Asset (Money) Laundering Prevention Act

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Asset (Money) Laundering Prevention Act, 2008
Date of Authentication and publication:
14 Magh, 2064 (28 January, 2008)
First Amendment: 2011,

Amending Act:
Asset (Money) Laundering Prevention (First Amendment) Act, 2011
Preamble: Whereas it is expedient to provide for the prevention of laundering of
criminal proceeds, the Legislature -Parliament has enacted this Act.
Act No. 34 of the Year 2008
Chapter – 1
Preliminary
1. Short Title, Extent, and Commencement : (1) This Act shall be cited as ” Asset
(Money) La undering Prevention Act, 2008″.
(2) The Act shall apply all over Nepal and to any person or corporate body,
irrespective of where they are residing, or located, who remits, transfers or
sends assets generated from the offences under this act from Nepal to abroad or
abroad to Nepal.
(3) The Act shall come into force immediately.
2. Definition : Unless the subject or context otherwise requires, in this Act, –
a) “Investigation Officer” means a personnel so appointed or designated as per
Section 15
b) “Offence” mean s the offence so designated under chapter -2.
c) “Transaction” means any act or agreement made in order to carry out any
economic or business activities and the term also means the purchase, sale,
distribution, transfer or investment and possession of any asse ts.
d) “Non -Financial Institution” means the following institutions: –
(1) Any firm or company other than those stated in Clause (h), registered as
per prevailing laws to carry out any trade or business including casino,
precious metals.
(2) Any institution ir respective of whether or not organized or incorporated
as per the laws,
(3) Any institution designated as “Non -Financial Institution” by the
Government of Nepal through a notice in the Nepal Gazette.
e) “Designated or as designated” means designated or as des ignated in this Act or
Rules thereof.
(E1) 1 “Professional” means notary public, auditor, insolvency practioner, legal
document drafting agents and other similar professionals.

f) “Department” means the Asset Laundering Investigation Department pursuant to
Se ction 11.
g) “Bank” means a bank licensed under the prevailing bank and financial institution
law by Nepal Rastra Bank to carry out ‘A’ class financial transactions.
1 Added by the first amendment.

h) “Financial Institution” means financial institution licensed under the prevailing
bank and fi nancial institution law by Nepal Rastra Bank to carry out ‘B’, ‘C’, and
‘D’ class financial transactions and the term also means the cooperatives, Or
person, firm, company or institution licensed to carry out foreign exchange
business or purchase and sell foreign currency, OR any company licensed for
insurance business, insurance broker and also securities market or business
operated as per prevailing laws.
i) “Financial Information Unit” means the Financial Information Unit instituted
pursuant to Section 9.
j) “Rastra Bank” means Nepal Rastra Bank established under the prevailing Nepal
Rastra Bank law.
k) “Public Servant” means any individual supposed to be public servant as per
prevailing laws.
l) “Suspicious Transaction” means the transaction of such nature that is i mpossible
in general economic, commercial and business practice and the term also
means similar other transactions the FIU declares from time to time as
suspicious transaction. 2
m) “Asset” means physical, non -physical, movable, immovable, tangible or
intangib le asset or any object or equipment/instrument which has a
monetary value and the term also means any document, records, evidence
or any other instrument establishing ownership or rights over such asset.
n) “Government Office” means the Land Revenue Office, Office of the
Company Registrar and the term also means any entity so designated by the
Government of Nepal through publishing a notice in Nepal Gazette. 3

Chapter -2
Provisions Relating to Offences
3. Asset not to Be Laundered : (1) No person shall launder or cause to launder
assets.

(2) Any person committing acts pursuant to Sub -Section (1) shall be deemed to have
committed offence as per this Act.

4.4 Offence of Money Laundering: For the purpose of this Act, one shall be
deemed to have laundered asset, i n case one or any third person acquires,
holds, posses, uses, consumes, utilizes or earns or displays or transacts or
deals with or causes to do so, in any manner, the asset obtained, held,
possessed, directly or indirectly from commission of any or all of the
following offence or act or the asset increased from any type of
investment of such asset; or converts or disguises or transfers such asset
2 Added by the first amendment. 3 Amended by the firs t amendment. 4 Amended by the first amendment.

or causes to do so with an intention to conceal, convert or disguise the
source, nature, place, ownership, rig ht, disposal of such assets; or obtains,
purchases, holds, possesses, uses, consumes or utilizes such asset or
causes to do so; or does or causes to do transaction in any form in spite of
the knowledge of such asset or with the reasonable ground to belie ve so;
or does or causes to do any kinds of assistance directly or indirectly to
transform, change or transfer such asset or causes to do so .

