The law on money laundering is also going to be applied to the business of non-profit organizations (NGOs/INGOs) operating in Nepal. When 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 oversees money laundering, the Social Welfare Council, a regulatory body of non-governmental organizations, is going to make policy arrangements in this regard under the direction of the government.

FATF and other agencies have also raised questions about the activities, financial transactions, financial discipline, etc. of non-profit organizations in Nepal that are supported by various donors. For this reason, the Social Welfare Council has prepared a draft of the guidelines under the guidance of the Ministry of Women, Children and Senior Citizens.

The Council has prepared a draft of the 'Directive 2081 on Financial Transactions and Transparency of Non-Profit Organizations for the Prevention of Money Laundering'. The draft will be implemented after the approval by the board of directors of the council. After that, the law on prevention of money laundering will be applied to the financial transactions and transparency of non-profit organizations. 

According to the Social Welfare Council sources, the guidelines will be passed and implemented. Until now, in many areas of the country, separate guidelines have been issued for the prevention of money laundering, but there was no such provision in the case of non-profit non-governmental organizations. According to Council sources, the draft of the guidelines has been prepared to solve the problems of non-governmental organizations' transactions not being transparent, questions about the effectiveness of implementation and financial governance, and to bring non-governmental organizations within the scope of money laundering prevention. 

After the publication of the guidelines, the Social Welfare Council may give instructions to non-profit organizations regarding the prevention of money laundering or terrorist acts or the manufacture of weapons of mass destruction and financial investment. In the draft, the non-profit organizations that receive foreign aid must also inform the council that the source of foreign aid has not been obtained through illegal acquisition before implementing a project.  After the implementation of the

directive, the consent of the council will also be required for such organizations to operate bank accounts. "After the international non-governmental organization has signed a general agreement with the association from the council and the Nepali NGO has received approval for the project, it will be mandatory to inform the Social Welfare Council when opening the bank account of the related project," the draft states, "The relevant department of the council must provide the financial information unit with the information about the sources given to them by the international non-profit organization and the project agreement with the association from the council and the local non-governmental organization that has approved the project." The

draft also contains provisions on the identification and verification of risk indicator institutions. "The council should monitor and supervise at least three times a year in the case of high-risk institutions, at least twice a year in the case of medium-risk institutions, and at least once a year in the case of low-risk institutions," the draft states.

Regulatory bodies and non-governmental organizations must inform the Council in the prescribed format regarding the transactions of the organization or the assets they have acquired in accordance with the provisions of the Prevention of Money Laundering Act. "If there is any suspicion or reasonable grounds to suspect that money received from foreign aid is related to money laundering and terrorist activities related to financial investment offenses or other offenses, financial information must be submitted to the unit," the draft says, "financial information must be reported to the unit even if it is suspected that the assets of any non-governmental organization, terrorist activities, individuals or organizations are related to or connected to financial investments in terrorist activities or may be used in such activities." 

There is also a provision in the draft that the regulatory body must report to the Financial Information Unit within seven days of being aware of the suspicious transaction even if an organization only attempts to do so. "In the case of requesting the details or information of a person or organization in the course of the investigation from the investigating agencies, it will not be necessary to inform the financial information unit except in the case of new facts or matters that appear suspicious," the draft says, "but the details of such person or organization and transactions should be prepared in such a way that it can be provided when requested." 

If the organization is required to submit a report related to suspicious transactions, the regulatory body should inform the financial information unit and the department if it is found that it has not been reported even though it exists. In relation to the transactions of non-governmental organizations that conduct projects worth more than 150 million annually, the Social Welfare Council should inform the Financial Information Unit of a report with brief information through the 'software system' no more than every 6 months. 

According to the directive, the regulatory body should identify and confirm the indicator organizations and at the end of each financial year, after identifying and assessing the risks, the risk should be classified into high, medium and low levels. "Each organization must send a mandatory institutional audit report to its regulatory body or department every year by July," the report states, "the regulatory body must arrange necessary, policy, procedural and regulatory arrangements for risk management." 

In Nepal, various countries and donor agencies have been providing grants in various fields. Most of these funds have been mobilized through NGOs, INGOs. In this way, it is mentioned in the constitution that the organization running on grants should be operated with the permission of the Social Welfare Council through a one-door system.

However, majority of these organizations are not under the social welfare and have been running on their own accord with donors. Therefore, no body has the exact details of how much money has been mobilized through the grant mobilization organization. Not only that, there are questions about the details of the organizations' transactions, transparency of accounting, abuse of subsidies, etc.

It is said that more than 300 organizations in Nepal have also been affected after American President Donald Trump stopped the grant run through the American Assistance Mission (USAID). The suspension of USAID grants has had the biggest impact on off-budget programs in Nepal. According to the Ministry of Finance, there are very few US grant programs in Nepal that are included in the budget.