Panama Papers, seven Nepalis and possible action they may face for offshore investment

Panama-PaperKathmandu, May 10


With Panama Papers reportedly linking seven Nepali nationals with what appears to be ‘dubious’ offshore investment, interest in Nepali legal provisions governing such investment have only increased. In a bid to satiate readers’ queries regarding such investment, Onlinekhabar scanned the governing laws and also talked to a Nepal Rastra Bank official knowledgeable about the issue.

Legal provisions

Nepal’s laws do not allow Nepali nationals to invest abroad without getting permission from the government and the central bank. Specifically, a legislation enacted 52 years ago bars Nepali nationals from investing abroad. The legislation, though, allows Nepalis working abroad to deposit money thus earned by opening bank accounts. Within a month after returning to Nepal from abroad, Nepali nationals must inform Nepal Rastra Bank, the central bank of Nepal, about their bank accounts.

Clause 3 of the same legislation allows Nepali nationals to invest abroad, with a rider: They must get a go-ahead from the government of Nepal. As per governing legal provisions, the government cannot allow Nepali nationals to invest abroad without publishing a notice to this effect in the National Gazette.

What law? Who cares about it?

These provisions aside, no Nepali national has so far sought permission from the NRB for making investment abroad, an NRB official told Onlinekhabar.

The official said: Foreign investment entails foreign currency, so potential investors have to seek permission from the NRB as well as the government. Records show not a single Nepali has sought permission for foreign investment thus far.

Possible action

If a probe finds the seven Nepalis guilty of investing abroad without seeking permission from the government and the central bank, they will face action for misappropriating foreign currency, the official says. As per legal provisions, the government can recoup the foreign currency invested and collect from the guilty triple the amount of investment as fine and jail the person for up to three years.

The Department of Revenue Investigation looks after such cases. The department should investigate the matter now, the official says.

The seven Nepalis can face action also under the Money Laundering Act 2064 BS. These people may face action for earning money in Nepal through illegal means and sending it abroad through illegal channels like Hundi, goes the official.

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