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Suspicious Transactions and Cash Transactions: A Growing Concern
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A recent surge in suspicious transactions and cash transactions has raised concerns among financial institutions and law enforcement agencies about the potential involvement of illegal activities.
According to sources, a significant number of transactions have been flagged as suspicious, with characteristics that may indicate money laundering or terrorist financing. These include:
- Transactions designed to conceal or disguise the nature or origin of funds derived from illegal activities
- Lack of an economic rationale or bona-fide purpose
- Unusually complex or unjustified transactions
Additionally, some transactions have been identified as having no connection to the profile, character, or financial status of the parties involved. These transactions may also appear to be intended to evade legal and regulatory reporting requirements or support activities related to terrorism.
Reporting Requirements
Under the “Parichhed 3, 7dha- Asset (Money) Laundering Prevention Act” and NRB Directive no. 19, financial institutions are required to submit Suspicious Transaction Reports (STRs) to the Financial Information Unit (FIU) for any transactions that may be related to money laundering or terrorist financing.
Wire Transfers
The increasing use of wire transfers as a means of transferring funds has raised concerns about the potential for illegal activities. Wire transfers, which are electronic transfers of funds between financial institutions, can be used to facilitate money laundering and terrorist financing.
FATCA Reporting
In addition to reporting suspicious transactions, banks are also required to comply with the Foreign Accounts Tax Compliance Act (FATCA), which requires them to report information about foreign accounts held by U.S. persons to the Internal Revenue Service (IRS).
Family Members
The definition of “family members” under the Bank and Financial Institutions Act (BAFIA) includes:
- Spouse
- Children
- Parents
- Siblings
- Other relatives
Egmont Group
The Egmont Group is an informal network of 167 financial intelligence units (FIUs) that collect information on suspicious or unusual financial activity. FIUs are not law enforcement agencies, but rather process and analyze the information received to identify potential money laundering or terrorist financing activities.
Modern Slavery and Human Trafficking
Himalayan Bank has also identified modern slavery and human trafficking as a growing concern. Modern slavery is a broad term that encompasses various unethical practices such as:
- Forced labor
- Debt bondage
- Human trafficking
The bank is committed to preventing any form of modern slavery or human trafficking in its operations.
Payable Through Accounts (PTA)
The bank does not provide payable through account facilities to its customers or correspondent partners. Payable through accounts are accounts that can be accessed directly by a third party to effect transactions on their own behalf.
Bank’s Policy to Prevent ML and TF
The bank has established a policy to prevent money laundering, terrorist financing, and other financial crimes. The objectives of this policy include:
- Preventing the bank from being used as a source or platform for illegal activities
- Protecting the bank from discredit
- Complying with local laws and regulations