CDNS Complies with Anti-Money Laundering Regulations

Ensuring Transparency and Preventing Illegal Activities

In a bid to ensure transparency and prevent illegal activities, the Central Depository Company of Nepal (CDNS) has implemented stringent procedures for identifying customers, dealing with authorized representatives, and verifying beneficial owners.

Customer Identification and Verification

CDNS will identify every customer and verify their identity using reliable documents, data, or information specified in sub-regulation 9 of regulation 4.
This move is aimed at preventing money laundering and other financial crimes.

Authorized Representatives

In cases where a customer is represented by an authorized agent or representative, CDNS will also identify every person acting on behalf of the customer and verify their identity using the same documents and data mentioned earlier.
Additionally, CDNS will verify the authority of such persons to ensure that they are authorized to act on behalf of the customer.

Beneficial Owners

CDNS has also taken measures to identify beneficial owners and verify their identity using documents and data sources detailed in regulation 9 of regulation 4.
This is intended to prevent the use of shell companies or other structures to hide the true ownership of assets.

Transaction Records

CDNS must maintain comprehensive records that detail individual transactions, including:
- The nature and date of the transaction
- The type and amount of currency involved
- The specific customer involved
These records will serve as evidence in cases where criminal activities are suspected.

Penalties for Non-Compliance

Failure to comply with these regulations may result in penalties imposed by the Supervisory Board under the AML/CFT Sanctions Rules, 2020.

The Banking Companies Ordinance, 1962 (as amended) also plays a crucial role in regulating banking companies operating in Pakistan. The ordinance establishes rules for corporate governance, grants regulatory authorities the power to inspect and supervise banking companies, outlines penalties for non-compliance, and provides mechanisms for enforcement.

In related news, the State Bank of Pakistan has recommended Know Your Customer (KYC) and Customer Due Diligence (CDD) regulations for financial institutions operating in the country. These regulations aim to prevent money laundering, fraud, and other financial crimes by ensuring that institutions have sufficient information about their customers.

KYC and CDD Regulations

Under KYC regulations, financial institutions are required to:

Obtain and verify customer identity before establishing a business relationship
Assess customer risk
Monitor transactions continuously

CDD measures involve:

Conducting enhanced due diligence on high-risk customers or complex transactions
Identifying Politically Exposed Persons (PEPs)
Inquiring about the source of funds or wealth

The implementation of these regulations is expected to enhance transparency and prevent illegal activities in the financial sector.