It is almost certain that Nepal will be on the negative list (grey list) of the Financial Action Task Force (FATF), an international organization that monitors money laundering. Nepal is going to be on the negative list due to the lack of expected improvements in the implementation of laws related to prevention of money laundering, investigation and prosecution of financial crimes.

What happens after being on the "gray list"?

• Imports will become more expensive, exports may become more difficult
• Foreign loans and financial aid/grants will decrease, interest may become more expensive 
• Foreign direct investment may also be affected
• International sector will look at Nepal negatively

FATF is announcing the final result in February. No matter how much good work is done in the meantime, no one can save Nepal from being on the gray list. There is no point in crying now,' said a government official, 'How can it be done, we should think about getting out of that list by improving quickly.'

According to him, after being on the 'grey list', one year is given to upgrade. You should keep asking for upgrades every three months. The officer also said that if it works effectively, it can be upgraded within a year. 

The mutual evaluation report of APG under FATF, which was published in August 2018, pointed out that there is a high risk of Nepal being on the "grey list" due to the absence of necessary legislation and zero achievements in investigation and action. In the report, the standards to be followed by countries including Nepal were divided into two parts, law enforcement and research aspect (effective rating) and law making and institutional aspect (technical compliance rating). 

The 'Technical Compliance Rating' has 40 criteria. The standard compliance status in this group is divided into four categories as 'Highly Compliance' (Full Compliance), 'Compliance' (Compliance), 'Partially Compliance' (Partial Compliance) and 'Non-Compliance' (No Compliance). Among those standards, Nepal's situation is 'Highly Compliance' in 16, 'Compliance' in five, 'Partially Compliance' in 16 and 'Non-Compliance' in three. 

In order to avoid the 'grey list', at least 21 of the 40 standards in this group must meet 'compliance' or 'highly compliance', which Nepal has done. At least 31 criteria under this group have been fulfilled after the passage of the bill to amend some Nepal Acts last year by the Parliament and the confirmation by the President. 

This means that Nepal is not going to be on the "Grey List" because of the "Technical Compliance Rating". They are going to be on the "grey list" because they are not able to meet the criteria under the "effective rating". 

11 criteria have been specified under 'Effective Rating'. These standards are evaluated with four indicators, namely 'high compliance', 'substantial compliance', 'moderate' and 'low'. To avoid the 'grey list', a country like Nepal should achieve 'high compliance' or 'substantial compliance' in at least 3 of the 11 standards of this group. But Nepal has only received medium evaluation in 4 and low evaluation in 7. As there was no improvement in the 'effective rating', the Nepali team held face-to-face talks at the APG meeting held in Manila, Philippines, a week ago. During the talks, the Nepali side claimed to have improved many indicators. But in that mind  Not ready to accept the international body to explain the

. The FATF General Assembly is being held in Paris, France in the second week of February. The Nepalese team will go to participate in the General Assembly with the details with the specified criteria. Through the same general meeting, the results of Nepal and other countries in the same situation will be announced.

Nepal has been closely monitored by FATF since July 2008. After committing to improve all the necessary areas within the specified time, FATF gave one year time for reforms while keeping a close watch on Nepal. That time ended last October. The possibility of Nepal escaping from the "grey list" has been eliminated since the expected improvements were not made during that period. 77 criteria (indicators) were again assigned to Nepal for

reform. 52 of them were asked to work immediately. After working on that, Nepal has submitted a report to APG. It is seen that Nepal will do well in 30/35 criteria. But APG has not said anything about it," said another government official, "In the meeting held in Manila, it was said that we should work on additional 12/13 standards. But it has not yet been decided which of them.' If it does well in most of the 77 criteria, there is a possibility that Nepal will be removed from the 'grey list' within a year. 

The Money Laundering Investigation Department celebrated the National Anti-Money Laundering Day on Monday with the slogan 'transparency in financial activities, commitment to prevention of money laundering'. On that occasion, Deputy Prime Minister and Finance Minister Bishnu Paudel, Chief Secretary Eknarayan Aryal, Governor Mahaprasad Adhikari and other government officials said that mercury has entered Nepal's "grey list" and now if they work effectively, they can get out of it as soon as possible. 

Even though Nepal has made significant progress in legal reform, they said that the risk of 'grey list' remains due to the lack of effective work on structural and practical reforms. They also accepted that the country's deteriorating economy and the issue of criminal wealth laundering are becoming complicated. 

Finance Minister Paudel said that there is not enough work to be done on the prevention of money laundering. He said, "For whatever reason, the work that should have been done in the prevention of money laundering has not been done the way it should have been." After passing the first and second stage of evaluation, Nepal should have been able to perform strongly in the third stage of evaluation. But we were weak in that.

In this regard, Finance Minister Paudel said that Nepal is working on laws, regulations, building necessary structures, investigations, prosecutions, etc. He emphasized on the need to speed up the investigation and prosecution with the feeling that no one should be acquitted, no one should be found guilty, and the message should be given that everyone is equal under the law. "International agreements in the field of money laundering, we should be excellent in following the laws and regulations we have made," he said. 

Chief Secretary Aryal said that there is a delay in the investigation and prosecution of illegal wealth laundering. "If one agency files a case, the other agency will not rotate the file and delay. Let all agencies work responsibly," he said. Implementation of rules and laws is not enough. Reporting is not effective, not timely. That is why we have reached the stage of monitoring by the international community. If we don't get serious in the next year, we will be in a serious crisis.' 

Chief Secretary Aryal mentioned that any big person, even financial houses, can be affected if illegal and illegal work is done, and said that the tendency to attack the governance system should be discouraged. He emphasized that the 13 agencies investigating money laundering should work in coordination. 

Rashtra Bank Governor Officer said that the trend of illegal wealth laundering has increased through the use of information technology. "Even if Nepal enters the gray list, the basis is ready to get out of it quickly," he said, "Nepal has made enough laws to prevent money laundering." The necessary structures and bodies for their implementation should be able to work effectively.' 

Director General of Money Laundering Investigation Department, Suman Dahal, said that FATF and APG are not satisfied if the number of illegal assets detected and prosecuted in the prevention of money laundering has not increased. According to him, the department has filed 15 cases in the first 6 months of the current year (from July to August) with a demand of about 55 billion bigo.  Dahal claims that about 30 cases have been decided in the past 1 year, and about 85 percent of the filed cases have been successful. "Now the department has made a 5-year strategy and started implementing it," he said. According to the FATF and APG standards, Director General Dahal stressed that work should be focused on 11 indicators, including determining suspicious transactions, locating assets, investigating, stopping assets, prosecuting and confiscating assets.

Nepal was at risk of 'grey list' even in 2010, but the risk was averted due to the strong diplomatic initiatives of the then government, commitment to law making and implementation. In 2014, when the same problem came up again, Nepal was saved from the "grey list" in the loan commitment of making a law. After losing the basis to believe only in repeated commitments, now FATF is going to put Nepal on the 'grey list'. 

What happens if you fall into the '

gray list'?  If Nepal falls in FATF's 'grey list', it will be affected in three areas, mainly economic, financial and diplomatic. There will be a direct impact on imports and exports under the

economic impact. Imports will become more expensive and exports will become more difficult. International trade may be affected as countries including India, where Nepal trades a lot, will be viewed with suspicion. As the interest rate of foreign loans will be expensive, production cost will increase in Nepal. It will affect the gross domestic product (GDP) of the country.