions (TFS) has moderate shortcomings in regards to TF and major shortcomings with regard to PF. FIs displayed a varying understanding of their TFS obligations with commercial banks, large development banks, large non-bank remitters, and other larger FIs conducting automated screening. Other FIs and all DNFBPs are not conducting adequate TFS screening. No funds have been frozen pursuant to UNSCRs. 7. Nepal has a multi-supervisor model for both FIs and DNFBPs. For commercial banks, the NRB implemented a new framework for risk-based AML/CFT supervision in 2021 with some sanctions imposed based on recent AML/CFT supervision activities. For all other FI AML/CFT supervisors, understanding of risks and implementation of risk-based supervision is in its early stages. DNFBP AML/CFT supervision has not commenced. In line with this, commercial banks and some larger FIs understand their AML/CFT obligations and are applying CDD and record keeping requirements, but there are challenges associated with Beneficial Ownership (BO) and Politically Exposed Persons (PEPs). Implementation of all AML/CFT preventative measures in all smaller FIs is less advanced. DNFBPs implementation of preventive measures is negligible. 8. Nepal has major shortcomings in its implementation of Recommendation 24 and 25. BO information is not available from Nepal’s registrars. Where LEAs may be seeking BO information from commercial banks (and other FIs if it is collected), it is unlikely to be accurate or up-to-date. 9. Nepal provides Mutual Legal Assistance (MLA) in response to incoming requests with approx. 32% of requests executed in a somewhat timely manner. Nepal averages approx. 12 outgoing MLA requests per year. In line with Nepal’s risk and context, Nepal and India have a five-level border security cooperation and coordination mechanism, which is actively used to coordinate and exchange information on border-related criminal activities. A similar border cooperation mechanism exists with China. Anti-money laundering and counter-terrorist financing measures in Nepal 2023 4 EXECUTIVE SUMMARY Risks and General Situation 2. The Federal Democratic Republic of Nepal (Nepal) is a lower-middle-income jurisdiction with a GDP of 40.83 billion USD (in 2022) 1 and per capita GDP of around $1,336 USD (in 2022). Nepal's economy is primarily based on the agriculture and service sectors. Nepal is bordered by India to the south, east, and west, and China to the north. 3. In Nepal corruption, tax evasion and human trafficking are the highest ML threats with the greatest potential to generate proceeds and produce negative economic and social impacts. Nepal’s porous borders are a significant ML risk having a strong nexus to domestic and foreign predicate offences such as narcotics trafficking, gold and cash smuggling, and environmental crime. Key vulnerable sectors include banking, cooperatives, dealers in precious metals and stones (DPMS), casinos, and remittance providers. Hundi is also prevalent in Nepal. Nepal is not a global or regional financial centre. The size and make-up of Nepal’s economy and financial sector is less attractive to laundering of foreign proceeds, except in relation to casinos along Nepal’s border. 4. Nepal has not experienced any acts of international terrorism in the period under review. Nepal’s porous border region is a key risk factor in the nexus to regional terrorism and TF activities with some reports suggest that Nepal may be used as a transit or staging point for regional actors to commit terrorist activities not targeted towards Nepal. Nepal’s domestic insurgency/terrorism and TF threat has significantly declined in recent years, but there are still small scale incidents directed at the Government and/or other political targets. Overall Level of Effectiveness and Technical Compliance 5. Following its 2011 mutual evaluation and inclusion in the FATF’s International Cooperation Review Group process, Nepal’s AML/CFT regime has undergone significant reform. This includes amendments to the Asset (Money) Laundering Prevention Act (ALPA) in 2011, 2014, 2016 and 2019 to enhance compliance with a range of FATF Recommendations (primarily related to the ML and TF offences and targeted financial sanctions for terrorism and TF); passing of the Criminal Proceeds and Instruments of Offence (freezing, controlling and confiscation) Act (POCA) 2013 to enhance Nepal’s confiscation regime; the establishment of the Department of Money Laundering Investigation (DMLI) as the sole investigative agency for ML and TF; and passing of AML/CFT preventive measures directives for most FI and DNFBP sectors. 6. In addition to these AML/CFT focused reforms, significant other legislative reforms include the Constitution of Nepal (adopted in 2015), National Civil Code (NCivC) 2017, National Civil Procedures Code (NCPC) 2017, National Penal Code (NPC) 2017 and National Criminal Procedures Code (NCrPC) 2017. Assessment of Risk, coordination and policy setting (Chapter 2 - IO.1; R.1, R.2, R.33 & 34) 7. Nepal completed its second National Risk Assessment (NRA) in 2020. The NRA identifies corruption, tax evasion, and financial sector crimes (such as banking offences and hundi) as high threat. The Assessment Team (AT) considers human trafficking is also a high threat and banking offences may 1World Bank data – GDP growth 2020 to 2022. https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?locations=NP, accessed 5 May 2023 Anti-money laundering and counter-terrorist financing measures in Nepal 2023 5 EXECUTIVE SUMMARY be lower threats. The NRA assessment focuses on terrorism and Nepal’s legislative framework with the TF analysis being very limited. The assessment of vulnerabilities is reasonable with banking, cooperative, DPMS and casino sectors identified as the most vulnerable sectors. Recommendation (R) 1 is rated partially compliant. Overall, competent authorities have a varied and developing understanding of ML risks and a limited understanding of TF risk. 8. The National Coordination Committee (NCC) is overseeing Nepal’s national AML/CFT policies through implementation of the risk-based National AML/CFT Strategy and Action Plan 2019-2024. Nepal is focused on strengthening its AML/CFT legislative frameworks and institutions, building the capacity of relevant competent authorities, and operational activities targeting Nepal’s highest threats and vulnerabilities. However, greater resources and prioritisation is needed for the activities of all competent authorities to be fully in line with Nepal’s ML/TF risks. 9. Nepal’s framework for AML/CFT national coordination and cooperation is well structured and focused on policy-related actions. R.2 is rated partially compliant. Enhanced use of established cooperation mechanisms for operational cooperation on all high ML threats, TF, and key vulnerabilities is needed. PF related cooperation and coordination is not occurring. Financial Intelligence, ML Investigations, Prosecutions and Confiscation (Chapter 3 – IO.6, 7,-8; R.1, R.3, R.4, R.29-32) 10. The Financial Intelligence Unit (FIU) is housed within the Nepal Rastra Bank (NRB) with good resources, strong operational independence, policies and procedures for all its functions and MOUs with relevant agencies. The FIU is making significant efforts to enhancing all functions through the ongoing implementation of goAML, but STR reporting needs improvement overall and particularly from non-commercial bank financial institutions (FIs), and there is no reporting from DNFBPs. The FIU makes an annual average of approx. 293 proactive and 87 reactive disseminations to key Law Enforcement Agencies (LEAs) who are making reasonable use of this intelligence and developing their own to trace criminal proceeds related to ML, and higher-risk predicate crimes. The FIU is supporting NRB’s AML/CFT supervision activities by providing information that has triggered AML/CFT onsite visits. 11. The DMLI is the sole ML investigation agency with clear designation of predicate crime authority for other LEAs and Investigative Authorities. Referrals to DMLI are not fully consistent with Nepal’s risk profile (including that there are gaps in some LEAs’ and Investigative Authorities’ powers – R.31 is rated partially compliant), and DMLI would benefit from additional human and institutional resources to initiate and investigate more high risk predicate crime ML cases in line with Nepal’s risks. DMLI has investigated 58 ML cases with 45 cases prosecuted (23 cases still under prosecution) and 32 natural persons convicted of ML. The vast majority of these convictions are self-laundering related to banking offences, which are rated high-risk in the 2020 NRA and are predicate crimes of focus in the National Strategy and Action Plan. However, Nepal has few ML investigations, prosecutions, and convictions for other high-risk predicate crimes. 