Nepal Rastra Bank’s KYC Guidelines: What You Need to Know
In today’s digital age, protecting your hard-earned money and preventing fraudulent activities is more important than ever. To achieve this, banks in Nepal are required to follow a strict “Know Your Customer” (KYC) policy.
What is the Objective of KYC Policy?
The objective of the KYC policy is to enable banks to have true identification of their customers. This helps prevent fraudulent activities such as money laundering and terrorist financing.
Documents Required for KYC
According to the guidelines issued by the Nepal Rastra Bank (NRB), banks are required to collect certain personal information from their customers, including:
- A photograph
- Proof of identity
- Proof of address
Kumari Bank Limited has framed its KYC procedure accordingly, requiring customers to provide a photograph and documentary proof of personal identification and address proof. The bank accepts commonly available documents as acceptable proof of personal identification and address proof.
Why Do Banks Ask for Proof of Identity and Address?
The identification of customers is a critical process aimed at preventing fraudsters from using false identities and addresses to undertake illegal activities, such as money laundering and terrorist financing. The bank also needs to identify its customers to control financial frauds and suspicious transactions.
Are KYC Requirements New?
No, KYC requirements have always been in place, and banks have been taking KYC documents in accordance with the guidelines issued by Nepal Rastra Bank from time to time. The revised guidelines were issued on February 27, 2012, emphasizing the importance of complying with KYC standards and anti-money laundering measures.
Is KYC Mandatory?
Yes, it is a regulatory and legal requirement. Banks are required to put in place a comprehensive policy framework covering KYC standards and AML measures. Additionally, the Asset (Money) Laundering Prevention Act, 2008, also mandates compliance with KYC guidelines.
How Can KYC Affect You as a Customer?
As a customer, you may be asked for proof of identity and address to prevent accounts from being opened in false identities. This does not mean that you are suspected of money laundering. Criminals try to appear normal law-abiding customers by opening multiple accounts using small amounts of money.
What Proof of Identity Will You Need?
The best identification documents are those issued by a government authority, which should have a photograph, address, and signature. For Nepalese nationals, a citizenship certificate is required for establishing identity, along with another document that establishes address. Similarly, firms, companies, trusts, etc., need to provide Partnership Deed, Trust Deed, Memorandum & Articles of Association, Certificate of Incorporation, Business Registration Certificate, PAN/VAT certificate, etc.
What Will Happen If You Do Not Provide the Required KYC Information/Documents?
The bank will be entitled to refuse to open an account or discontinue its relationship with you if you do not provide the required KYC information/documents. However, if you require reasonable time to furnish certain non-critical documents, you can approach the branch.
Conclusion
Irrespective of the size of your relationship with the bank, KYC guidelines need to be adhered to. Please help us prevent crime, tax evasion, and money laundering by being patient when staff asks for documents to prove your identity. You can also help prevent crime against yourself and others by maintaining confidentiality of your account details and identity documents.