July 16: Nepal Rastra Bank has introduced strict measures to identify bank account holders and customers using banking service without opening accounts in order to curb money laundering and terror funding.

The central bank has issued a new directive effective from July 16 to discourage the possibility of such malpractices.

The new directive has amended the existing provisions as well as annulled some provisions related to money laundering and funding terrorism.

NRB has said it has set new criteria for identification of customers as the current scheme of ‘know your customer’ (KYC) has become obsolete in the changed context.

The central bank’s move comes as an effort to stop legalizing black money through money laundering and to curb funding of terrorism in the new fiscal year.

NRB has warned of stern action to the banks and financial institutions which do not follow the new criteria set for identification of account holders. The central bank will first seek clarification from the BFIs not following the directive and warn them not to repeat the mistake. In the second phase, NRB can impose a fine or Rs 1 million if its instructions are not followed. The BFIs still defying the NRB directive will then be liable to pay a fine of Rs 5 million to 50 million.

If the BFIs are found to have aided in money laundering by opening fake accounts then the minimum fine is Rs 5 million. NRB has asked the BFIs to pay special attention when a high-profile person opens a new bank account. BFIs have also been instructed to inform the central bank if any individual deals in repeated transactions up to Rs 1 million within a day. Anyone depositing Rs 1 million or more amount have to mandatorily show the source of income, states the new directive.

BFIs also need to rate their customers as per the new provision.