12. Nepal is pursuing some high-level confiscation-related policy objectives and building the capacity of the Department for Management of Proceeds of Crime (DMPC), and has a sound legal framework. This is yet to translate into institutional-level policies and procedures by LEAs and Investigative Authorities, or confiscation results in line with Nepal’s risks. Overall, Nepal requires Anti-money laundering and counter-terrorist financing measures in Nepal 2023 6 EXECUTIVE SUMMARY greater commitment to confiscation with the total value of recovered confiscation orders being approx. NPR 2.6 billion (~USD 19.5 million) in the period under review. Nepal has ten successful non-conviction based confiscation cases related to ML. Overall, LEAs’ freezing and/or seizing actions are not consistent with Nepal’s risks and Nepal does not maintain consolidated confiscation-related information and statistics that links LEAs’ and Investigative Authorities’ seizing/freezing actions, confiscation orders, and enforcement actions. 13. While the Department of Customs (DOC) and Armed Police Force (APF) is seizing some smuggled cash and gold/silver at Nepal’s border, DOC is not systematically implementing Nepal’s cash declaration system. Terrorist and Proliferation Financing (Chapter 4 – IO.9, 10, 11; R.1, R.4, R.5-8, R.30, R31 & R.39) 14. In the period under review, Nepal had two TF cases both initiated by international cooperation. One case resulted in seven TF convictions, but Nepal has not enforced the court’s judgments. The second case commenced in 2018 and is currently under prosecution. Notwithstanding, Nepal has a limited ability to identify potential TF in line with its risk mainly due to non-integration of TF into Nepal’s broader counter-terrorism strategies, lack of operational-level cooperation through the CTM or Nepal’s border security cooperation and coordination mechanism with India, and non- recognition of the financing of domestic political activities having the elements of terrorism as TF. 15. Nepal’s legal framework to implement Targeted Financial Sanctions (TFS) has moderate shortcomings whereby the Freeze Order does not apply to new, or changes to, UNSCR 1267 and 1988 designations after 6 December 2013. While Nepal has a legal framework to implement TFS relating to UNSCR 1373, it is not used including in relation to Nepal’s TF cases. FIs displayed a varying understanding of their TFS obligations with commercial banks, large development banks, large non- bank remitters, and other larger FIs conducting automated screening. Other FIs and all DNFBPs are not conducting adequate TFS screening. Nepal has not demonstrated that terrorists, terrorist organisations and terrorist financiers are deprived of their assets including in relation to its TF cases. 16. Nepal is not implementing a risk-based approach to preventing TF abuse of NPOs. 17. Nepal’s legal framework for implementing TFS for PF has major shortcomings with natural and legal persons not required to freeze funds or assets of persons or entities designated under UNSCRs 1718 or 2231. FI and DNFBP screening is similar to TFS for TF, no funds have been identified or frozen, and specific monitoring is not occurring. Preventive Measures (Chapter 5 - IO4; R.9-23) 18. Nepal has a range of technical shortcomings in preventive measures for FIs (e.g., R.10 is rated partially compliant), which cascade to DNFBPs in combination with some DNFBP scope gaps. Nepal has sought to prohibit Virtual Assets (VA) and Virtual Asset Service Providers (VASPs). Banks play a critical role in Nepal’s financial sector with implementation issues weighed most heavily for commercial banks, followed by development banks, cooperatives, casinos, real estate and DPMS. 19. The understanding of ML/TF risks and AML/CFT obligations varies considerably among FI sectors. It is notably higher among banks and other FIs with some exposure to group-wide internal Anti-money laundering and counter-terrorist financing measures in Nepal 2023 7 EXECUTIVE SUMMARY AML/CFT policies. In line with this, the application of mitigating measures is not commensurate with risk across most FIs. 20. Commercial banks, large development banks, large finance, remittance, securities and life insurance companies are applying CDD and record keeping requirements. These FIs face challenges in; (i) linking the individual to their identity due to limitations in Nepal’s common identity documentation, and (ii) in identifying Beneficial Ownership (BOs) as they are fully reliant on self-declaration and information provided by the customer with limited avenues for verification. All other FIs have more limited ability to overcome these challenges and apply more rule-based CDD. 21. For enhanced due diligence, in particular Politically Exposed Persons (PEPs) screening, commercial banks and large development banks have systems to identify and monitor PEPs. Large finance, remittance, securities and life insurance companies have some systems to identify and monitor PEPs but are overly reliant on the Nepal Bankers Association’s PEPs list, which may not be up-to-date and does not include family members, close associates, or foreign PEPs – these FIs have limited measures to overcome gaps in the Nepal Bankers Association’s PEPs list. Nepal has technical deficiencies with regard to the application of counter measures. 22. Commercial banks continue an upward trend in STR reporting over recent years and contribute almost 50% of TTRs. Other FI sectors generally record low number of STRs. 23. The recentness of DNFBP sector specific regulations/directives and the lack of AML/CFT supervision means, overall, DNFBPs implementation of preventive measures is negligible, and DNFBPs are not submitting STRs. Supervision (Chapter 6 - IO3; R.14, R.26-28, R.34, R.35) 24. Nepal has a multi-supervisor model for both FIs and DNFBPs. Nepal is not actively preventing criminals from holding or controlling FIs or DNFBPs due in part to technical gaps in licencing and registration requirements. 25. For commercial banks, NRB implemented a new framework for risk-based AML/CFT supervision in 2021 and is close to completing its second round of inspections. As a result, NRB is starting to develop an understanding of the ML/TF risks in the commercial banking sector at an institution level. NRB has also imposed fines on commercial banks for AML/CFT non-compliance, although these were limited and not dissuasive. For all other FI supervisors, the understanding of risks and implementation of risk-based supervision is in its early stages. 26. For the DNFBP supervisors, understanding of ML/TF risks is in its very early stages and AML/CFT supervision has not yet commenced. Transparency and Beneficial Ownership (Chapter 7 - IO5; R.24-25) 27. Nepal has major shortcomings regarding R.24 including that Nepal has not assessed the ML/TF risks associated with all types of legal persons created in Nepal, and implemented measures to prevent misuse of legal persons for ML/TF. All competent authorities did not demonstrate an awareness of ML/TF risks associated with legal persons. Anti-money laundering and counter-terrorist financing measures in Nepal 2023 8 EXECUTIVE SUMMARY 28. Companies are required to register with the Office of the Company Registrar (OCR), which maintains basic information that is being sought by LEAs and Investigative Authorities. However, OCR has no proactive mechanisms to ensure basic information is accurate or up-to-date – very limited sanctions have been imposed by OCR. 29. Nepal relies upon information collected by commercial banks and some other large FIs in the course of implementing CDD requirements for BO information, which competent authorities are making some use of. However, information sought by these FIs is focused on the natural person owning 10% of more of shares (as controlling ownership interest in the legal person) and fully reliant on self- declaration and information provided by the customer. 30. Nepal has major shortcomings regarding R.25. Trusts can be created under the National Civil Code 2017 (NCivC), the common law, and settled in Nepal under foreign laws. Public trusts are required to be registered and private trusts are required to notify the Registrar of their existence. Trustees are required to maintain records, but relevant authorities have little information on trusts in Nepal. Nepal has not implemented other mitigating measures to prevent the misuse of trusts including that trustees are not obliged to disclose their status to FIs and DNFBPs. International Cooperation (Chapter 8 - IO2; R. 36-40) 31. Nepal is party to relevant international conventions and has a strong framework for MLA. However, it has moderate shortcomings relating to MLA for confiscation and extradition. In both cases, the key shortcoming is that Nepal requires a treaty for confiscation and execution of the judgment of foreign courts, whereas, treaty is mandatory for extradition. Currently, Nepal only has an extradition treaty with India and a MLA treaty with China. 32. Nepal provides MLA in response to incoming requests with approx. 32% of requests executed in a somewhat timely manner. Nepal averages approx. 