Conference on AML_CFT and Transfer Pricing
Conference on AML/CFT and Transfer Pricing
The Institute organized a half-day conference on Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) and Transfer Pricing on 30th January 2025 in Kathmandu. The conference was organized on two technical sessions:
Technical Session 1: AML/CFT Obligations for Accounting Profession
The session was chaired by Mr. Suman Dahal, Director General of the Department of Money Laundering Investigation, with CA Aman Uprety, Council Member of ICAN, serving as the session moderator. The session commenced with the moderator providing a brief introduction of both the session chair and the panelists. Following the introductions, the session chair delivered his remarks, emphasizing the importance of integrating global policies into national practices. He also highlighted the need for leveraging advanced digital technologies to identify fraud risks in money laundering and commented on the role of professional accountants in enhancing financial transparency.
The session afterwards had a paper presentation, panel discussion and question answer.
Paper Presentation
CA. Kiran Kumar Khatri, delivering presentation on “AML/CFT Obligations for Accounting Profession” in the 1st Technical Session, of the Conference
CA. Kiran Kumar Khatri, Director at ICAN, presented an insightful session on the "AML/CFT Obligations for Accounting Professionals." He began his presentation by providing an overview of money laundering, its stages, and the associated predicate offenses, including financial terrorism. He highlighted the significant global impact of money laundering and terrorist financing, referencing estimates by the United Nations Office on Drugs and Crime, which suggests that 2-5% of the global GDP is laundered annually. He also discussed the current institutional and legal frameworks governing anti-money laundering (AML) efforts in Nepal and key result of the Mutual Evaluation Report 2022 conducted by Asian Pacific Group of Financial Action Task Force.
Moving forward, CA. Kiran Kumar Khatri emphasized the legislative requirements for accounting professionals in relation to AML and combating the financing of terrorism (CFT). He noted the commitment of the International Federation of Accountants (IFAC) to serving the public interest by fighting corruption, including money laundering. He identified three main obligations for professional accountants: risk management, client due diligence, and the reporting of suspicious transactions. He also underscored the risks faced by accountants who may inadvertently assist in AML/CFT crimes or fail to comply with AML/CFT legislation.
Furthermore, CA. Kiran Kumar Khatri stressed the regulatory role of ICAN in regularly updating AML/CFT guidelines and conducting sector-specific risk assessments for the accounting profession. He also highlighted the importance of developing a robust monitoring and supervision mechanism to ensure compliance with AML/CFT standards by the professional accountants.
Panel discussion
After the paper presentation, a panel discussion was held on the topic. The panel members in the session were as thus:
| S. No. | Name of Panelist | Designation |
| 1 | CA. Prabin Kumar Jha | President, ICAN |
| 2 | Dr. Hari Nepal | Director, Nepal Rastra Bank, Expert on AML/CFT |
| 3 | Mr. Basudev Bhattarai | Head, Financial Intelligence Unit |
Glimpse of the technical session of the Conference
The Moderator started the panel discussion and requested Dr. Hari Nepal to share his insight regarding the need to include the professional accountant within the AML/CFT jurisdiction and the obligation associated with it. In response, Dr. Nepal stressed the role of the professional accountant in financial transparency and its convergence with the objective of the Money Laundering Act being primary reason for inclusion of the professional accountant within Jurisdiction. Dr. Nepal remarked there is a need to reduce the increasing financial crime, and the professional account are the major warriors with required professional competence along with their public interest responsibility. He talked about the demarcation of the AML auditors and Financial Auditors and obliges the professional accountant to report the Suspicious Transaction Report on discharging the professional duty.
Then the moderator requested Mr. Basudev Bhattarai to clarify the limitation of the obligation to be borne by the Professional Accountant as envisioned by the Anti-Money Laundering Act. Mr. Bhattarai in response clarified the work scope of the Financial Intelligence Unit being collector of suspicious information from the reporting entities thereafter analyzing and dissemination the information to the concerned entity for necessary investigation. He emphasized ICAN to update its guideline regarding the AML/CFT and encourage its members to integrate with the reporting platform of Financial Intelligence Unit (FIU) to report suspicious transactions. Mr. Bhattarai requested to reference the guideline issued by the FIU and mark it as the baseline in identifying suspicious transactions.
Thereafter, the Moderator requested CA. Prabin Kumar Jha to share his perspective in regard to obligating the professional accountant to report the suspicious transaction and its contradiction to the confidentiality principle of the professional accountant. CA. Prabin Kumar Jha responded that the obligation incorporated in the Act should not erode the norms of the ethical principles required to be abide by professional accountant and expressed his skepticism about the alignment of the current reporting practice of professional accountant with the legislative requirement of AML/CFT. He emphasized the need for coordination between the FIU and other regulatory bodies to clarify the responsibilities and reduce the expectation gap. He also stressed the need to enlarge the Practicing firms with specialization in such new requirements popping up in the regulatory framework.
