Financial Crime World

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Financial Crime Prevention Strategies in Nepal

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Nepal’s fight against financial crime has gained momentum with the establishment of various regulatory bodies and institutions. In this article, we will explore the key players and strategies involved in preventing money laundering and financing of terrorism.

Regulatory Bodies and Institutions

The Central Bank of Nepal (1956), Securities Board of Nepal (1993), and Financial Information Unit (FIU- Nepal) (2008) are some of the key players in preventing financial crime. Each institution plays a crucial role in maintaining banking stability, regulating the securities market, and receiving, processing, analyzing, and disseminating financial information on suspected money laundering and terrorism financing activities.

Central Bank of Nepal

The Central Bank of Nepal is responsible for formulating monetary and foreign exchange policies, maintaining banking stability, and developing a secure financial system. It was established in 1956 to ensure a stable and prosperous economy.

Securities Board of Nepal

The Securities Board of Nepal regulates the securities market and prevents insider trading and other crimes. Established in 1993, it ensures fair and transparent market practices.

Financial Information Unit (FIU- Nepal)

FIU- Nepal is responsible for receiving, processing, analyzing, and disseminating financial information on suspected money laundering and terrorism financing activities. It was established in 2008 to combat financial crime effectively.

Compliance Program

To comply with anti-money laundering (AML) and counter-terrorism financing (CFT) regulations in Nepal, designated service providers must develop and implement a rigorous compliance program. This includes:

  • Establishing consistent procedures for customer due diligence, risk profiling, and monitoring
  • Implementing proper management oversight, supervision, processes, controls, segregation of duties, and training

Risk-Based Approach

Each registered entity should consider its unique market, corporate structure, clients, and transaction types when adopting AML/CFT measures to ensure their effectiveness. Nepal has made significant progress in laying the groundwork for an AML/CFT system by devising sound legal and institutional structures, organizing capacity-building activities, and raising awareness among stakeholders and the general public.

Ongoing Reporting Responsibilities

As a designated service provider, you are required to notify FIU- Nepal regarding any suspicious activities. Your ongoing reporting responsibilities include:

  • Filing Threshold Transaction Reports (TTRs) within 15 days of a transaction exceeding a certain threshold limit
  • Filing Suspicious Transaction Reports (STRs) within three days of determining a report needs to be filed
  • Maintaining records of all transactions, customer details, and activity logs for a minimum of five years

Conclusion

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Nepal’s financial sector has taken significant steps towards preventing financial crime by establishing robust regulatory bodies and institutions. Designated service providers must comply with AML/CFT regulations by developing effective compliance programs and reporting suspicious activities to FIU- Nepal. By working together, we can build a secure and stable financial system in Nepal.