Govt expands powers of money laundering investigation department, extends reach to share market offenses

Key Highlights:

DoMLI can investigate independently, without a predicate offense

Its central authority has been restored

Scope expanded to cover smuggling, tax, and financial market crimes (including insider trading and manipulation)

Banking and broader financial offenses now included

KATHMANDU, May 4: The government has significantly strengthened the authority of the Department of Money Laundering Investigation (DoMLI), broadening its jurisdiction and sharpening its legal tools through a recent ordinance.

By amending the Asset (Money Laundering) Prevention Act, 2008, the government has introduced key changes aimed at tightening oversight of financial crimes. The ordinance revises three major provisions of the existing law, with a notable amendment to Section 13, which governs how complaints can be filed.

Under the revised framework, the DoMLI is no longer limited to cases directly tied to a specific predicate offense. Earlier, money laundering cases had to be linked to another criminal offense that could potentially trigger a money laundering case.

The DoMLI can now independently examine matters related to asset laundering, even when a clear underlying crime is not immediately established—marking a significant expansion of its investigative scope. Government officials said that the last amendment to the Asset (Money Laundering) Prevention Act had allowed various other agencies—including police, customs, forests, the Commission for the Investigation of Abuse of Authority, and the Department of Revenue Investigation—to independently file money laundering-related cases, reducing the role of the DoMLI.

“Around 40 different institutions could file money laundering-related cases in district courts or special courts. While their role in curbing money laundering proved largely ineffective, the DoMLI was also rendered ineffective due to this provision,” said a senior government official, asking not to be named.

According to a former government secretary, the changes also widen the range of offenses that can trigger money laundering investigations. Complaints may now be lodged if there is information linking laundering activities to crimes such as smuggling—including customs, excise, and tax violations—along with tax offenses, whether direct or indirect.

Importantly, the ordinance brings financial market misconduct into sharper focus. Activities that distort securities or commodities markets, such as market manipulation and insider trading, now fall within the DoMLI’s reach. In addition, offenses related to banking, financial systems, foreign exchange, negotiable instruments, and insurance are explicitly covered.

The legal update also streamlines prosecution. Money laundering cases can now be filed directly in the Special Court, potentially expediting judicial proceedings.

Further strengthening its role, the DoMLI is empowered to act proactively during investigations. If it finds that no case has been initiated regarding a related offense within its jurisdiction, it can call for further investigation into that offense and formally recommend prosecution.

The impact of the amendment is already visible. Authorities are now positioned to bring money laundering charges before the court against individuals currently in custody, including Deepak Bhatt and Sulav Agrawal.

With these changes, the government signals a more assertive stance against financial crimes, particularly those that affect the broader economy and capital markets.