Money laundering prevention bill in House

By Ranju Kafle, Kathmandu, Feb. 1: The property whose source has not been disclosed so far is about to get validation from the government after taxation. A bill to amend certain laws related to prevention of money laundering and promotion of business environment tabled in the House of Representatives on Wednesday has such arrangements in it.

Law, Justice and Parliamentary Affairs Minister Dhruba Bahadur Pradhan presented the bill on asset clearance in the Lower House. If the House endorses the bill as it is, it will legalise all the hidden assets after paying tax to the government. Business community was voicing for the arrangements to give the facility by paying taxes to the government.

The government itself had proposed to make it legal by fixing taxes on assets whose sources have not been disclosed. Minister Pradhan said that there is an arrangement where the source of undisclosed property can be legalised by paying taxes. “Anyone who is unable to reveal the source of property can utilise it in several businesses after paying taxes to the government. The arrangement is proposed to determine the taxes. However, the legalisation will not be applicable to those assets acquired through illegal means,” he clarified.

According to the arrangements, only those assets which are free from the involvement in money laundering or other related crimes, and there is no crime related to tax evasion, will be considered for legalisation by taxing. There is no such provision to legalise property acquired from crime by self-declaring. Such case can be revoked after further investigation if found guilty.

In section 30 of the proposed bill, it has been suggested to amend (instead of the old) the existing law on asset purification (Section 28 of the Money Laundering Prevention Act 2064). In Section 28 of the current Act, there is a provision to 'prove the source of wealth'. The title of this provision has been amended as 'source of wealth should be disclosed'.

If a person is prosecuted for crimes related to financial investment in money laundering and terrorist activities, his assets appear abnormal compared to his income or financial situation, or if he embraces an abnormally high standard of living, or if it is proven that he has given someone more than his status as a donation, gift, or reward it has to be proved from what source such property has been acquired, the prevailing provisions read. At the same time, it is said that if the source of the property cannot be proved, the property will be confiscated.

By changing this provision of the existing law, a provision has been placed in the proposed bill to legalize property whose sources have not been disclosed with conditions. “When the source of the property is not disclosed, and if there is no case against the investigated person for related offenses or money laundering offenses, a record shall be kept and the volume of the property not disclosed shall be sent in writing to the Internal Revenue Department for tax assessment and recovery,” read the draft.

It is clearly stated in the proposed bill that if the Internal Revenue Department has committed a tax-related offense or not, if it comes in writing for the assessment of the tax of undisclosed assets, if no offense is found, such assets should be considered as the income of the current income year and the maximum tax as per the prevailing law should be determined and recovered.

It is said that the name, surname and address of the person whose tax has been collected should be kept on the website of the department and the details of his income and revenue should be sent to the department and the financial information unit.

The Internal Revenue Department has been given the authority to guide and implement the conditions to be followed according to the law regarding prevention of financial investment in the manufacture and expansion of weapons of mass destruction and terrorist activities. A provision has also been made that legal property can be prosecuted if it is found that the legal property has been acquired through any fault by paying tax on undisclosed property.