(a) Revenue evasion,
(b) Organized crime,
(c) Financing of terrorist activities,
(d) Offence under existing law on arms and ammunition,
(e) Offence under existing law on foreign exchange regulation,
(f) Offence under existing law against homicide, theft, fraud, forging
of document, counterfeiting, abduction or hostage taking,
(g) Offence under existing law on narcotic drug control,
(h) Offence under existing law on national park and wildlife
conservation,
(i) Offence under existing law against human trafficking and
transportation,
(j) Offence under existing law on cooperative institution,
(k) Offence under existing law on forest
(l) Offence under exi sting law against corruption,
(m) Offence under existing law on bank and financial institution,
(n) Offence under existing law on banking offences and penalty,
(o) Offence under existing law on ancient monument conservation,
(p) Offence under any other law or treaty which Nepal is a party to,
as designated by the Government of Nepal through publishing a
notice in Nepal Gazette.

4A. 5 Prohibition on Financing of Terrorist Activities: No one shall finance or
causes to finance terrorist activities.

4B. 6Offence of Financing of Terrorist Activities: Any person commits the
offence of financing of terrorist activities if that person by any means
collects or provides to any person any asset with the intention that they
should be used or in knowledge that they are to be used in or der to carry out
any act which constitutes an offence within the scope of the following
conventions or any other act intended to cause death or serious bodily
injuries to an individual.
(1) Tokyo Convention on Offences and Certain Other Acts Committed on
Boar d Aircraft, 1963,
(2) Hague Convention for the Suppression of Unlawful Seizure of Aircraft,
1970,
5 Added by the first amendment. 6 Added by the fist amendment.

(3) Montreal Convention for the Suppression of Unlawful Acts Against the
Safety of Civil Aviation, 1971,
(4) Convention on the Prevention and Punishment of Crime Aga inst
Internationally Protected Persons Including Diplomatic Agents, 1973,
(5) International convention Against the Taking of Hostages, 1979,
(6) SAARC Regional Convention on Suppression of Terrorism, 1987,
(7) Any Convention against Terrorist Activities which Nepal is a party to.

5. Not to Attempt, Abet or Provoke : No one shall attempt, abet or incite others to
commit offences stipulated in this chapter.

5A. 7 Penalty for the offence committed abroad: Notwithstanding anything
contained in this Act, any act or offen ce mentioned in Section 3, 4, 4A, 4B of this
Act committed abroad shall be dealt as an offence and may be liable to penalty
as if they were committed in Nepal, provided that the act or offence are
punishable offence in the foreign country where such offen ce were committed
and such country has not imposed penalty for the offence.

Chapter -3
Provision Relating to Identity, Transactions and Details of the Customers

6. Customers to be Identified : (1) Any bank, financial institution or non financial
Institut ion shall maintain clear record of identity of a person while establishing any
kind of business relationship with such person or while transacting the amount above
the threshold, either in a single transaction or in series of transactions as prescribed by
Rastra Bank from time to time by publishing a notice.
(2) Bank, financial institution or non -financial institution, while identifying the
customer as per Sub -Section (1), shall cause the person establishing business
relationship or having transactions with it to submit the documents as follows: –
(a) In case of a natural person his/her name, family surname, copy of
citizenship or passport including other necessary documents that substantiate
his/her permanent residential address and profession or business,
(b) In ca se of the person or firm except those provided in Clause (a), copy of
the document certifying incorporation, establishment or registration of the
institution, documents that mention name, surname, address, profession,
business of board of directors and exe cutive director or proprietor of firm or
partners of partnership firm,
(c) In case of business relation or transactions to be established or made on
behalf of someone else, documents relating to principal’s identity, address
including power of attorney clarify ing the business of the principal,
(d) Name, surname, address of close relative, person or institution benefiting
from business transaction,
(e) In case of transactions made through negotiable instruments, name,
surname and address of the issuer and payee of such instrument,
7 Added by the first amendment.

(f) Other documents as prescribed by the Financial Information Unit from time
to time.
(3) Bank, financial institution or non -financial institution shall maintain a separate
record of documents and transactions of each customer, pursuant to Sub -Se ction
(2), including date and nature of transactions, type of account and code number.

7. Liability of Government Entity, Bank, Financial Institution and Non –
Financial Institution :-(1) The government entity, bank, financial institution and
non -financia l institution shall fulfill the following responsibilities for the purpose of
this Act: –
(a) To maintain records of amount transacted beyond the threshold
prescribed by Rastra Bank at a single or in a series of transactions by a
person,
(b) To investigate and inqu ire any transaction which appears to be suspicious
or transacted with the motive of asset laundering or so laundered or there are
reasonable grounds for suspicion,
(c) To inform the Financial Information Unit about the transactions
mentioned in Clause (a) with in fifteen 8 days of event and the transactions
mentioned in clause (b) immediately after the event.

(2) In case, anything happens to be omitted in the information reported to the
Financial Information Unit pursuant to Sub -Section (1) or anything differen t from
original information or particulars received from the concerned person during the
transaction is subsequently received, the concerned entity, bank, financial institution
or non financial institution shall promptly report such details to the Financia l
Information Unit.

