NRB to BFIs: Keep tabs on high-risk clientele
KATHMANDU, FEB 28 -
In a bid to strictly monitor money laundering and terrorist financing, the Nepal Rastra Bank (NRB) on Monday issued a circular, asking banks and financial institutions (BFIs) to keep an eye on high-risk customers.
Although the central bank’s Financial Information Unit (FIU), assigned to keep records of suspicious transactions, has already issued a directive on ‘know your customer (KYC)’ policy for BFIS, the latest circular is more detailed.
The new circular has told BFIs that they should adopt an enhanced customer due diligence (Enhanced CDD) for high-risk customers, clearly defining who the high-risk customers are.
The circular has defined high-risk customers as those involved in banking crime, people with high designation, politically influential people and those who do not carry out face-to-face transactions. “BFIs should establish relations with such clients only after getting approval from senior officers,” states the directive.
Non-face-to-face transactions are those carried out through internet, postal service, ATM and other cards, telephone banking and fax, according to the circular.
While conducting Enhanced CDD, BFIs should, besides other things, incorporate the source of income and the transaction amount. BFIs are also required to adopt the Enhanced CDD for transactions with countries failing to take anti-money laundering measures. Banks should seek more documents about the banks and customers of the countries that have been blacklisted by the Financial Action Task Force, NRB officials said.
Financial Action Task Force (FATF), global anti-money laundering body, recently blacklisted 16 countries, including Pakistan and Thailand. “Nepali banks should seek more details of banks of those countries while opening letters of credit or conducting other transactions,” said a senior NRB official.
As far as low-risk clients are concerned, BFIs can adopt Simplified CDD, but they should be able to produce all related documents if demanded by the regulator.
BFIs have been directed to classify their clients under three categories—high-risk, moderate-risk and low-risk. After the classification, the customers should be monitored under Enhanced CDD, CDD and Simplified CDD approaches, respectively.
The circular has said BFIs should not accept customers whose risk details cannot be prepared.
With the existing directive only covering credit and debit transactions, payment of remittance worth Rs 1 million and exchange transactions worth Rs 500,000, the new transaction has also incorporated wire transfer of money. “Wire transfer means transferring funds from one account to another electronically,” said the NRB official.
Other directions of the circular include BFIs prepare policy and procedure for CDD that incorporates identification of customers and their beneficiaries; collect information about customers and identify their risk levels, implement the policy regarding new clients and supervise their transactions. If BFIs have outsourced their client identification and CDD job to third party, BFIs themselves are responsible for the end result.
NRB spokesperson Bhaskarmani Gnawali said BFIs should outsource such jobs to third parties only if they are confident that the outsourcees are complying with anti-money laundering and terrorist financing laws. BFIs also need to obtain documents regarding their clients from outsourcees.
Source: Kantipur