12 ongoing MLA requests per year with the vast majority of these requests initiated from the Court and not LEAs during investigations. Nepal is using other forms of international cooperation for AML/CFT purposes including through the FIU and Nepal Police (NP). In line with Nepal’s risks and context, the Nepal and India five-level border security cooperation and coordination mechanism is actively used to coordinate and exchange information on criminal activity. A similar border cooperation mechanism exists with China. Anti-money laundering and counter-terrorist financing measures in Nepal 2023 9 EXECUTIVE SUMMARY Priority Actions 1. Nepal should pass the Amendments to Some Laws relating to AML and Business Promotion Bill. When passed, Nepal should expedite implementation and significantly enhance the capacity of impacted competent authorities to undertake their new and/or modified AML/CFT functions. 2. Nepal should enhance public and private sectors’ understanding of Nepal’s ML/TF risks by updating its TF risk assessment, assessing the ML/TF risks associated with legal persons and arrangements, and by conducting more focused ML risk assessments on corruption, tax evasion, human trafficking, narcotics offences, environmental crime, and border-related crimes. 3. LEAs and Investigative Authorities and the Office of the Attorney General (OAG) should prioritise the investigation and prosecution of ML associated with all high risk predicate crimes at a level consistent with Nepal’s overall ML risk. 4. NRB’s new AML/CFT Supervision Division should be appropriately resourced to deliver supervision across all NRB supervised FI sectors. Supervision should be risk-based and prioritised for commercial banks and other higher risk FIs supervised by NRB. 5. Nepal should significantly enhance risk-based AML/CFT supervision of cooperatives, casinos, DPMS, and real estate agents. 6. Nepal should implement TFS for TF without delay2 and ensure TFS implementation by FIs and DNFBPs. 7. The FIU’s goAML division should be given additional human and financial resources to expedite full adoption and operation of goAML. 8. Nepal should significantly enhance implementation of all preventative measures (and address TC gaps) by conducting a range of activities (including sanctioning where appropriate) to ensure all FIs and DNFBPs enhance their application of risk-based CDD and enhanced or specific measures (focused first on PEPs and BOs), apply mitigating measures commensurate with their risks, enhance FIU and regulatory reporting, and apply internal controls. 9. The Department for Management of Proceeds of Crime (DMPC) should receive significantly greater human and institutional resources to undertake its function and receive cooperation and coordination from all competent authorities to enhance Nepal’s ability to effectively deprive criminals from their ill-gotten gains. 10. Nepal should streamline its MLA response coordination mechanisms; and establish policies, procedures and SOPs that support LEAs and Investigative Authorities to prioritise the use of MLA and other forms of international cooperation in ML/TF and high risk predicate crime cases. 2 Nepal informed the assessment team at the Face-to-Face Meeting that it had issued a new ‘Order to Freeze’ on 25 April 2023. Anti-money laundering and counter-terrorist financing measures in Nepal 2023 10 EXECUTIVE SUMMARY Effectiveness & Technical Compliance Ratings Effectiveness Ratings IO.1 - Risk, policy IO.2 - International IO.3 - Supervision IO.4 - Preventive IO.5 - Legal persons IO.6 - Financial and coordination cooperation measures and arrangements intelligence Moderate Moderate Low Low Low Moderate IO.7 - ML IO.8 - Confiscation IO.9 - TF IO.10 - TF IO.11 - PF financial investigation & investigation & preventive sanctions prosecution prosecution measures & financial sanctions Moderate Low Low Low Low Technical Compliance Ratings (C – compliant, LC – largely compliant, PC – partially compliant, NC – non compliant) R.1 - Assessing risk R.2 - National R.3 - Money R.4 - Confiscation & R.5 - Terrorist R.6 - Targeted & applying risk- cooperation and laundering offence provisional financing offence financial sanctions – based approach coordination measures terrorism & terrorist financing PC PC LC LC LC PC R.7 - Targeted R.8 - Non-profit R.9 - Financial R.10 - Customer due R.11 - Record R.12 - Politically financial sanctions – organisations institution secrecy diligence keeping exposed persons proliferation laws NC NC LC PC C LC R.13 - R.14 - Money or R.15 - New R.16 - Wire R.17 - Reliance on R.18 - Internal Correspondent value transfer technologies transfers third parties controls and foreign banking services branches and subsidiaries LC LC NC LC LC LC R.19 - Higher-risk R.20 - Reporting of R.21 - Tipping-off R.22 - DNFBPs: R.23 - DNFBPs: R.24 - Transparency countries suspicious and confidentiality Customer due Other measures & BO of legal persons transactions diligence PC C C PC PC PC R.25 - Transparency R.26 - Regulation R.27 - Powers of R.28 - Regulation R.29 - Financial R.30 - & BO of legal and supervision of supervision and supervision of intelligence units Responsibilities of arrangements financial institutions DNFBPs law enforcement and investigative authorities PC PC C PC C LC R.31 - Powers of law R.32 - Cash couriers R.33 - Statistics R.34 - Guidance and R.35 - Sanctions R.36 - International enforcement and feedback instruments investigative authorities PC LC LC PC LC LC R.37 - Mutual legal R.38 - Mutual legal R.39 - Extradition R.40 - Other forms assistance assistance: freezing of international and confiscation cooperation LC PC PC PC Anti-money laundering and counter-terrorist financing measures in Nepal 2023 11 MUTUAL EVALUATION REPORT OF NEPAL Preface This report summarises the AML/CFT measures in place in Nepal as at the date of the on-site visit from 5-16 December 2022. It analyses the level of compliance with the FATF 40 Recommendations and the level of effectiveness of Nepal’s AML/CFT system, and recommends how the system could be strengthened. This evaluation was based on the 2012 FATF Recommendations, and was prepared using the 2013 Methodology. The evaluation was based on information provided by Nepal, and information obtained by the assessment team during its on-site visit to Nepal. The evaluation was conducted by an assessment team consisting of: Mr. Shaun Mark, Australian Federal Police, Australia (law enforcement/FIU assessor). Mr. Md Khairul Anam, Bangladesh Financial Intelligence Unit, Bangladesh Bank (financial assessor). Ms. Ran Sun, People’s Bank of China, China (financial/FIU assessor). Ms. Jayneeta Prasad, Office of the Director of Public Prosecutions Fiji (legal assessor). Ms. Suhanna Omar, Bank Negara, Malaysia, (financial assessor). Mr. Robert Milnes, Department of Internal Affairs New Zealand (financial assessor). Ms. Minerva Sobreviga-Retanal, National Bureau of Investigation, Philippines (legal/law enforcement assessor). Mr. Ayesh Ariyasinghe, Sri Lanka FIU, Sri Lanka (FIU/law enforcement assessor). The assessment process was supported by Mr. Shannon Rutherford, Ms. Joëlle Woods and Ms. Kirsty Struthers of the APG Secretariat, with additional support from other Secretariat members. The report was reviewed by Mr Matthew Shannon, Finance Canada; Mr. Kenneth Wong, Attorney- General’s Chambers Singapore; and the FATF Secretariat. Statistical tables: Information shown in tables throughout this report has been sourced directly from Nepal government authorities, unless otherwise stated. Translations of legal instruments: Non-official English translations of laws and other relevant instruments were provided to the AT directly by Nepal authorities. The translations were treated as accurate for all purposes from the outset of the evaluation. Exchange rates: The exchange rate used throughout this report is 1 NPR = USD$0.0075 based on the exchange rate at the end of the onsite (16 December 2022). Nepal’s Previous MER: Nepal previously underwent an APG Mutual Evaluation (ME) in 2011 conducted according to the 2004 FATF Methodology. The 2011 ME report is published and is available at www.apgml.org. Anti-money laundering and counter-terrorist financing measures in Nepal 2022 12 The 2011 ME concluded that Nepal was compliant on one Recommendation, largely compliant with three Recommendations; partially compliant with ten recommendations and non-compliant with 33 recommendations. Two recommendations were found to be not applicable. Nepal was in the FATF’s International Cooperation Review Group (ICRG) process fromFebruary 2010 until removal from the process in July 2014. Significant progress was made by Nepal while under ICRG including amendments to the ML and TF offences; establishing a confiscation regime and TFS for terrorism and TF regime; issuing enforceable CDD directives; ratification of conventions; enactment of MLA legislation; enhancing the function of the FIU; and STR reporting requirements. Anti-money laundering and counter-terrorist financing measures in Nepal 2023 13 1 CHAPTER 1. ML/TF RISKS AND CONTEXT 1. Nepal is a landlocked country in South Asia located in the Himalayas. It is bordered by India to the south, east, and west, and China to the north. The population of Nepal is approx. 