The Asia/Pacific Group on Money Laundering (APG) has advised the government of Nepal to “significantly enhance risk-based” management of the country’s casinos and beef up anti-money laundering (AML) and counter-terrorism financing (CFT) protections.
As reported by GGRAsia, a new APG report says Nepal is “exposed to foreign money laundering threats from neighboring jurisdictions due to its porous border and its close economic and trade links” to other countries. “Casinos, particularly in the border region, are a key vulnerability to the laundering of foreign proceeds.”
The report, released on September 8, indicated that the country’s casino industry ranks as “medium-high vulnerability” for money laundering, based on a National Risk Assessment in 2020. According to the report, there are 28 licensed land-based casinos in Nepal, including 15 “mini-casinos.” Ten are located in the capital of Kathmandu, with the others in “various locations close to the Indian border.” They generate turnover of about NPR9 billion (US$67.5 million) per year.
The report also stated that the “‘fit and proper’ person requirements” for Nepalese gaming halls “are derived from an unclear regulatory framework and are not sufficient to prevent criminal ownership or management.”
Moreover, the report said Nepal is only “partially compliant” with recommendations from the Paris-based Financial Action Task Force (FATF), and authorities in the South Asian country “have a varied and developing understanding of money laundering risks and a limited understanding of terrorism financing risk.”
The APG pointed out that local authorities have licensed 19 new casinos since 2018, without declining a single application. In addition, “Despite all casinos in Nepal undertaking foreign exchange transactions, only six casino operators (covering 10 casinos) have obtained the required license” from the nation’s central bank, Nepal Rastra Bank (NRB).
Of the six, only two “have ever submitted a required monthly return to NRB for their foreign exchange transactions, which is a condition of the license.”
Casino operators in Nepal are “not applying mitigating measures commensurate with their money laundering/terrorism financing risks,” the report continued, due to “negligible understanding” of the risks as well as due to a “lack of guidance and … supervision.”
