NRB revises directive to control financial crimes

KATHMANDU:

Nepal Rastra Bank has made it more difficult for high-ranking officials and their family members to open a bank account and conduct banking transactions, in an attempt to control financial crimes like money laundering and terror financing.

In a revised directive on anti-money laundering and combating the financing of terrorism, banking sector regulator has instructed all banks and financial institutions to start business relationship with high-ranking officials, their family members and suspicious customers only after getting all their details, including personal details spanning three generations.

“The same process also needs to be followed while opening their bank accounts,” says the revised directive issued today. Earlier, NRB allowed all categories of financial institutions to gather these information on a later date in case the clients failed to submit them at the time of establishing banking relation.

The revised directive was made public on the eve of the arrival of a mission of the Financial Action Task Force — an international body that creates standards for fighting financial crime. The team is making a two-day trip to Nepal to evaluate the progress made by the country in combating financial crimes like money laundering and terror financing.

If the mission is satisfied with the progress made by Nepal, the country’s name may be removed from the ‘watch list’ of International Co-operation Review Group, which comprises countries at high risk of providing a breeding ground for money laundering and terror financing.

“We hope the team will take notice of the latest revision and efforts being made by NRB in combating financial crime,” a high-ranking NRB official said.

NRB had originally introduced the directive on anti-money laundering and combating the financing of

terrorism in February 2012. It had then made slight changes to it, easing the process of opening of bank accounts and conducting banking transactions after banks and financial institutions complained strict provisions on customer due diligence, like gathering of personal information spanning three generations, had affected ordinary customers.

So as not to harass ordinary clients, the revised directive issued today has also made it easier for people who remit small amounts of money.

The directive says banks and financial institutions need not get information like address of the person, their birth date, or citizenship or ID card number if they are remitting Rs 75,000 or less. “Similarly, banks and financial institutions also need not conduct customer due diligence on recipients of remittances less than Rs 75,000,” the directive says.

“However, in the case of wire transfer of funds exceeding Rs 75,000, banks and financial institutions need to thoroughly follow customer due diligence procedure and get information like name of the person, the client’s bank account number or unique number that identifies the transaction, person’s address, and the name of beneficiary.”

Also, banking institutions will have to extend training on combating financial crimes to agents who carry out wire transfers on their behalf and monitor their activities, the directive says. “Similarly, banks and financial institutions also need to identify high-risk areas based on geographic location and high-risk clients based on their profession or business that they are involved in.”

Source: THT