29 million with approx. 7% of the population living in the capital city of Kathmandu. 2. Nepal is a developing jurisdiction with a GDP of approx. 40.83 billion USD (in 2022) 3 and per capita GDP of around $1, 336 USD (in 2022). 4 Nepal's economy is primarily based on the agriculture and service sectors accounting for approx. 33% and approx. 57% of GDP, respectively. Incoming remittance is also significant. Between 2015 and 2019 GDP grew at an average rate of approx. 4.75%.3 However, the COVID-19 pandemic has had a significant impact on Nepal’s economy with a GDP contraction of approx. 2.25% in 2020. Since the relaxing of Nepal’s and global COVID-19-related restrictions, GDP growth is approx. 4.25% driven primarily by an increase in incoming tourists. 3. Nepal is a federal democratic republic, with a Government based on a multi-party system. The Constitution of Nepal adopted in 2015 establishes a federal system of government with three levels: federal, provincial, and local. Principal law-making and enforcement occurs at the federal and provincial levels with powers of the three levels of Government outlined in Schedule 5 to 9 of Constitution of Nepal. At the federal level, Nepal has a bicameral legislature, consisting of the 275 member House of Representatives (the lower house) and the 59 member National Assembly (the upper house). Nepal’s head of state is the President. The executive power is vested in the Council of Ministers with the Prime Minister as the head. 4. Nepal is divided into seven provinces, each with its own Provincial Government, consisting of a unicameral legislature, Chief of Province as a representative of the Federal Government, and a Chief Minister (head of provincial government) with executive power of the province vested in the Provincial Council of Ministers. Nepal has 753 local governments at the municipal and village level, which are responsible for providing basic services and implementing local policies in accordance with Schedule 8 and 9 of the Constitution of Nepal and the Local Government Operation Act, 2017. 5. Nepal legal system is strongly influenced by common law and Hindu traditional law and also some elements of civil law system with the following hierarchy of laws: Constitution of Nepal is supreme law in Nepal with statutes required to be consistent with the Constitution (Article 1, Constitution of Nepal) and the Supreme Court having the authority to declare the legislation not consistent with Constitution void (Article 133 Constitution of Nepal). International Conventions and Treaties that Nepal has ratified are applicable as national laws in accordance to Section 9 of the Nepal Treaty Act 1991. It also provides that in the event of inconsistency between provisions of convention/treaty ratified by Nepal and Nepalese law, the convention/treaty prevails. 3 World Bank data – GDP growth 2020 to 2022. https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?locations=NP, accessed 5 May 2023 4 World Bank data – GDP growth 2020 to 2022. https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?locations=NP, accessed 5 May 2023 Anti-money laundering and counter-terrorist financing measures in Nepal 2023 14 CHAPTER 1. ML/TF RISKS AND CONTEXT Statutes are enacted by the Federal Parliament under Part 9 of Constitution of Nepal having precedence over other laws subordinate there to including administrative measures. The 1 Constitution of Nepal also allows for the issuance of Ordinance by the President on recommendation of the Council of Ministers when both Houses of the Federal Parliament are not in session and circumstances exist which render it necessary to take immediate action (Article 114 Constitution of Nepal). Ordinance have the same force and effect as a statute but must be enacted by Parliament within 60 days of both Houses sitting to remain in force and effect. Rules and By-Laws may be issued pursuant to statutory delegation by the Council of Ministers and authorized agencies respectively. The rules and by-laws must be compliant with the terms of the enabling statute. Directives are departmental or ministerial orders issued under the authority of statutes or rules. 6. Nepal has a three tier Judicial System of the Supreme Court, High Courts (Appellate Court), and District Courts (first instance court). The Supreme Court is the apex court and the court of record. All other courts and institutions exercising judicial powers are under its jurisdiction. The Supreme Court has both original and appellate jurisdiction and consists of a chief justice (appointed by the President on the recommendation of the Constitutional Council) and maximum of twenty other judges. Other judges of the Supreme Court, High Courts, and District Courts are appointed on the recommendation of the Judicial Council. Article 152 of the Constitution of Nepal provides for Special Courts with the Special Court designated with exclusive jurisdiction over ML, TF, corruption offences, and other designated offences (Special Court Act, 2002). ML/TF Risks and Scoping of Higher-Risk Issues Overview of ML risks 7. In Nepal corruption, tax evasion and human trafficking are the highest ML threats with the greatest potential to generate proceeds. Nepal’s NRA recognises the ML risks of these offences. According to Transparency International, Nepal’s Corruption Perception Index score is 34/100 and ranks Nepal at 110/180 globally 5 (see para 31 for further information). Tax evasion both direct and indirect is due to a culture of low compliance; high costs to comply with requirements; and weak enforcement. 6 It is estimated 1.5 million Nepalese are vulnerable to trafficking as Nepal is a source, transit and destination jurisdiction for human trafficking. 7 The forms of human trafficking include forced labour, domestic servitude, and sex trafficking. 8 8. Nepal’s border region is a significant risk, having a strong nexus to domestic and foreign offending with criminal activity exploiting Nepal’s porous border, particularly with India. Nepal and India share a porous and open border of more than 1,800 km with few check points and a large volume of people moving without a passport or visa on a daily basis. Nepal’s NRA recognises the strong nexus between the border, transnational crimes and illegal activities. Border related offences such as smuggling and narcotics trafficking are higher ML threats in Nepal. Whilst Nepal is not a significant 5 Transparency International, 2023, Nepal Corruption Perception Index, 2022, https://www.transparency.org/en/countries/nepal, accessed 29 May 2023. 6 Bertelsmann Stiftung, 2022, BTI 2022 Country Report — Nepal, Gütersloh: Bertelsmann Stiftung, https://bti- project.org/fileadmin/api/content/en/downloads/reports/country_report_2022_NPL.pdf, accessed 21 February 2023. 7 United States Department of State, 2022, 2022 Trafficking in person report, U.S. Embassy in Nepal, https://np.usembassy.gov/2022-trafficking-in-person-report/, accessed 01 March 2023. 8 Ibid Anti-money laundering and counter-terrorist financing measures in Nepal 2023 15 CHAPTER 1. ML/TF RISKS AND CONTEXT producer of narcotics domestically, hashish, heroin and domestically produced cannabis and opium are 1 trafficked to and through Nepal across the porous border. The porous border also lends itself to the smuggling of people, cash, counterfeit currency, and gold and other precious metals. Environmental crime is also a higher ML threat with Nepal being a source and transit jurisdiction for illegal wildlife trade. 9 9. Domestic proceeds are laundered within Nepal and abroad mainly within the region due to strong economic and trade connections, particularly with India. Nepal’s information and statistics on ML cases highlights laundering through the banking (including via remittance), DPMS and real estate sectors, and in cash. Considering global ML typologies and the lack of AML/CFT and other controls, ML through casinos and legal persons and arrangements is likely. 10. Incoming remittances significantly contribute to Nepal’s GDP (approx. 26%), with an estimated large portion flowing through hundi. Funds are laundered and moved abroad through hundi (including by high-net worth individuals) and also to avoid currency transfer restrictions, for tax evasion, and as part of trade-based ML. 10 11. Nepal is not a global or regional financial centre with the size and make-up of Nepal’s economy and financial sector less attractive to laundering of foreign proceeds. Nepal is however exposed to foreign ML threats from neighbouring jurisdictions due to its porous border and its close economic and trade links. In addition, casinos particularly in the border region are a key vulnerability to the laundering of foreign proceeds. Overview of TF risks 12. Nepal is not a high-risk jurisdiction for TF. Nepal has not experienced any acts of international terrorism in the period under review and does not have nationals or persons/entities located in Nepal designated under United Nations Security Council Resolutions (UNSCR) 1267 or 1989. Nepal is not identified as a major source or route jurisdiction for foreign terrorist fighters. 