(3) Notwithstanding anything in Sub -Section (1), in case there is any suspicion on
the transactions of persons having regular business relation or transactions, the
concerned entity, bank, financial institution or non -financial institu tion shall inform
the Financial Information Unit after making an inquiry.
(4) The bank, financial institution, or non -financial institution shall maintain a
secured record of transaction referred to in this Section at least for a period of five
years from the date of such transaction.

7A. 9Responsibility of Professionals: Notwithstanding anything contained in existing
law, the professionals shall immediately report suspicious transaction to the
Financial Information Unit if they know of any suspicious trans action in course
of their professional performance.

8 Amended by the first amendment. 9 Added by the first amendment.

Chapter – 4
Provisions for Coordination Committee and Financial Information Unit

8. Formation of Coordination Committee : (1) There shall be a Coordination
Committee constituted as follows to coor dinate inter -related entities and to provide
necessary suggestions to the Government of Nepal with regard to the prevention of
offence 10:-
(a) Secretary, Ministry of Finance – Coordinator
(b) Secretary, Ministry of Law, Justice and Parliamentary System –Member
(c) Secr etary, Ministry of Home –Member
(d) Secretary, Ministry of Foreign Affairs –Member
(D1) 11 Secretary, Office of Prime minister and council of Ministry -member
(D2) 12Deputy Attorney General, office of the Attorney General – member
(e) Deputy Governor, Nepal Rastra Bank – Member
(E1) 13 Inspector General of Police, Nepal Police – member

(2) The chief of the Financial Information Unit shall act as a secretary of the
Coordination Committee constituted pursuant to Sub -Section (1) and the
Financial Information Unit shall work as Secretariat of the Coordination
Committee.
(3) The procedures of meeting of the Coordinate Committee pursuant to Sub -Section
(1) shall be as determined by the committee itself.

8A. 14 Function, Duty and Power of Coordination Committee: The coordina tion
committee shall have following function, duty and power in addition to the
function, duty and power mentioned elsewhere in this Act.
(a) To prepare policy for prevention of offence and submit the policy to
the Government of Nepal,
(b) To implement or cause t o implement the decision of the Government of
Nepal taken for prevention of offence,
(c) To recommend to the Government of Nepal, as per necessity, to
implement the standards and policies developed for prevention of
offence by international organization of wh ich Nepal is a member,
(d) To instruct concerned agencies for prevention of offence and to
monitor whether or not the instructions are complied with,
(e) To implement or cause to implement the annual report prepared by
the Financial Information Unit.
10 Amended by the first amendment. 11 Adde d by the first amendment. 12 Added by the first amendment. 13 Added by the first amendment. 14 Added by the first amendment.

(f) To perform or cause to perform other tasks in relation to prevention of
offence, as prescribed by the Government of Nepal.

9. Financial Information Unit : (1) There shall be a Financial Information Unit in
Rastra Bank for collection and analysis of information relatin g to the offence 15.
(2) The Governor of Rastra Bank shall appoint the chief of the Financial
Information Unit from among the officers of Nepal Rastra Bank, not lower in
rank than a First Class Officer.
(3) The Office of the Financial Information Unit shal l be placed in Nepal Rastra
Bank and the Rastra Bank shall provide the staff required for it.
10. Functions, Powers and Duties of Financial Information Unit : (1) In addition to
the functions, powers and duties mentioned elsewhere in this Act, the functio ns,
powers and duties of the Financial Information Unit shall be as follows: –
(a) To regularly obtain details of transactions under Section 7 from government
entities, bank, financial institution and non -financial institution and maintain
records thereof upon conducting an analysis,
(b) In case the notice, details and documents needs to be inquired and
investigated …… 16, conduct preliminary inquiry and send details thereof to
the concerned Department, government entity, bank, financial institution and
non -financ ial institution,
(c) To communicate the Department with extensive details relating to the report
received pursuant to Clause (a) or if upon inquiry pursuant to Clause (b) the
transaction appears suspicious or arises any suspicion or any reasonable
ground exist s so as not to believe the transaction.
(d) To share with the Financial Information Units of other country and
international organization and institutions notice, details and documents
regarding offence 17 on the basis of reciprocity and receive such notice from
concerned country and international organization and institution,
(e) To inspect transactions and records of bank, financial institution and non
financial institution, to obtain any information or clarification about such
transactions and records and to obtai n their copies where necessary,
(f) To manage required training programs for the staffs of government entities,
Departments and Financial Information Unit for prevention of asset
laundering,
(g) To carry out other functions as prescribed.

(2) 18In course of perfor mance of its mandate, the Financial Information Unit
may request any government agency or regulatory institution or any
organization or any investigating agency or official to provide to the FIU any
information, particular or document that is in their poss ession and such
agency or official may, in course of performance of duty, request the Financial
15 Amended by the first amendment. 16 Amended by the first amendment. 17 Amended by the first amendment. 18 Amended by the first am endment.

