Multiple Transactions in a Day: Institutions Must Report Within 15 Days
Kathmandu, Nepal
The Financial Intelligence Unit (FIU) has issued guidelines for financial institutions to report multiple transactions in a day within 15 days of such transactions. This move aims to prevent money laundering and terrorist financing.
Tipping Off and Confidentiality
According to the guidelines, tipping off means informing clients that their accounts are being monitored or that there is an element of suspicion on a transaction. Institutions must not tip off customers when they identify suspicious transactions.
Consequences of Non-Compliance
The FIU has warned that failure to comply with anti-money laundering (AML) and combating the financing of terrorism (CFT) regulations can result in severe penalties, including:
- Fines ranging from NPR 1 million to NPR 50 million for financial institutions
- Fines ranging from NPR 100,000 to NPR 10 million for other organizations
- Full or partial restrictions on business
- Suspension or cancellation of registration/permission/license
- Imposition of other appropriate sanctions
Customer Risk Categorization
The guidelines categorize customers into three risk categories based on factors such as their identity, source of income, and transaction history:
High-Risk Customers
- Individuals from countries with a higher risk of money laundering and terrorist financing
- Those with suspected beneficial ownership
- Those involved in certain businesses or activities
Low-Risk Customers
- Salaried employees
- Pensioners
- Government departments
- Those whose identity and source of income are clearly disclosed and whose transactions do not raise any suspicion
Non-Face-to-Face Transactions
The guidelines define non-face-to-face transactions as those conducted over the internet or through other means such as:
- Postal services
- Telephone banking
- Electronic point-of-sale transactions using prepaid cards
Beneficial Owners and Record-Keeping
Beneficial owners are natural persons who ultimately own or control a customer or entity. Institutions must identify them to prevent money laundering and terrorist financing. The guidelines require financial institutions to keep records of all transactions, customer data, and beneficial owner information for at least five years.
Compliance Urged
The FIU has urged financial institutions to comply with the guidelines to prevent money laundering and terrorist financing in Nepal.