13. Nepal’s porous border is a key risk factor in the nexus to regional terrorism and TF activity with reports 11 that Nepal may be used as a transit place or staging point for terrorists to hide. 12 Other regional open source reports 13 indicate that regional foreign-backed religiously motivated extremist 9 UNODC, 2020, World Wildlife Crime Report 2020: Trafficking protected species, United Nations Publication, https://www.unodc.org/documents/data-and-analysis/wildlife/2020/World_Wildlife_Report_2020_9July.pdf, accessed 01 March 2023. 10 Nepal Risk Assessment, 2020, pg 127. 11 India Today, 2018, Arrested IM terrorist Qureshi had been living in Nepal with fake documents, https://www.indiatoday.in/india/story/arrested-im-terrorist-qureshi-had-been-living-in-nepal-with-fake-documents- 1151283-2018-01-22, accessed 28 February 2023. 12 U.S. Department of State, 2020, Country Reports on Terrorism 2020: Nepal, https://www.state.gov/reports/country- reports-on-terrorism-2020/nepal/, accessed 28 February 2023. 13 Hindustan Times, 2023, ‘Trace source of money reaching madrasas on Indo-Nepal border’ https://www.hindustantimes.com/cities/lucknow-news/trace-source-of-money-reaching-madrasas-on-indo-nepal-border- 101675792023789.html, accessed 28 February 2023. 13 The Indian Express, 2023, Probe Funding of illegal madrasas along Nepal border: UP govt to DM, https://indianexpress.com/article/cities/lucknow/probe-funding-of-illegal-madrasas-along-nepal-border-up-govt-to-dm- 8376616/, accessed 28 February 2023. Anti-money laundering and counter-terrorist financing measures in Nepal 2023 16 CHAPTER 1. ML/TF RISKS AND CONTEXT groups have recently increased their presence in Nepal, particularly along the India-Nepal border. 1 These groups are not focused on Nepal. Nepali authorities acknowledge the challenge of Nepal’s porous border and the security threat it poses including in relation to terrorism and TF. 14. Historically, Nepal has also faced a high risk of domestic insurgency/terrorism and TF. The domestic TF threat has been decreasing with the significant decline in domestic insurgency/terrorism in recent years 14 due in part to the Government’s longstanding peace agreement policy. For example, in March 2021 the Government and Communist Party of Nepal (Maoist Centre) signed a three-point peace agreement. Notwithstanding, Nepal still faces domestic insurgency/terrorism and TF threats primarily related to smaller scale incidents (mainly involving small improvised explosive devices and/or small arms) directed at the Government and/or other political targets. 15. There is limited information available on how insurgents/terrorist or groups raise, move and use funds in Nepal. The AT assumes that minimal funding and material support is required with funds moved via cash and/or hundi. Notwithstanding, Nepal’s two TF cases (see IO.9) demonstrate that the formal financial sector has been abused for TF. Overview of Nepal’s risk assessment 16. Nepal completed its first NRA in 2016 and the second in 2020. The 2020 NRA is based on the risk assessment tool developed by the World Bank. Nepal did not provide to the AT any other form of completed national or sectoral AML/CFT-related risk assessment. The Implementation Committee (IC) and 25 sectoral sub-committees coordinated the individual NRA modules. There are two versions of NRA: full version available to the government agencies and a sanitized version for the public. 17. Nepal assesses the overall level of ML risk as medium with corruption, tax evasion, and financial sector crimes (such as banking offences and hundi) identified as high threat. Drug trafficking, organised crime, extortion, arms related offences, fraud, counterfeiting of currency, environmental crime, robbery (theft), human trafficking and sexual exploitation, smuggling (including black marketing) and forgery offences are identified as medium threat. Counterfeiting and piracy of products is identified as medium low threat. Insider trading and market manipulation, trafficking of stolen goods, kidnapping, illegal restraint and hostage taking are identified as low threat. The public NRA discusses corruption, tax evasion and financial sector crimes (such as banking offences and hundi) as major threats. 18. The AT’s view is that the threat level of drugs trafficking and environmental crime may be higher, and banking offences are not at the same level as corruption and tax evasion. The AT considers Nepal’s findings regarding other ML threats as reasonable. 19. Nepal assesses its overall level of ML vulnerability as medium-high with banking, cooperative, DPMS and casino sectors medium-high vulnerability. Nepal assessed vulnerabilities of formal foreign exchange dealers and remittance providers as low; however, when combined with hundi these sectors 13 The Daily Guardian, 2020, Pak-funded mosques, guesthouses emerge along India-Nepal border, https://thedailyguardian.com/pak-funded-mosques-guesthouses-emerge-along-india-nepal-border/, accessed 28 February 2023. 14 Institute for Conflict Management, 2023, Number of Terrorism Related Incidents Year Wise, https://satp.org/datasheet- terrorist-attack/incidents-data/nepal, accessed March 2023. Anti-money laundering and counter-terrorist financing measures in Nepal 2023 17 CHAPTER 1. ML/TF RISKS AND CONTEXT are rated high vulnerability. Nepal also rates the real estate sector as high vulnerability. In general, the 1 AT considers Nepal’s findings regarding sector vulnerabilities as reasonable. However, the NRA does not cover some FI sectors (for example, payment service operators and providers, including domestic money value transfer services) nor the DNFBP sectors of lawyers, notaries and company/trust service providers. 20. Nepal assesses its terrorism/TF risk as medium for domestic threat and low for international threat. While non-profit organisations (NPOs), open borders, the informal economy and innovations/trends in information technology are identified as TF vulnerabilities, the analysis is focused on Nepal’s legal and institutional frameworks for terrorism and TF. The AT acknowledges that Nepal does not have high TF risks; however, the TF assessment in the NRA is very limited. Scoping of Higher Risk Issues 21. During the mutual evaluation on-site visit and in this report, the AT focused on the below higher risk issues. 22. The AT focused on high-threat predicate offences of corruption, tax evasion and human trafficking. The AT focused most on corruption due to the level of corruption in Nepal; the potential to generate proceeds; the nexus with other predicate crime offending; and the significance of economic and social impacts. The assessment team gave equal focus to tax evasion and human trafficking. 23. Nepal’s porous border is a significant ML risk. There is a strong nexus between the border and predicate crime offending in Nepal including higher-risk predicate crimes of narcotics trafficking, smuggling (primarily precious metals and cash), and environmental crimes. The team placed focus on these issues and predicate crimes. 24. Domestic proceeds are laundered within Nepal and abroad, including neighbouring jurisdictions. For the formal sector, the AT focused on laundering through the banking, remittance, DPMS and real estate sectors. Due to global typologies and the significant lack of AML/CFT controls, laundering through the casino sector and legal persons and arrangements was also a focus. In the informal sector, the AT focused on laundering through hundi. Nepal has sought to prohibit VASPs with the assessment team focusing on Nepal actions to enforce this prohibition.. 25. Nepal is not a high-risk jurisdiction for TF. Noting the decrease in insurgency/terrorism; the government’s commitment to upholding the Peace Agreements; and open source reports on Nepal’s nexus to regional terrorism, the AT focused on TF risks linked to Nepal’s border regions and TF associated with smaller scale incidents directed at the Government and/or other political targets. This focus included consideration of Nepal’s international cooperation with neighbouring jurisdictions as well as domestic coordination among Nepal’s LEAs. Based on global typologies and regional context, Nepal’s cash economy and hundi providers were also an area of some focus. Based on Nepal’s two TF cases control measures in the formal sector was also a focus. While NPOs are identified as a TF vulnerability, the sector is not considered at high risk for TF abuse. 26. As there are many competent authorities involved in Nepal’s AML/CFT regime and Nepal has strong links to neighbouring jurisdictions (particularly with India), the AT placed some focus on domestic and regional cooperation and coordination. Anti-money laundering and counter-terrorist financing measures in Nepal 2023 18 CHAPTER 1. ML/TF RISKS AND CONTEXT Materiality 1 27. Nepal is a developing jurisdiction classified as a Lower-Middle-Income Economy. GDP is approx. 