Information Unit for information, particular or document that is in possession
of the FIU.
(2a) 19It shall be the duty of the agency, organization, official and Financial
Information Unit to provide the information requested as per Sub -Section (2).

(3) 20The Financial Information Unit may, besides issuing directives on
method, form, time and other procedures regarding the submission of details,
statistics, notic es and information pursuant to Clause (a) of Sub -Section (1),
issue directives to government agency, bank, financial institution, non -financial
institution or professional about the measures they are to adopt while
establishing business relation with the c ustomer/beneficiary, during
transaction, for identification of suspicious transaction, for risk management,
for prevention of terrorist financing or for conducting transaction with
politically exposed persons or for overall monitoring of implementation of such
measures and it shall be the duty of such government agency, bank, financial
institution and non -financial institution and professional to abide by such
directives.

Chapter -5
Provisions for Formation of the Department and its Functions, Duties an d Powers

11. Establishment of the Department : (1) The Government of Nepal shall establish
a Asset Laundering Investigation Department to investigate against and inquire
into the offences under this Act.
(2) The chief of the Department shall be at least 21 a first class officer of civil
service.
(3) The organizational structure of the Department and required number of staff
shall be as prescribed by the Government of Nepal.
(4) The Government of Nepal may designate any entity to conduct investigation
and i nquiry of the offences pursuant to Sub -Section (1) until the Department is
established.

12. Powers of the Department regarding Investigation and Inquiry : (1) The
Department may exercise the following powers in course of investigation and
inquiry of the o ffences under this Act: –
a) To order any concern government entity, bank, financial institution or
non -financial institution to submit to the Department within a particular
time period the relevant document, evidence or other required matters
that are in pos session of such entity, bank, financial institution and non –
financial institution,
19 Added by the first amendment. 20 Amended by the first amendment. 21 Added by the first amendment.

b) To conduct search of any concerned government entity, bank, financial
institution or non -financial institution or any other places, to seize, take
into possession the releva nt document, deed, material evidence and other
evidence by issuing to the concerned official an acknowledgement of
such seizure and possession,
c) To order the concerned official of the government entity, bank, financial
institution or non -financial instituti on, other staff or a concerned person
who, the Department believes, possesses information on relevant facts to
appear to the Department to give statement,
d) To release, upon interrogation, taking statement or clarification pursuant
to Clause (c), the concern ed person on the condition that s/he signs a
document to appear to the Department whenever required or s/he appears
on reporting dates given; Or release under obligation to appear on given
dates by taking bail or guarantee where there exist reasonable grou nds to
believe that such person becomes fugitive or order the detention where
s/he fails to post the bail or guarantee, subject to approval by the District
Court,
Provided that the concerned person shall not be detained for a period longer
than the period such person has to serve in prison upon conviction.
e) 22To freeze, take under control or order the concerned entity or
official to freeze, take under control any assets located in Nepal
which is in ownership, possession or control of the concerned person
or a ny other benefit generated from such asset or any other
instruments used in the offence whether possessed by the concerned
person or somebody else, if investigation and inquiry so requires or if
a request to this effect is received from any nation where th e offence
under this Act is committed or from any country or other
international organization in accordance with the provision of
bilateral or multilateral treaty which Nepal is a party to or any
similar provisions; or make a similar request to foreign nat ion or
international organization through diplomatic channel on the basis of
reciprocity to freeze or take under control such asset, instrument or
goods.
f) 23To adopt or cause to adopt measures or method as designated to
conduct investigation and inquiry of the offence under this Act and
to adopt designated standards for identification and evaluation of the
asset.

(2) In case, in course of investigation and inquiry of the offence under this Act,
any concerned official, staff or representative of any governm ent entity, bank,
financial institution or non financial institution disobeys the Department’s order
to submit any documents or any other matters, freeze assets or provide
information about any matter, or in case any official or staff of such entity, bank,
Financial institution disobeys the Department’s order to appear before the
22 Amended by the first amendment. 23 Amended by the first amendment.

Department, the Department may arrest and require such person to abide by the
Department’s order by imposing fine up to one thousand rupees on such person.

