NRB asks BFIs, remittance cos to implement Customer Due Diligence
KATHMANDU, JUN 04 -
Nepal Rastra Bank (NRB) has directed banks and financial institutions (BFIs) and remittance and money transfer service providers to implement Customer Due Diligence (CDD) as part of Anti-Money Laundering and Combating the Financing of Terrorism (AML CFT).
The central bank’s Foreign Exchange Department issued a circular on Wednesday basically telling banks to know their customers. CDD should include identification of the customer and the beneficiaries of the customer, collecting information about customers and identifying their risk level, implementing policies regarding new clients and supervising their transaction regularly.
Similarly, the central bank has ordered BFIs and remittance service providers to classify their clients into two categories — high risk level and low risk level — and monitor them under Enhanced CDD and Simplified CDD respectively. According to the circular, high risk level clients are those involved in banking crime, people with high designations, politically influencing people and those who don’t do face-to-face transactions. With regard to this category of clients, remittance service providers should implement Enhanced CDD at each step of client identification and establish relations with such clients
only after getting the approval of a senior officer of the service providing company.
However, in case of low risk level clients, service providers can adopt Simplified CDD, but they should still be able to produce all the related documents if demanded by the regulator.
According to the circular, examples of institutions and customers falling under the low risk category are institutions regulated by NRB, financial institutions outside the countries which are under regulation and supervision and clients with an annual turnover within Rs 10,000, among other criteria.
Similarly, in case of wire transfer, service providers are required to obtain the full identity of the sender and verify it. If service providers fail to obtain and verify such identity, the transaction will automatically fall under the suspicious category and it should be reported to the FIU. Service providers can even refuse to execute the transaction, says the circular.
Earlier, such directives were issued by the Financial Information Unit (FIU), and NRB only required remittance service providers to comply with the Know Your Customer (KYC) policy. According to NRB spokesperson Bhasker Mani Gnawali, all the directives issued earlier by the FIU have been scrapped, and it will now only receive reports of suspicious transactions.
“This circular was issued by the central bank mainly to bring all the compliance related activities within one window under the regulator itself,” said Gnawali. The circular came in line with the Foreign Exchange Act 1962.
Source: The Kathmandu Post