40.83 billion USD (in 2022) 15 and per capita GDP of approx. $1, 336 USD (in 2022) 16. Nepal’s economy is primarily driven by service sector (approx. 57% of GDP) and agriculture (approx. 33% of GDP). Other key sectors of Nepal’s economy include, remittances from Nepalese workers abroad and small and medium-sized enterprises. 28. Nepal’s trade is heavily influenced by its geography with its economy heavily dependent on trade with India and China. India is Nepal’s largest trading partner representing approx. 68% of exports and approx. 63% of imports 17 including that most imports and exports to other jurisdictions pass through India. Nepal’s main exports include textiles, carpets, and handicrafts, while the main imports include petroleum products, machinery and equipment. China is Nepal’s second largest import partner (representing approx. 15.7% of total imports primarily machinery/electrical products 18) and is among the top investors in Nepal's infrastructure. Nepal's imports from China fell to approx. 1.84 billion USD in 2022 down from approx. 2.38 billion USD the previous year, while exports to China totalled approx. 5.39 million USD in 2022, down from 8.37 million USD over the same period. 19 29. Remittance from Nepali migrants working abroad is a crucial source of household welfare and a major source of foreign exchange earnings for Nepal. According to the World Bank, Nepal received 8.2 billion USD in remittances in 2021, which accounted for approx. 22.6% of the country's GDP. Nepal is among the top 25 remittance recipient jurisdictions. 20 The top destinations for Nepali migrant workers and related remittance are the Gulf jurisdictions (particularly Qatar, Saudi Arabia, and the United Arab Emirates) as well as Malaysia and South Korea. 21 The majority of foreign work remittances are sent through formal channels, such as banks and remittance providers. However, hundi channels are also prevalent for both inbound and outbound remittance, particularly in rural areas where formal financial services may not be available. 30. The size of the informal economy in Nepal is significant accounting for around 50% or more of GDP. Around 60%-80% of the total work force is engaged in informal work 22 in a range of activities including agriculture, small-scale trade, construction and the service sector. The informal economy has 15 World Bank data – GDP growth 2020 to 2022. https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?locations=NP Date accessed 5 May 2023 16 World Bank data – GDP growth 2020 to 2022. https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?locations=NP Date accessed 5 May 2023 17 World Integrated Trade Solution, 2019, Nepal Trade Summary, https://wits.worldbank.org/CountryProfile/en/Country/NPL/Year/LTST/Summarytext, accessed 09 March 2023. 18 World Integrated Trade Solution, 2019, Nepal Trade Summary, https://wits.worldbank.org/CountryProfile/en/Country/NPL/Year/LTST/Summarytext, accessed 09 March 2023. 19 Nepal seeks easier trade access to Chinese markets, 2023, Reuters, https://www.reuters.com/world/asia-pacific/nepal- seeks-easier-trade-access-chinese-markets-2023-03- 14/#:~:text=Nepal%27s%20imports%20from%20China%20fell,same%20period%2C%20official%20data%20showed. Date accessed 1 May 2023 20 The World Bank Group, 2023, Personal Remittances, Received (% of GDP) – Nepal, https://data.worldbank.org/indicator/BX.TRF.PWKR.DT.GD.ZS?locations=NP, accessed 09 March 2023. 21 Government of Nepal, 2022, Ministry of Labour, Employment and Social Security – Nepal Labour Migration Report, https://moless.gov.np/storage/files/post_files/Nepal%20Labour%20Migration%20Report_2022.pdf, accessed 09 March 2023. 22https://www.ilo.org/kathmandu/areasofwork/informal-economy/lang--en/index.htm ; https://www.worldeconomics.com/National-Statistics/Informal-Economy/Nepal.aspx Anti-money laundering and counter-terrorist financing measures in Nepal 2023 19 CHAPTER 1. ML/TF RISKS AND CONTEXT a strong nexus with use of cash with cash the dominant mode of day-to-day transactions in Nepal 1 especially in rural areas. This is despite the recent introduction of cash transaction limits (refer para 91). Structural Elements 31. The following structural challenges impact the effectiveness of Nepal’s AML/CFT regime: Commitment to address AML/CFT issues: While Nepal’s actions to enhance its AML/CFT systems since its 2011 MER demonstrate a commitment to combating ML/TF, this commitment is not uniform across Nepal’s AML/CFT system with criminal justice elements, TFS, supervision and regulation of DNFBPs requiring enhanced commitment. In addition, delays in the passing of current AML/CFT legislative reforms (e.g., Amendments to Some Laws relating to AML and Business Promotion Bill) suggest high level political commitment is lacking. Political stability: Nepal has experienced political instability since it became a Republic in 2008 with no government to date managing to complete a full term in power. However, Nepal’s political stability is improving. The World Bank’s global index of political stability, ranked Nepal 8.06 in 2011 and 38.21 in 2021 (a score of 0 represents the lowest politically stable jurisdictions 23). Rule of law: In 2021, the World Bank’s global index for Nepal’s rule of law was 34.62. 24. Nepal fell two positions in its global ranking and is 70th place out of 139 jurisdictions worldwide. 25 Reasons for Nepal’s rule of law declining 26 include prolonged political instability, bureaucracy and governance issues. 27 Freedom House’s report in 2021 rates Nepal as ‘partly free’ with political rights scoring 25/40 and civil liberties receiving 32/60. 28 Transparency and corruption: Transparency International ranked Nepal 110 out of 180 countries in 2022 29 on the Corruption Perceptions Index (CPI) with a score of 34/100. While Nepal’s score has improved since 2012 indicating its perceived level of corruption is becoming less, reports 30 indicate that corruption is widespread in Nepal. The World Bank global index percentile ranks Nepal’s control of corruption at 33.17 31 (0 represents the lowest ranked jurisdiction) placing Nepal in the bottom third of countries in the world; however, there has been improvement since 2011 when Nepal was percentile ranked 23.22. 23 https://info.worldbank.org/governance/wgi/ 24 Ibid. 25 Ibid. 26 The World Justice Project, 2021, Rule of law Project, https://worldjusticeproject.org/sites/default/files/documents/Nepal_2021%20WJP%20Rule%20of%20Law%20Index%20 Country%20Press%20Release.pdf date accessed 23 March 2023. 27 The Himalayan, 2021, Editorial: Poor rule of Law, https://thehimalayantimes.com/opinion/editorial-poor-rule-of-law, accessed 23 March 2023. 28 Freedom House, 2022, Freedom in the World 2022: Nepal, https://freedomhouse.org/country/nepal/freedom- world/2022, date accessed 23 March 2023. 29 Transparency International, 2023, Nepal Corruption Perception Index, 2022, https://www.transparency.org/en/countries/nepal Date accessed 29 May 2023. 30 Freedom House, 2022, Freedom in the World 2022: Nepal, https://freedomhouse.org/country/nepal/freedom- world/2022, date accessed 23 March 2023. The Kathmandu Post, 2023, Nepal’s position in corruption index remains unchanged, https://kathmandupost.com/national/2022/01/26/nepal-s-position-in-corruption-index-remains- unchanged#google_vignette date accessed 20 February 2023. 31 Worldwide Governance Indicators, Nepal: Control of Corruption, https://info.worldbank.org/governance/wgi/Home/Reports date accessed 23 March 2023. Anti-money laundering and counter-terrorist financing measures in Nepal 2023 20 CHAPTER 1. ML/TF RISKS AND CONTEXT Independent and efficient judicial system: Nepal’s Constitution 2015 provides for the separation of powers with three separate branches of government – executive, legislative and judiciary. 32 The 1 judiciary has a three-tier structure comprised of the Supreme Court of Nepal, High Courts and District Courts. The Special Court is designated with exclusive jurisdiction over ML, TF, corruption offences and other designated offences. Recently, Nepal has faced internal pressures to reform the judicial system to make it more efficient, transparent and accountable. There have also been calls for Nepali authorities to end political interference in the enforcement of the law and administration of justice 33 and protect the integrity of the Supreme Court to ensure public trust in the judiciary. 34 Stable and effective Government institutions: Nepal’s government faces challenges in effectively delivering services. The World Bank global index ranks Government effectiveness at 20.9 in 2016 (0 represents the lowest ranked jurisdiction). 