Chapter -6
Provision s on Investigation and Inquiry

13. Complaint : (1) Any person, who has knowledge that somebody has committed, is
going to commit or is committing any act constituting an offence under this Act,
may submit a complaint, application, information or notice to the Department in
writing or oral form.
(2) The Department shall register complaint, application, information or notice if it
is received in writing pursuant to Sub Section (1) and the Department shall
transcribe the oral complaint, application, informati on or notice it receives and
then register it.
14. Investigation and Inquiry : (1) The Department shall conduct necessary
investigation and inquiry if it receives information through a complaint pursuant to
Section 13 or through information pursuant to Sec tion 10 (1) (c) or through any
other means or source that any offence under this Act has been committed, is being
committed or is going to be committed.
(2) Where the Department receives information that any offence under this Act has
been committed, is be ing committed or is going to be committed and there is
reasonable ground to believe that the person involved in the offence may abscond
or destroy, hide or alter evidence or document, the Department may conduct
immediate investigation activities including taking into custody any document or
asset by conducting search of the place where the offence is taking place or has
taken place or by arresting the person involved in the offence.
(3) …. 24

15. To Appoint or Designate Investigation Officer: (1) The Depa rtment may
appoint or designate any officer of the Department or other officer of the
Government of Nepal or that of any public institution as an investigation officer to
conduct investigation and inquiry of the offences under this Act.
(2) The Department, while appointing or designating any other officer of
Government of Nepal or that of public institution as an investigation officer, shall
consult the chief of the concerned entity or institution.

16. Functions, Duties and Powers of the Investigation Off icer : (1) The functions,
powers and duties of the investigation officer appointed or designated pursuant to
Section 15, shall be as follows: –
(a) To take necessary action by arresting the suspect promptly,
24 Repealed by the first amendment.

(b) To conduct or cause to conduct search of any office, residence, building,
warehouse, vehicles or any place in course of investigation and inquiry,
(c) To exercise other powers vested to the Department.
(2) The investigation officer may, while proceeding pursuant to Sub -Section (1),
keep the suspect on obligation to appear before the department on given dates,
release him/her by obtaining bail or guarantee or detain the suspect, subject to
the approval of the court where the suspect fails to post the bail or guarantee.

17. To Keep Under Custody for Investigation and Inquiry : (1) The investigation
officer may, by issuing detention letter, detain the person against whom proceedings
have been initiated as per this Act if there exist sufficient grounds to believe that
such person may demolish or destroy any evidence or create obstruction or adverse
influence in investigation and inquiry proceedings.
(2) Where the investigation and inquiry against the arrestee requires more than
twenty -four hours’ time, the investigation officer shall produce the suspect before
adjudic ating officer and detain the suspect as remanded.
(3) The Department shall, while producing the suspect for remand as stipulated
under Sub -Section (2), clearly mention the charges against the detainee, reasons and
grounds thereon, description of suspect’s statement, if any, and the reason to detain
the suspect for investigation.
(4) If remand is requested for investigation and inquiry pursuant to Sub -Section (3),
the adjudicating officer may, after reviewing the concerned documents and whether
or not the investigation and inquiry has been satisfactory, remand the suspect for
ninety days, not exceeding thirty days at a time.
(5) In case remand is requested as per Sub -Section (2), the detainee may petition
before the adjudicating officer thereby stating rea sons and grounds for him not to be
remanded.

18. Order for Freezing Assets : (1) The Department or investigation officer may, where
there exists reasonable ground during the investigation and inquiry conducted
pursuant to this Act that any one is likely to transfer, sell or hide or disguise in any
manner the property generated from offence, order the concerned entity to prevent
any transfer, mortgage or sell of such assets for a fixed period of time.
(2) In case a written order is made to freeze assets pur suant to Sub -Section (1), the
concerned entity shall freeze such assets, preventing it from being transferred or
mortgaged or sold.
(3) The Department may, as per the report of the investigation officer, impose fine
up to fifty thousand rupees to the chief of the concerned entity who does not freeze
the assets in contravention to the order issued pursuant to Sub -Section (1).

19. Freezing of Account or Transactions : Notwithstanding anything mentioned in the
prevailing laws, the Department may, if it receiv es information during investigation
and inquiry of the offence under this Act that anyone has maintained account or has
transaction with any bank, financial institution or non -financial institution, issue an
order to the concerned bank, financial instituti on or non -financial institution to
promptly freeze such transactions or bank account.

