The Asia/Pacific Group on Money Laundering (APG), in its mutual evaluation report (MER) released on September 8 on anti-money laundering and counter-terrorism financing, advised Nepal to further improve its supervision of non-financial businesses and professions, including casinos.
The MER examined Nepal in light of its implementation and upholding of the 40 globally recognised criteria developed by the Financial Action Task Force (FATF) to combat money laundering, terrorist funding, and proliferation finance.
“The ‘fit and proper’ person requirements for casinos there, are derived from an unclear regulatory framework and are not sufficient to prevent criminal ownership or management,” the APG report noted.
APG also revealed that the legal status of the casino regulatory system is unclear, and the casinos’ fit and suitable standards only apply to the undefined “operator”. It suggested Nepal to improve oversight measures and risk-based supervision across the sector prioritizing casinos first.
“In the last five years, 19 new casinos have been approved licenses with none declined. Limited information was provided regarding the steps taken when considering applications,” the report added.
Furthermore, casinos regularly engage in foreign exchange. As per requirement, the service must also be licensed by the Nepal Rastra Bank (NRB) under foreign exchange regulations. However, as of now only six casino operators that operate a total of 10 casinos have acquired a license from the NRB.
After a National Risk Assessment conducted in 2020 by the local authorities, the casinos in Nepal were classified as “medium-high vulnerability”. Despite having a small economy, the border casinos are an attractive way to launder money due to lack of AML/CFT (combatting the financing of terrorism) and other controls.
As of now, there are 28 casinos in Nepal according to the MER, 15 of which are described as mini-casinos. In terms of distribution, 10 are located in the capital, Kathmandu while the remaining are spread closer to the border with India.