35 Key AML/CFT institutions such as the NRB are stable. However, Nepal’s AML/CFT regime continues to undergo structural reform (since 2011) with the draft Amendments to Some Laws relating to AML and Business Promotion Bill aiming to make further structural change including giving ML investigation authority to predicate crime investigation agencies and TF investigation authority to NP. Currently, DMLI is the sole ML and TF investigation agency. Background and other Contextual Factors 32. Nepal officially adopted the federal system with the promulgation of the Constitution in 2015. Nepal continues to face significant challenges in the transition to fully institutionalize three layers of governments as Nepal embeds and refines its federal system. Key ongoing challenges include implementation responsibilities and resource allocation between federal and provincial governments, capacity of provincial and local government institutions, and disparities between regions and provinces access and delivery of basic services. AML/CFT-related functions and institutions are across Nepal’s three levels of Government, which creates challenges to effective implementation. 33. Nepal is in the process of rolling out a new national (federal level) identity card with a unique identifier number with corresponding biometric and demographic data. At the time of the onsite, around 33% of the population had obtained a National ID Number. The most common form of identification in Nepal is Citizenship Card and Driver’s License. The Citizenship Card is issued at age 16 by District Administration Offices under the MoHA and includes the holders name, address, and date of birth and photograph at the time of issuing. This card is not required to be updated. A Driver’s License, issued by provincial authorities, includes holders name, address, and date of birth and photograph at the time of issuing. It is required to be renewed every five years. 34. As discussed in paragraph 30, the size of the informal economy in Nepal is significant with cash the dominant mode of day-to-day transactions in Nepal especially in rural areas. Driven by a range of NRB initiatives, level of financial inclusion in Nepal is increasing, particularly in access for formal 32 BTI Transformation Index, 2022, Nepal, https://bti-project.org/en/reports/country-dashboard/NPL, date accessed 23 March 2023. 33 International Committee of Jurists, 2020, Nepal: high level mission urges law and policy reform to achieve human rights accountability and strengthen justice sector institutions – ICJ Report, https://www.icj.org/nepal-high-level-mission-urges- law-and-policy-reform-to-achieve-human-rights-accountability-and-strengthen-justice-sector-institutions-icj-report/ date accessed 23 March 2023. 34 Human Rights Watch, 2021, Nepal: Protect Judicial Independence and Integrity, https://www.hrw.org/news/2021/11/12/nepal-protect-judicial-independence-and-integrity date accessed 23 March 2023. 35 https://info.worldbank.org/governance/wgi/ Anti-money laundering and counter-terrorist financing measures in Nepal 2023 21 CHAPTER 1. ML/TF RISKS AND CONTEXT financial services and the adoption and use of digital/mobile financial services. 36 Percentage of the 1 population (above 15 years) with an account in a financial institution has increased from 25% in 2011 to 53% in 2021. 37 AML/CFT strategy 35. Nepal is implementing the National AML/CFT Strategy and Action Plan 2019-2024 (AML/CFT Strategy and Action Plan), which includes 10 objectives to enhance Nepal’s AML/CFT system. The implementation of the National AML/CFT Strategy and Action Plan is overseen by the NCC with guidance from the National Review Council (NRC). Individual strategies and actions are implemented with support by several inter-agency cooperation and coordination mechanisms. Legal & institutional framework 36. The key AML/CFT institutions include: FIU-Nepal is designated as Nepal’s FIU, established within the NRB in 2008 as an independent unit. The FIU is also the secretariat of the NCC. Nepal Rastra Bank (NRB) is the central bank of Nepal and is the supervisory authority of banks and other FIs (see Table Chap 1.3). The Governor leads the RCM and the Deputy Governor is the lead of the IC. Ministry of Law, Justice and Parliamentary Affairs (MoLJPA) is responsible for drafting laws and making legal reforms and is also designated as the Central Authority for MLA. Ministry of Home Affairs (MoHA) is responsible for maintaining peace and security in Nepal. MoHA is designated as the Central Authority for extradition and is responsible for Nepal’s TFS regime for TF and PF. The Secretary leads the CTM. Armed Police Force (APF) under the Ministry of Home Affairs is a paramilitary land force responsible counter-insurgency and maintaining internal security, disaster response, and border security. The APF has no authority to investigate ML/TF or predicate crimes. Ministry of Foreign Affairs (MoFA) is responsible for implementing Nepal’s foreign policy, maintaining international relations and cooperation, and some elements of Nepal’s MLA and TFS regimes. Office of the Attorney General (OAG) is the prosecution authority of Nepal. The Special Government Attorney Office is responsible for ML and TF prosecutions in the Special Court. The Deputy Attorney General leads the ICM, and the Chief of the Special Government Attorneys Office leads the ICC. 36 Member Series: Nepal’s Financial Inclusion Journey Towards Access to Finance, Financial Literacy and Financial Consumer Protection, https://www.afi-global.org/publications/member-series-nepals-financial-inclusion-journey-towards-access-to- finance-financial-literacy-and-financial-consumer-protection/; Nepal Financial Inclusion Report 2023,https://www.uncdf.org/article/8240/nepal-financial-inclusion-report-2023; IMF Data Access to Macroeconoci & Financial Data, https://data.imf.org/?sk=e5dcab7e-a5ca-4892-a6ea-598b5463a34c&sid=1460043522778, date accessed 23 Match 2023. 37 World Bank, The Global Findex Database 2021, https://www.worldbank.org/en/publication/globalfindex/Data, date accessed 23 Match 2023. Anti-money laundering and counter-terrorist financing measures in Nepal 2023 22 CHAPTER 1. ML/TF RISKS AND CONTEXT Office of the Company Registrar (OCR) is the registrar for companies (see IO.5 for discussion on other competent authorities responsible for the registration of other legal persons/entities and 1 arrangements in Nepal). Department for Management of Proceeds of Crime (DMPC) under the Ministry of Home Affairs is responsible to manage and auction the confiscated assets. LEAs and Investigators Authorities 38: Department of Money Laundering Investigation (DMLI) is the sole agency responsible for investigation of ML and TF. Police: Nepal Police (NP) is primarily responsible for prevention and investigation of crime and maintaining law and order in Nepal with the vast majority of predicate offence investigations conducted by NP and their respective bureaus. Under the Constitution of Nepal each province has a police service with the division of responsibility between NP and provincial police in accordance with the Nepal Police and Province Police (Operation, Supervision and Coordination) Act, 2020. However, overall, Nepal is still establishing provincial police services. Department of Customs (DOC) is a department in the Ministry of Finance and is responsible for the implementation of Nepal’s cash declaration system and investigation of predicate offences under the Customs Act. Commission for the Investigation of Abuse of Authority (CIAA) is a constitutional body responsible for anti-corruption including as a role of ombudsman, investigation and prosecution of corruption related cases. Department of Revenue Investigation (DRI) is a department under Office of the Prime Minister and Council of Ministers (OPMCM) and is authorised to investigate tax evasion and abuse of foreign exchange. Inland Revenue Department (IRD), under the Ministry of Finance, is authorised to investigate administrative tax revenue collection with any criminal element referred to the DRI. Department of National Park and Wild Life Conservation (DoNPWLC) and NP can investigate national parks and wildlife offences under the National Parks and Wildlife Conservation Act 1973. Department of Forest and Soil Conservation (DoFSC) can investigate forestry offence under the Forest Act 2019. Securities Board of Nepal (SEBON) is responsible for investigating securities related offences under the Securities Act. FI Supervisors: NRB is the AML/CFT supervisor for commercial banks and other FIs (see Table 5). Department of Cooperatives (DeoC) is the AML/CFT supervisor of cooperatives. For those cooperatives operating at provincial or local level only, AML/CFT supervision is designated to the relevant provincial or local body. National Insurance Authority (NIA) is the AML/CFT supervisor for the insurance sector. SEBON is the AML/CFT supervisor for the securities sector. IRD is designated the AML/CFT supervisor for pension funds. 38There are some other competent authorities that are not LEAs per se. See competent authorities are identified in c.30.4. Anti-money laundering and counter-terrorist financing measures in Nepal 2023 23 CHAPTER 1. ML/TF RISKS AND CONTEXT DNFBP Supervisors 39: 1 Ministry of Culture, Tourism and Civil Aviation (MoCTCA) is designated the AML/CFT supervisor for casinos. Department of Land Management and Archive (DoLMA): is designated the AML/CFT supervisor for real estate agents. IRD: is the designated AML/CFT supervisor for DPMS. Nepal Bar Council (NBC) is the designated AML/CFT supervisor for lawyers. Nepal Notary Public Council (NNPC) is the designated AML/CFT supervisor for notaries. Institute of Chartered Accountant of Nepal (ICAN) is the designated AML/CFT supervisor for chartered accountants and registered auditors. OCR is the designated AML/CFT supervisor for TCSPs. 