Provided that the Department shall make a request through diplomatic channel to
freeze the transaction or account operated with a bank, financial institution, non –
financ ial institution or person from abroad.
20. Seized Assets and Documents to Be Kept Secured: The investigation officer shall
keep in secured manner the assets and documents seized in course of inquiry and
investigation under this Act.
21. Support of Other En tities May Be Obtained : (1) The Department may, in course
of investigation and inquiry under this Act, demand assistance from any entities or
public institution and it shall be the duty of such entities and institutions to assist the
Department at the time of demand.
(2) The Department may also demand assistance from Nepal police in course of
inquiry and investigation of offence under this Act. It shall be the duty of the
concerned police officer or the police personnel to assist the Department whenever
dem anded.
(3) The Department may, if it deems that the nature of offence under investigation
and inquiry requires consultation with or participation of any expert working with
any entity in investigation and inquiry, request the concerned entity to depute the
expert to the Department for some time and such entity shall, notwithstanding
anything contained in existing law, where it receives such a request from the
Department, depute such expert to the Department.
22. Filing a Case: (1) If it is evident from inv estigation and inquiry that one has
committed an offence under this Act, the Department shall write to the concerned
government attorney for a decision on whether or not to file a case against such
person.
(2) The Department shall, where in response to wri ting pursuant to Sub -Section (1) it
receives concerned government attorney’s decision to file a case, file the case before
the court as prescribed by the Government of Nepal through a notice in Nepal
Gazette.
23. Limitation : There shall be no limitation to file a case relating to the offence under
this Act.
24. Government to Be Plaintiff : The Government of Nepal shall be the plaintiff in the
case relating to an offence under this Act.
25. No Obstacle to Sue Under Prevailing Laws : (1) If any act constituting an offence
under this Act is also punishable under any other existing law, one may also be
charged under such law.
(2) If it is evident from investigation of an offence under any existing law that one
has committed an offence under this Act, the entity or officer conducting
investigation and inquiry of such offence shall inform the same to the Department.
26. Confidentiality: (1) No Investigation Officer or any staff or person involved in the
investigation and inquiry shall, unless the prevailing law other wise requires, breach
confidentiality of any matter or document s/he encounters with during investigation
and inquiry or while performing his/her duty.
27. Automatic Suspension : Any official or staff of any bank, financial institution or non –
financial inst itution or civil servant shall be deemed to be automatically suspended
for a period he/she is detained as per this Act or until the case filed against him/her
pursuant to Section 22 is settled.

28. Assets Deemed to be Gained from Asset Laundering : If in c omparison to the
income source or financial condition one charged of an offence under this Act has
larger assets, lives unnaturally higher standard of life, or is proved to have provided
donation, grant, gift, loan, contribution or will of the value more t han one’s capacity,
one shall prove the source of earnings and in case one fails to do so, such assets shall
be deemed to have been generated from commission of offences under this Act.
29. 25Offence not Required to be Established : Notwithstanding anything mentioned in
this Act or in the existing laws, the commission of acts or offences mentioned in
Section 4 or 4B shall not need to be established to punish one for the offence
mentioned in Section 3 or 4A . And the mere fact that acts or offences mentioned in
Section 4 were not prosecuted or such prosecutions were unsuccessful shall not bar
the punishment of offence mentioned in Section 3 or 4A .

Chapter -7
Penalty

30. 26 Penalty: (1) Anyone who has committed the offence of financing of terrorist
activities sha ll be liable to imprisonment from one year to five years and fine
equivalent to the claimant value where claimant value is identified and upto five
hundred thousand rupees where claimant value is not identified.
(2) Any one who has committed the offence me ntioned in Chapter -2, other than
one mentioned in Sub -Section (1), shall be liable to fine equivalent to the
claimant value and one year to four years of imprisonment.
(3) In case any bank, financial institution or non -financial institution has
committed o ffence, the official or staff of such bank, financial institution or non
financial institution who is identified as perpetrator of the offence or in case
such perpetrator is not identified, the official working as chief of the institution
at the time of co mmission of the offence shall be liable to penalty.
(4) If any civil servant or official, chief or staff of any bank, financial institution
or non -financial institution has committed the offence , such person shall be
liable to ten percent additional punis hment to the punishment mentioned to
Sub -Section (1) and (2).
(5) Anyone who attempts, assists or incites the offence under this Act shall be
liable to half of the punishment awarded to the commission of the offence.
(6) If anyone commits or cause to commi t offence under this Act by using any
firm, company or institution, such firm, company or institution shall be liable to
fine mentioned to this section.
(7) If anyone violates this Act or the rules or directives under this Act in a
manner other than those provided for in Sub – section (1) to (6), one shall be
liable to fine equivalent to claimant value by confiscating such value and up to
five hundred thousand rupees where such value is not identified.
25 Amended by the first amendment. 26 Ame nded by the first amendment.

31. Imposing Fines : (1) 27 The Financial Information Unit may award the following
fine for following wrongs: –
(a) From rupees one hundred thousand to rupees three hundred
thousand to bank, financial or non -financial institution for not
maintaining documents and records as per the provision of this Act.
(b) Rupees five hundred thousand to bank, financial institution or non –
financial institution does not report particulars or information to the
Financial Information Unit as per Section 7 and Section 10 (1) (a), at
every time of the failure of the report.
(c) From rupees one h undred thousand to rupees three hundred
thousand to professionals for not reporting information to the
Financial Information Unit as per Section 7(a).
(2) The person not satisfied with the penalty decided as per Sub -Section (1) 28may make an appeal before the Appellate Court within thirty five days
from the day fine is awarded.

32. Punishment for Concealing or Destroying Evidences : Any person who commits
the offence of concealing or destroying evidence related to acts deemed to be an
offence under this Act shall be liable to the imprisonment of one month to three
months and/or fine of fifty thousand rupees to one hundred thousands rupees in
accordance with the gravity of offence and the person assisting the commission of
such act shall be liable to half of such punishment.
33. Punishment for Obstruction: If any person obstructs the proceedings of
investigation and inquiry undertaken under this Act, the adjudicating officer may, on
the basis of investigation officer’s report, punish him/her with a maximum
impr isonment of six months and/or a maximum fine of five thousand rupees.

