NRB tightens grip on money laundering

HIMALAYAN NEWS SERVICE

KATHMANDU: The central bank has directed money changers and remitters in the country to be more vigilant in tracking down any suspicious activity that signals money laundering, issuing a series of directives today.

Nepal Rastra Bank (NRB)’s Foreign Exchange Management Department has introduced regulations asking remitters and money changers to inform the Financial Information Unit (FIU) of NRB about any transaction that is over the limit within a fortnight of the transaction.

The directive has asked all financial institutions and remittance service providers to report to the FIU about transactions conducted by a single entity which exceeds Rs one million within 15 days of the transaction.

Likewise, if anyone sends money within Nepal or to bordering areas of the country –– in single or multiple transactions –– in a single day that exceeds Rs one million also needs to be reported by the remitters. Similarly, financial institutions, money changers or any other institution such as hotels, travel agencies or courier companies that are allowed to exchange foreign currency, have to report about any foreign currency exchanged by a single entity that exceeds US $5000 to FIU within 15 days of the transaction.

“Institutions involved in money transfer or currency exchange have to be vigilant in detecting any attempt of transferring money without a legitimate source,” pointed out spokesperson for the central bank Bhaskar Mani Gyanwali. “Though NRB had already issued directives to prevent money laundering in 2009, this fresh directive will further provide clear cut procedures that need to be followed as per the AML Act,” he added.

The AML Act aims at curbing money laundering. This Act,

as per the international finance law and the Financial Action Task Force, aims at preventing criminal activities

like money laundering and

the financing of terrorist activities which weaken the economic, social and the legal framework of a nation.

The regulation has asked to formulate and implement the required policies and procedures as mentioned in the Anti-Money Laundering Regulation - 2066. According to the directive, remitters and money changers have to be informed about their customers and beneficiaries as per Customers Due Diligence and keep records of their transactions. The companies even have the right to deny services to customers who fail to provide correct information.

Moreover, remitters and money changers have been asked to especially scrutinise transactions that seem complicated and those unconvincingly big transactions sans economic and legal motives. The institutions have to keep records of such transactions in writing for at least five years and figure out the motive for such transactions.

Remitters and money transferors have to keep records of those customers who are considered risky as per Enhanced Customer Due Diligence.

Risky customers include those residing in places infamous for money laundering and corruption activities, customers with an ambiguous source of income, and customers involved in an industry linked to possible money laundering activities.