New Nepal Banking Regulation: Know Your Customer (KYC) Law

As part of new Know Your Customer (KYC) regulations set by Nepal Rastra Bank (NRB), banks in Nepal are now required to obtain specific personal identification and address proof from new customers intending to open bank accounts.

Adoption of KYC Procedure by Kumari Bank Limited

Kumari Bank Limited, one of Nepal’s leading financial institutions, has adopted the new KYC procedure. New account applicants are now required to submit:

1. A photograph
2. Proof of identity
3. Proof of address

The bank has also provided a list of commonly accepted documents to minimize inconvenience for its customers.

Importance of KYC Procedures

These KYC procedures go beyond securing a new account. They serve to protect customers from potential fraudsters and provide an added layer of security, safeguarding banks against:

1. Money laundering
2. Financing terrorism

Both banks and customers are mandatory to comply with these guidelines.

What is Money Laundering and How Does it Relate to Banking?

Money laundering is the process of converting illegally obtained funds into seemingly legitimate transactions or assets. Criminals often attempt to open bank accounts using false identities. Banks must prevent such activity by implementing robust KYC procedures.

Identity Documents Required for Opening a Bank Account

Customers must provide acceptable proof of their identity and address to establish a new bank account. Documents issued by government authorities containing photographs, addresses, and signatures are preferred.

For Nepalese Nationals:

1. Citizenship certificate
2. Document establishing their address

For Businesses or Other Entities:

1. Partnership deeds
2. Trust deeds
3. Memorandum & Articles of Association
4. Certificates of incorporation
5. Business registration certificates

Non-compliance with KYC Regulations

Failure to provide the necessary KYC information or documents may result in:

1. Refusal to open a new account
2. Discontinuation of an existing banking relationship

However, if a customer finds they are unable to provide certain non-critical documents promptly, they can approach their branch for assistance.

These requirements do not assume customers are committing money laundering activities. Instead, they are aimed at preventing potential misuse of banking services by criminals and ensuring the proper identification of all prospective account holders. As a responsible banking customer, you play an essential role in preventing fraudulent activities and maintaining the integrity of the banking system.