34. Assets to be confiscated : (1) Any assets obtained from an offence under this Act
and further assets generated from such asset and assets used for commission of
such offence shall be confiscated.
(2) In case entitlement to assets pursuant to Sub -Section (1) has been transferred to
someone else with a quoted value of such asset, the quoted value shall be treated as
that mentioned in promissory deed.
(3) 29Any assets, instrument or goo ds, irrespective of who possess it, used in the
offence under this Act shall be confiscated.
Provided that such property, instrument or goods shall be returned to its
owner if it is proved that such instrument or goods was used or purchased and
sold withou t the consent of the owner or the owner has no knowledge of its use
in the offence, by imposing the liability of payment or satisfaction of such things
to the offender.

27 Amended by the first amendment. 28 Amended by the first amendment. 29 Added by the first amendment.

Chapter –8
Miscellaneous

35. Seizure of Passport : Notwithstanding anything mentioned in prevailing laws, the
Department may, where necessary, issue an order to the concerned office not to issue
new passport or to seize already issued passport, depending upon the gravity of the
offence.
36. Assets to Be Released : In case the asset frozen p ursuant to Section 18 proves to
have no criminal origin, the Department if case has not been filed, or the court
hearing the case if the case has been filed, shall order the concerned authority which
has frozen the asset to release such assets and the conc erned entity shall release such
assets upon such order.
37. Not to be Liable for Providing Information : In case any loss occurs to a person
because of submission of information to the Financial Information Unit by a
government entity, bank, financial insti tution or non -financial institution or by a
staff, official or agent of such bank, financial institution or non -financial institution
as per the provision mentioned in Section 7 and Clause (a) of Section 10, no such
entity, bank, financial institution or n on -financial institution or staff, official or agent
of such entity, bank, financial institution or non -financial institution shall be liable to
any action.
38. Auction to be Made: (1) Where, upon being stored for a long period, the goods
seized in relati on to offence punishable under this Act are likely to suffer any
damage or breakage due to stain or any other cause; rot; depreciate in value or where
it is not possible to maintain or preserve the goods due to lack of space for storage,
the same may be au ctioned by fulfilling the procedures as prescribed by the
prevailing laws.
(2) The proceeds obtained from auction sale pursuant to Sub -Section (1) shall be
balanced in the deposit account and if it is subsequently decided to give such goods
back to the own er, the owner shall be entitled to the amount received from such
auction.
39. Departmental Sanction to the Staff involved in Investigation and Inquiry : If any
Investigation officer or staff of the Department acts with mala -fide intention to
cause troubles or tension to anyone in course of investigation and inquiry of the
offences under this Act, the secretary of the concerned ministry where the
investigation officer is the chief of the department himself or the chief of the
department shall award department al sanction notwithstanding whatever is
mentioned in prevailing laws.
40. Provisions Relating to Delivery of Notice: (1) Notwithstanding anything contained
in the prevailing laws, a summon to be served to a foreign national in connection
with an offense un der this Act shall be served to the office or representative of such
person in Nepal, if any, and the notice so served shall be deemed to have been duly
served.
(2) In case no office or representative as stipulated under Sub -Section (1) exists, the
notice shall be served to the main place of business of such person or his/her
permanent residential address or the mailing address if provided by him/her in

course of business, through telex, tele -fax or other means of telecommunication or
through registered mai l and the summon so served shall be deemed to have been
duly served.
(3) Notwithstanding anything mentioned in Sub -Section (1) or (2), this section shall
not bar to serve the summon to the foreign national as per the specific provision
contained in the tre aty which Nepal or the Government of Nepal is a party to, if
there is any.
41. Notice to be Published: In case a notice or summon can not be served to any
person as per this Act or any other prevailing law because the address of such a
person is not ident ified or because of any other reason and a report thereof is
received, a notice containing a brief detail of the case shall be published in national
level newspaper (in English daily in case of foreign national) at least twice
requiring the concerned perso n to appear within thirty days before investigating
authority or adjudicating authority where charge has been filed. If such notice is so
published, it shall be deemed to be duly served to such person, notwithstanding
anything contained in prevailing laws .
42. Order to Freeze the Assets of a Foreigner: (1) If any foreign person does not
appear before the investigation officer as per the notice or even after summon is
served pursuant to Section 40, the investigation officer may issue an order to be
effectiv e until such person appears before the investigation officer, to keep the
assets, entitlement, interest or concern within Nepal in status quo or to prevent it
from being taken out of Nepal if the person has any such assets, entitlement, interest
or concern and it shall be the duty of all concerned to comply with such order.
(2) The investigation officer shall impose fine not exceeding Rupees one hundred
thousand rupees on any person not complying with the order issued pursuant to
Sub -Section (1. The losses or harm caused to the Government of Nepal or public
institution, if any, due to such non compliance of the order, shall also be recovered
from such person.
43. No Obstruction to Adjudication and Settlement Proceedings: Notwithstanding
anything mentioned i n prevailing laws, no death of the suspect before or after the
filing of charge shall bar the adjudication and settlement proceedings of a case
under this Act.
44. Waiver of Penalty: The investigation officer may present an accused person
cooperating with the investigation and inquiry proceedings as a prosecutor’s witness
and may provide such person with full or partial waiver of penalty in the case
initiated under this Act.
Provided that notwithstanding anything mentioned in this Act or in prevailing
laws a lawsuit may be reregistered against such person if his cooperation could not
be corroborated by other evidence or if such accused makes statement before the
adjudicating officer against the cooperation extended to the investigation and
inquiry officer.
44A. 30 Information or particulars not to be disclosed : (1) The Financial
Information Unit, government agency, bank, financial institution, non –
financial institution or any official or staff of such agency and institution or
professionals shall not give or di sclose information and particular received or
30 Addeded by the first amendment.