Question and Answer (Q&A)
The panelist also responded to the questions from the Participants concerning AML/CFT Obligations for Accounting Profession as under:
Q: What is the necessity to bring such stringent regulation on Money laundering on present circumstance where the economy is depleting, Rs. 7 billion money is on circulation and most of the global economy are legalizing the proceeding upon payment of tax by CA. Rajesh Kumar Shah?
A: Dr. Hari Nepal responded that Nepal has also facilitated the legalization of legally earned income that has not been taxed as practiced by other country and shall not be misled by legalization of the money earned through financial crime.
Mr. Basudev Bhattarai replied that 12% of GDP is in circulation which is normal to the developed economy where there is 4-7% of money in circulation.
Q: Whether the amendment made on the AML Act is the imposition of law by the developed countries to the developing country? What is the practice of imposing obligation to the professional accountant in the developed country? Whether the given regulation is medium to penalize the professional accountant and why are not the bank and financial institution made more responsible? Whether there is plan to differentiate the work scope of AML/CFT and Financial Auditors? What is ICAN preparation regarding the reporting mechanism of Suspicious Transaction By CA. Bishesh Babu Acharya?
A: Dr. Hari Nepal responded that the need of imposing the strict regulation has been created due to the growing financial crime in the country rather than imposition by the developed country. He highlighted the strict regulatory practices followed by countries like Singapore and Switzerland, emphasizing that such measures are necessary for Nepal due to the rising levels of financial crime. Dr. Hari Nepal clarified that the Banks and Financial institution shall have substantially higher responsibility than of the Professional Accountant.
Mr. Basudev Bhattarai replied that the suspicious transaction reporting shall not be reported on professional accountant’s report whereby CA. Kiran Kumar Khatri replied to the practice of suspicious transaction reporting is practiced by UK, UAE, Tanzania and Sri Lanka.
And CA. Prabin Kumar Jha stated that the ICAN is updating the directive of AML/CFT guideline issued to the practicing members and reasserted the need of consultation with the regulators regarding the procedures of the reporting the suspicious transaction and exploring the better harmony of professional practice along with such regulatory requirements.
Concluding Remarks by Session Chair:
Lastly, the Chair of the Conference, Mr. Suman Dahal, Director General of the Department of the Money Laundering Investigation summed up the key deliberations of the panelists and highlighted the need to be sincere and legally compliant by the professional accountant in this changing regulatory landscape. He also highlighted that the accounting profession should extend utmost cooperation to the government and related agencies in this fight against money laundering and thanked ICAN for having organized this program in the week following the National AML Awareness Day celebrated on 14th of Magh every year.
Technical Session 2: Challenge and Way Forward for Implementation of Transfer Pricing Guidelines 2024
Paper Presentation
FCA. Shailendra Uprety initiated the second technical session with a paper presentation on the topic "Challenges and Way Forward for Implementation of Transfer Pricing Guidelines 2024.”
CA. Shailendra Uprety delivering presentation on "Challenges and Way Forward for Implementation of Transfer Pricing Guidelines 2024” in the 2nd Technical Session of the Conference
"He began by discussing the evolving landscape of global transactions and the global value chain, which now accounts for more than 30 percent of all international transactions, highlighting the growing importance of transfer pricing. He provided an overview of both international and national regulatory norms related to transfer pricing, offering insights into the key provisions of the Transfer Pricing Directive 2081. FCA. Uprety highlighted that transfer pricing, being a relatively new concept, presents significant challenges to national tax systems. He identified key challenges such as the lack of prior experience, scarcity of resources, limited database availability, and inadequate coordination between government agencies. Additionally, he stressed the need for harmonizing transfer pricing policies across countries, drawing on international best practices, and incorporating essential components such as safe harbor provisions, Advanced Pricing Agreements, and treatment of intangibles within the Transfer Pricing Directive to ensure effective implementation for Transfer Pricing.
Vote of Thanks
CA. Surandra Bhusan Shrestha, Executive Director delivering Vote of Thanks in the Closing Session of the Conference
CA. Surendra Shrestha, Executive Director of ICAN expressed heartfelt gratitude to session chairman and panelist of first technical session for their thought-provoking insight into the AML practices, it challenges and evolving landscape which have significantly enriched the participants' understanding. He also thanked the moderator for skillfully steering the discussion, ensuring maximum value and engagement. Special appreciation was extended to the paper presenter for laying the groundwork for a meaningful dialogue. He also expressed gratitude to CA Shailendra Uprety for his remarkable presentation on transfer pricing Guideline. He concluded by expressing his gratitude to the participants for their curiosity and participation, and extended his warm wishes for the 28th anniversary of ICAN.
Glimpse of Participants in the Conference