37. Nepal’s AML/CFT cooperation and coordination mechanisms: National Review Council (NRC) is responsible for framing and reviewing the implementation of Nepal’s AML/CFT policies. National Coordination Committee (NCC) is responsible for coordinating, framing and recommending national AML/CFT policies including the National Strategy and Action Plan. Regulatory Coordination Mechanism (RCM) is responsible for AML/CFT supervision cooperation and coordination. Investigation Coordination Mechanism (ICM) and Investigation Coordination Committee (ICC) are responsible for ML, TF investigation cooperation and coordination. Counter Terrorism Mechanism (CTM) and Targeted Financial Sanctions Committee (TFSC) are responsible for countering TF and TFS cooperation and coordination. Implementation Committee (IC) is responsible for conducting national risk assessments. Financial sector, DNFBPs and VASPs 38. Nepal is a developing jurisdiction classified as a Lower-Middle-Income Economy. Nepal is not a global or regional financial centre with its financial sector dominated by banks. In recognition of the different ML/TF risks, context and materiality of the financial and DNFBPs sectors, the AT focused most on commercial banks followed by development banks, savings and credit cooperatives, casinos, real estate and DPMS. Moderate focus was placed on money changers, remittance companies, securities and insurance FIs. Lawyers and accountants were also given moderate focus. For others FIs and DNFBPs such as the Employee Provident Fund, Citizen Investment Trust, Postal Saving Bank, hire purchase providers, payment service operators and providers, finance companies, micro-finance institutions and the Postal Savings Banks received less focus, similarly for notaries and TCSPs. Overview of the financial sector 39 There are some professionals (such as providers of taxation, consultancy or non-chartered accountancy/bookkeeping services) undertaking DNFBP activities that do not have a designated AML/CFT supervisor. Anti-money laundering and counter-terrorist financing measures in Nepal 2023 24 CHAPTER 1. ML/TF RISKS AND CONTEXT 39. Nepal's financial sector comprises of banks and FIs, cooperatives, foreign exchange and MVTS, 1 an insurance sector, a securities sector, the postal savings bank, and various other FIs. The total value of the financial sector is approx. NPR 9,200 Billion (~USD 69 billion). 40. Banks and FIs: The sector is regulated under NRB Act and the BAFIA by the NRB. The sector consists of commercial banks, development banks 40, finance companies and micro finance institutions and the Infrastructure Development Bank. Banks and these FIs make up approx. 85% of total financial sector assets 41 with the 27 commercial banks 42 accounting for approx. 65% of total financial sectors assets. These FIs provide a range of financial services activities including digital banking, internet banking, mobile banking, and QR payments. The NRA 2020 rates the banking and FI sector as medium- high vulnerability, with current account deposits, business credit and trade finance identified as the most vulnerable products. Micro-finance institutions are only included in the NRA 2020 analysis of financial inclusion. 41. Cooperatives: Cooperatives play a significant role in Nepal’s economy, particularly in rural areas. They are member-owned organisations focused on promoting the economic and social well- being of members. There are over 30,000 cooperatives in Nepal, with a combined membership of over 7.33 million people holding approx. 5% (NPR 478 billion; ~USD 3.5 billion) of total financial assets and engaging in a high volume of cash transactions. 42. Cooperatives are regulated by the Cooperative Act and overseen by Ministry of Land Management, Cooperatives and Poverty Alleviation at the federal, provincial and local level. There are three basic types of cooperatives: Saving and credit cooperatives – the most common form of cooperative, which accept savings/deposits and provides lending to members. Production based cooperatives – are involved in activities such as agriculture and other small- scale industries. Multipurpose Cooperatives- are involved in multiple economic activities. 43. There are 14,484 savings and credit cooperatives. The NRA 2020 rates the cooperative sector as medium-high vulnerability due to a lack of AML/CFT knowledge and a complex AML/CFT supervisory framework across DeoC, the 7 provincial and 753 local bodies. The National Cooperative Bank Limited operates at the national level and is the sole institution focused on providing financial services (mainly savings and loans) to its approx. 13,700 member cooperatives across 77 districts of Nepal. The National Cooperative Bank Limited has 68 branches across Nepal and holds approx. 12% of total cooperative sector assets. 44. Foreign exchange and MVTS: In addition to commercial banks and four of the development banks, there are 353 licensed money changers, 218 hotels licensed to undertake currency exchange and 42 international MVTS providers licensed for inbound remittance only (under the NRB Act and FERA). No remitter is permitted to remit funds out of Nepal with all outward remittance required to be via 40 All development banks have private ownership. 41 Approx. 17% of sector assets are held by the NRB. 42 Three banks are majority state-owned; three are joint venture with foreign banks; 19 are private banks; two are foreign subsidiary. Anti-money laundering and counter-terrorist financing measures in Nepal 2023 25 CHAPTER 1. ML/TF RISKS AND CONTEXT banking channels. Nepal’s restrictive controls on foreign exchange and remittance means that currency 1 exchange and international MVTS through licensed FIs are assessed in the NRA 2020 as low vulnerability. 45. Insurance sector: The insurance sector is regulated under the Insurance Act 2022 by the NIA. There are 41 insurance FIs, including 19 that provide life insurance products assessed as the higher risk. Insurance FIs hold approximately 5% or NPR 575 billion (~USD 4.3 billion) of financial assets, predominantly by life insurance FIs. The NRA 2020 rates the insurance sector as medium vulnerability. 46. Securities sector: The securities sector is regulated under the Securities Act by the SEBON. The Nepal Stock Exchange was established in 1994 and is the only exchange in Nepal. Market capitalization is approx. USD 24 billion and approx. 217 companies are listed on the exchange primarily commercial banks, hydro-power companies, insurance companies, and finance companies. The securities market is limited to domestic investors only. The NRA identifies shares and mutual funds identified as most vulnerable to ML/TF. There are 80 securities FIs (Stock Brokers, Merchant Bankers, and Fund Managers) that hold less than 1% (NPR 65 billion equivalent to approx. USD 487 million) of financial assets. The NRA 2020 rates the securities sector as medium vulnerability. 47. Postal Savings Bank (PSB): Through the network of Nepal Post Offices, the Postal Savings Bank provides saving accounts to government officials (max deposit NPR 1.5 million ~USD 11,250), domestic transfers (max NPR 10,000 ~USD75 per transfer), and low value remittance to/from India and a small number of key foreign jurisdictions. There are 68 Postal Savings Bank units/branches throughout Nepal, which operate as independent units e.g., transfer from one PSB unit to another is a domestic wire transfer. The NRA assesses the PSB as low vulnerability. 48. Various other FIs: includes hire-purchase providers, payment service operators and providers (including domestic MVTS), 52 pension funds, the Employees Provident Fund (EPF), Citizen Investment Trust (CIT). The EPF and CIT are both government entities. Nepal assesses Employees Provident Fund, Citizen Investment Trust and other pension funds as having lower levels of vulnerability. The NRA 2020 does not cover payment service operators and providers. Table 1: Overview of FIs Institution Type # of Entities Total Assets Total Assets Indicative (Billion NPR) (~USD) Proportion of total FI sector Assets Banks and FIs Commercial banks (A Class) 27 6,020.55 45.1 billion 65.5% Development banks (B Class) 17 612.73 4.5 billion 6.7% Finance companies (C Class) 17 152.04 1.1 billion 1.65% Micro finance institutions (D 65 519.6 3.9 billion 5.6% Class) Infrastructure Development 1 25.86 194 million.28% Bank Cooperatives Cooperatives 30,879 477.99 3.585 billion 5.20% Foreign exchange and MVTS MVTS (incoming remittance 42 2.34 17.5 million.03% only) Money changers 353.70 5.25 million.01% Anti-money laundering and counter-terrorist financing measures in Nepal 2023 26 CHAPTER 1. ML/TF RISKS AND CONTEXT Money changers (hotels) 218 N/A N/A N/A