provided under this Act in any type of conditions by any ways to none, except
to the agency, organization or official legally mandated to receive such
information or particular.
(2) Any person, government agen cy, bank, financial institution, non -financial
institution breaching the provision contained in Sub -Section (1) shall be liable
to fine of up to rupees ten thousand and if the provision is breached by any
official, such official shall be liable to addition al fine of rupees five thousand;
and if it is a staff, the staff shall be subject to departmental sanction as well.

44B. 31 Responsibilities of Regulatory Institution: (2) For the purpose of this Act,
the functions, duties and power of Regulator of any busi ness shall be as
follows:
(a) To implement or cause to implement this Act and the Rules thereof,
(b) To cause the person or institution conducting business to implement
this Act and the Rules thereof,
(c) To make mandatory condition, while registering or issuing perm ission
or license of the business, for the person or institution conducting
business to comply with this Act,
(d) To inspect, supervise or monitor whether or not the person or
institution conducting business has complied with Clause (b) and (c).
(e) To award appr opriate sanction or penalty to the person or institution
who does not implement this Act or Rules thereof, in accordance with
the law that applies to specific regulator or to impose fine in
accordance with this Act in case there is no specific law,
(f) To subm it to the Financial Information Unit a report on activities
conducted in accordance with Clause (a) to (c) and other tasks
performed for prevention of the offence.
(2)Where there is no regulatory institution to regulate any reporting
institution having a n obligation to report to the Financial Information Unit
information, notice and particulars as per the provision of this Act and the
Rules thereof, the government of Nepal may, in consultation with the
coordination committee, designate any regulatory inst itution to regulate,
monitor, inspect or supervise such institution or person.
(3) The penalty imposed on any person or institution as per this Section shall
not bar from initiating any other proceeding and imposing penalty against
such person as per this Act.

Explanation: For the purpose of this Section, “institution” means any
institution incorporated under existing law and it also means firm.

44C. 32 Report to be submitted: (1) Government agency, bank, financial institution,
non -financial institution shall maintain a separate record of the tasks they
have performed in relation to this Act and shall prepare a report thereof
within two months from the end of fiscal year.
31 Addeded by the first amendment. 32 Addeded by the first amendment.

(2) A copy of the report prepared as per Sub -Section (1) shall be provided to
the F inancial Information Unit within seven days from the day the report is
prepared.
(3) Financial information unit shall submit the report received as per sub
section (2) to the meeting of coordination committee & this committee shall
make the essential decis ion regarding to such report.

44D. 33Nominal Expenses to be allowed: (1) Where all asset of an individual is
frozen in course of investigation and inquiry of the offence or in course of the
proceeding of the case and there is no other means or source of l ivelihood for
the concerned person or his/her dependents, the court may order the
department to release the portion of the asset required for basic condition of
livelihood.
(2) The department shall act upon the order issued pursuant to Sub -Section
(1).
44 E34 Processing records by computer can be taken as evidence : (1)
Notwithstanding anything contained in any existing laws, except it is proved
otherwise for the purpose of this Act, the record processed or developed by the
electronic means can be taken a s evidence.
(2)The essential provisions for the purpose of receiving, analyzing or
processing record, particular and data shall be as prescribed.

45. Reward : (1) Any person who files complaint or provides information and
cooperates with the inquiry an d investigation or evidence collection shall be entitled
to receive ten percent of the claimant value or rupees one million, whichever is
lower, if allegation is established.
(2) In case the persons pursuant to Sub -Section (1) are more than one, such amoun t
shall be distributed proportionately.
46. Rules May be formulated: The Government of Nepal may frame necessary Rules
for implementation of the objectives of this Act.
33 Addeded by the first amendment. 34 Addeded by the first amendment.