The Nepal Rastra Bank (NRB) has introduced a new directive for financial institutions involved in hire purchase lending to prevent money laundering and terrorist financing.
Issuing the directive on Tuesday, the central bank mandated these institutions, including the Employees Provident Fund, Citizen Investment Trust, and Social Security Fund, to enforce Know Your Customer (KYC) requirements based on citizenship or national identity cards. They must also identify, verify, and categorize high-ranking individuals, their family members, and associates.
Under the directive, customers must be classified into categories such as incumbent high-ranking individuals, retired high-ranking individuals, high-ranking individuals from neighbouring or nearby countries, other foreign high-ranking individuals, and those affiliated with international organizations.
Additionally, the institutions are required to report suspicious transactions and activities in accordance with the procedures set by the Financial Information Unit under the NRB.
The central bank’s directive comes days after the Financial Action Task Force (FATF), an intergovernmental body overseeing global anti-money laundering (AML) and countering the financing of terrorism (CFT) compliance, added Nepal to its grey list for failing to meet AML/CFT requirements.
Members of Parliament, during a meeting of the House of Representatives on Tuesday, demanded the government’s response after FATF added Nepal in its grey list.
Speaking in the Special Hour of the House of Representatives meeting, Udaya Shumsher JBR demanded to know what the government was doing to remove Nepal from the FATF grey list.
"Nepal has been placed in the FATF's grey list mainly due to weak regulation of the cooperative sector. What is Nepal's plan to increase the regulation of cooperatives and get out of the grey list soon? Let this be informed to the Parliament," he said. (With inputs from RSS)
