BFIs asked to identify remittance senders

KATHMANDU, DEC 11 - 2013

Nepali beneficiaries of remittance may not get funds sent by their kins from abroad through banks and financial institutions (BFIs) without the sender being properly recognized.

In the latest revised circular, Nepal Rastra Bank (NRB) has directed BFIs that they must get information about the sender and verify their identity. The BFIs have to get information about the name of the sender and his/her account number or any symbol number that identifies electronic transactions if the sender does not have a bank account.

The BFIs will have to obtain the address of the sender, and if proper address is not identified, they should verify the birth date, birth place, citizenship number or national identity number of customer identification number, states the revised directive.

It also states that in the case of unavailability of the name and account number of the beneficiary, a separate symbol number that proves the wire transfer of fund must be sought.

The central bank has also asked the BFIs to record payments without proper identification under “risky” category.

A senior NRB official said the revised directive was issued as per the amended Anti-Money Laundering Act. The Act has brought the wire transfer of fund under the purview of money laundering and terrorist financing investigation.

The BFIs have been allowed to make payments up to Rs 75,000 sent through wire without taking information about sender, but they have to properly identify the beneficiary while making payments of above Rs 75,000, according to the directive.

The BFIs have to monitor whether their agents (usually the money transfer agencies) have taken safeguard measures against the risk of money laundering and terrorist financing while making payments. The central bank has also told the banks to publish details about their agents on their websites.

The new central bank measure has come at a time when a team of the Financial Action Task Force (FATF), global anti-money laundering body, is in Nepal to conduct a field study whether to keep Nepal out of the regulator monitoring over deficiencies in anti-money laundering and terrorist financing measures.

The three-member team is expected to hold talks with stakeholders in its two-day stay here. Based on its reporting, the FATF will decide whether to keep Nepal out of the regulator monitoring.

The revised directive has also directed the BFIs to open accounts of risky customers and politically exposed persons (PEPs) and their family members or maintain business relations with them only after properly identifying and verifying their identity.

The Anti-Money Laundering Act has provisioned enhanced due diligence of PEPs (either citizens or foreigners) keeping them under high risk category.

The central bank has told the BFIs to properly identify if any customer is found involved in suspicious activities. They have to identify the risk on the basis of geography, business and profession, working area, customer, service and production, transactions and customer details.

Banks have to determine the level of risk and a report on risk evaluation should be submitted to the central bank annually. Based on the risk evaluation, each customer should be categorized under highly risky, moderate risky and low risky. The BFIs are also required to take measures to reduce the risk and keep them updated.  

NRB Spokesperson Bhanskar-mani Gnawali said the measures are expected to minimise money laundering and terrorist financing activities to a greater extent.