Disclosure of income source must for co-op directors

AMID increasing incidents of embezzlement in cooperatives, the Department of Cooperatives (DEoC) is preparing to make it mandatory for board members to disclose their income source for investment. The DEoC’s plan is aimed at controlling the inflow of black money in the cooperative sector. The DEoC is preparing to introduce such measure through a guideline which it plans to devise soon. Besides the board members, depositors at the cooperatives also will have to disclose their sources of income for amount more than certain threshold. Although the cooperatives are required to ensure disclosure of income source for deposits of more than Rs 1 million as per the directive of Financial Intelligence Unit (FIU) at Nepal Rastra Bank (NRB), the DEoC itself is preparing to incorporate an antimoney laundering provision into the guideline. Once this guideline comes into effect, the depositors as well as the cooperatives board members have to reveal their source if the amount exceeds the prescribed limit. Other regulators, NRB, Insurance Board and Securities Board of Nepal (Sebon) have already prepared guidelines on anti-money laundering and started implementing them. The department is, however, incorporating the issue of antimoney laundering as one of the components of the guideline that will cover other areas such as auditing, provisions guiding the conduct of general assembly, code of conduct for the board members and high-ranking employees in the cooperatives, manual for management of the cooperatives account committee and maintaining the uniformity in the accounting software being used by the cooperatives. DEoC Registrar Kedar Neupane said the planned anti-money laundering guideline could help scrutinise depositers’ source of funds and investments by the board of directors. “Following the enforcement of the guideline, the directors and the depositors have to disclose source of their money,” added Neupane. “The move is aimed at controlling the practice of investing money earned through illegal means.” Along with the guideline on anti-money laundering, the department is also working on introducing four other guidelines on audit, annual general meeting, account committee and software. The department is working to make the audit of the individual cooperatives as per the cooperatives standard. “Although the cooperatives are carrying out the audit in their own way, most of them don’t comply with the norm of the cooperatives,” Neupane said, adding that they would work in coordination with chartered accountants and auditors for the purpose. The guideline on annual general meeting requires the cooperatives to conduct their annual general meeting (AGM) as per the standard maintained by the department. Neupane said the AGM manual would compel the cooperatives’ board conduct the assembly in a proper way. “The mandatory involvement of the members could help minimise malpractices in the individual organisations.” Neupane said they would coordinate with the private software developers working in the area to establish uniformity in the accounting software being used by the cooperatives. DEPT OF COOPERATIVES PLAN