Tuesday, 5 May 2009

Bhutan : Cleaning up the dirty money trail

RMA unit will make it harder to launder money
4 May, 2009- The Royal Monetary Authority (RMA) is planning to set up a financial intelligence unit (FIU), which will track the flow of money from corruption scams, financial crimes, money laundering, fronting and other illegal activities, both within and outside the country.

The unit will also keep a close eye on financial transactions that may be used to finance terrorism, prostitution and narcotics trades in Bhutan, the region or globally.

Agencies like the Anti Corruption Commission (ACC), Royal Audit Authority (RAA) and Royal Bhutan Police (RBP) currently do not any have expert capacity to track such funds.

The unit will be given legal backing by the financial services Act, which has, in principle, recent Cabinet approval.

Currently even ACC requires a court order to look at financial assets, but FIU will give direct and unlimited access to information on financial assets and transactions in banks and other financial institutions in Bhutan.

“Financial institutions like banks are legally obliged to send FIU any information on any suspicious transactions, otherwise there would be quite large penalties involved,” said head of RMA’s financial institutions supervision division, Eden Dema.

“Once set, any person can approach FIU if they know about someone engaging in suspicious activity and then FIU will track the person’s financial assets and transactions,” said Eden Dema.

However, unlike ACC, the unit will not go into uncovering corruption but keep track of the money trail to prevent its conversion into white money, Eden Dema said.

RBP, revenue and customs, the foreign ministry, ACC and RAA will be a part of the unit’s information-sharing system.

“We’re doing this because the repercussions of money laundering are very bad for a country’s economy,” said Eden. She said that the practice facilitates corruption and crime, weakens the financial sector, reduces productivity, threatens the financial liquidity of institutions and affects investments.

Under Asian Development Bank assistance, the unit’s framework is scheduled to be ready by 2010.

Tenzing Lamsang


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