Financial Crime World

Title: “Nepal’s Financial Regulators Fortify the Country’s Anti-Money Laundering/Counter-Terrorism Financing (AML/CFT) Regime”

Introduction

In the dynamic world of finance, ensuring compliance with Anti-Money Laundering/Counter-Terrorism Financing (AML/CFT) regulations is paramount for financial integrity and global standing. In Nepal, the central bank, securities regulatory body, and the Financial Information Unit (FIU) play pivotal roles in strengthening Nepal’s financial system’s resilience against illicit activities.

Nepal Rashtra Bank - The Central Banking Pillar

Nepal Rashtra Bank, est. 1956, serves as the fountainhead of monetary policies in Nepal. Its mandate includes:

  • Stabilizing the banking and financial sectors
  • Developing an efficient financial system
  • Preserving financial health and security

Securities Board of Nepal - Guarding the Securities Market

Securities Board of Nepal (SBN), est. 1993, acts as the securities market regulator. Its functions include:

  • Oversseeing securities regulations
  • Preventing insider trading and securities market crimes
  • Supervising securities-related matters

Financial Information Unit (FIU-Nepal) - Guarding the Financial Realm

FIU-Nepal, est. 2008, operates under Nepal Rashtra Bank and functions as Nepal’s national AML/CFT reporting agency. Its responsibilities include:

  • Processing financial information and data related to suspected money laundering and terrorism financing activities
  • Disseminating such information to law enforcement agencies and foreign Financial Intelligence Units (FIUs)

Complying with AML/CFT Regulations in Nepal

As a designated service provider, implementing a robust AML/CFT compliance program is essential. Your program should include:

  1. Consistent procedures for Customer Due Diligence (CDD), risk assessment, monitoring, and implementing controls.
  2. Proper management oversight, supervision, and training.
  3. Determination and confirmation of ultimate beneficial owners and periodic updates.

Catering to the Unique Market Landscape

Registered entities in Nepal must consider:

  • Their specific market
  • Corporate structure
  • Clients
  • Transaction types
  • Other factors when adopting effective AML/CFT measures.

Building a Strong AML/CFT Framework

Nepal has made notable progress in creating:

  • Legal and institutional structures
  • Capacity building activities
  • Raising awareness among stakeholders and the public to support its AML/CFT system.

Reporting Obligations

Designated service providers in Nepal have specific reporting obligations:

Threshold Transaction Report (TTR)

  • Notification to FIU-Nepal for transactions above certain thresholds, e.g., deposits, withdrawals, and currency exchanges worth over a specified amount.

Suspicious Transaction report (STR)

  • Filing within three days of identifying a suspicious transaction.

Recordkeeping

  • Retention of records and customer details for a minimum of 5 years.

Conclusion

The unwavering commitment of Nepal’s financial regulators, Nepal Rashtra Bank, Securities Board of Nepal, and FIU-Nepal, has created a solid foundation for Nepal’s AML/CFT regulatory framework. Designated service providers must implement robust AML/CFT policies and compliance programs and adhere to specific reporting obligations to contribute to Nepal’s financial integrity.