Financial Crime World

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Terrorist Financing in Nepal: A Growing Concern

The fight against terrorist financing has become a pressing issue in Nepal, with authorities scrambling to stay ahead of the curve. In recent years, Nepal’s financial sector has seen a significant increase in suspicious transactions and money laundering activities, raising concerns about the country’s ability to prevent and detect such crimes.

AML/CFT Supervisors

At the forefront of this battle are Nepal’s AML/CFT supervisors - the Nepal Rashtra Bank (Central Bank of Nepal), Securities Board of Nepal, and Financial Information Unit (FIU- Nepal). Established in 1956, 1993, and 2008 respectively, these agencies play a crucial role in monitoring and regulating financial transactions to prevent money laundering and terrorist financing.

How to Comply with AML/CFT Regulations in Nepal

For designated service providers operating in Nepal, compliance with AML/CFT regulations is mandatory. This includes:

  • Developing and implementing a robust anti-money laundering/counter-terrorism financing policy that covers:
    • Customer due diligence (CDD)
    • Risk profiling
    • Monitoring
    • Reporting of suspicious transactions

AML/CFT Reporting Obligations

As a designated service provider, it is essential to notify FIU- Nepal regarding any suspicious activities. The company must file two types of reports:

  • Threshold Transaction Reports (TTRs) - filed within 15 days for transactions exceeding specific thresholds
  • Suspicious Transaction Reports (STRs) - submitted within three days of determining a report needs to be filed

Recordkeeping

In addition to reporting suspicious activities, entities are required to maintain records of:

  • All transactions
  • Customer details
  • Activity logs

for at least five years. This information is crucial in identifying patterns of suspicious behavior and tracking the flow of funds.

Nepal’s Progress

Despite these challenges, Nepal has made significant progress in laying the groundwork for its AML/CFT system. By:

  • Devising sound legal and institutional structures
  • Organizing incremental capacity building activities
  • Raising awareness among stakeholders and the general public

authorities are working to prevent terrorist financing in the country. However, more needs to be done to address the growing threat of terrorist financing in Nepal.

Conclusion

The fight against terrorist financing in Nepal is a complex and ongoing challenge that requires the concerted efforts of:

  • Government agencies
  • Financial institutions
  • Designated service providers

By staying vigilant and adapting to new threats, Nepal can prevent the misuse of its financial system for nefarious purposes and safeguard national security.