Nepal Rastra Bank asks fund managers to enforce anti-money laundering lawsThe central bank enforced the directive aiming to extend anti-money laundering measures to non-banking sectors too.
Nepal Rastra Bank has asked state-owned Employees Provident Fund, Citizen Investment Trust and Postal Savings Bank to enforce anti-money laundering measures.
The central bank issued the directive to implement anti-money laundering laws at government operated fund managers to prevent transfers of illegally acquired money in accordance with a Cabinet decision.
“The law needed to be implemented at these institutions too as they manage huge amounts of money collected from civil servants and private sector employees,” said an anonymous official.
The Employees Provident Fund extended its services to employees of private companies too after Parliament passed the necessary piece of legislation in 2014. According to the fund, it provides provident fund services to more than 600,000 clients including government employees. Among them, around 166,000 are employees from the private sector.
The Citizen Investment Trust manages the retirement fund, gratuity and pension and insurance funds of various organisations. It currently holds deposits totalling more than Rs111 billion.
The Postal Savings Bank holds deposits amounting to more than Rs1 billion, collected particularly from rural areas of the country.
The central bank enforced the directive aiming to extend anti-money laundering measures to non-banking sectors too. “It will enable these institutions to act as an oversight agency to check black money transactions in their concerned areas,” said the source.
Nepal Rastra Bank has asked government operated fund managers to devise working guidelines under headings such as internal responsibility and work divisions, risk-based evaluation system and procedures and identification and follow up of risk-based customers and suspicious transactions.
Under the provision, these organisations have to prepare lists of high ranking government officials and their family members so that they can carry out instant enquiries in case any transaction made by them looks suspicious. They need to update the overall customer lists annually based on the degree of risk.
The central bank has asked the fund managers to report to the Financial Information Unit if an individual carries out transactions of more than Rs1 million either physically or electronically from abroad. If the transaction is done in foreign currency, the upper limit has been fixed at an amount equivalent to Rs500,000. “For each of these transactions, a separate threshold transaction reporting is mandatory,” the central bank said in the directive.
Nepal is now in the process of fulfilling compliance of anti-money laundering to report to the Asia Pacific Group on Money Laundering, a regional anti-money laundering watchdog of the Financial Action Task Force. The watchdog body is scheduled to conduct mutual evaluation of Nepal through peer review next year.
According to the 2016 Basel Anti-Money Laundering Index, Nepal was ranked in the 12th position globally with a risk score of 7.57, showing the country at high risk of money laundering.
With the evaluation time approaching, the government has been asking the concerned agencies to enforce the related laws to check black money transfers. Under the government plan, it has targeted to create as many oversight agencies as possible to implement risk-based supervision of the areas under their jurisdiction.
According to the Department of Money Laundering Investigation, around three dozen government agencies have started implementing anti-money laundering laws.