KATHMANDU, Dec 12: The cases of suspicious transactions in commercial banks are on the rise despite growing concerns of Nepal Rastra Bank (NRB) to tighten the money laundering measures.
According to an annual report unveiled by NRB’s Financial Information Unit (FIU), the number of suspicious transactions in banks went up by 81 percent in the fiscal year 2021/22, compared to the previous fiscal year. During the review period, banks reported 2,380 cases of suspicious transactions to NRB’s FIU - up from 1,533 cases in the previous year.
Suspicious transaction reporting involves detailed information about transactions that provide necessary evidence to the FIU to identify individuals, groups and organizations involved in fraud, terrorist financing, money laundering and other crimes.
Suspicious transactions: Reporting entities more vigilant
All banks and financial institutions (BFIs), money-changers and remitters, cooperatives, insurance companies, and securities business persons and designated non-financial businesses and professions such as dealers of precious stones and metals, casinos, independent accountants and legal professionals, notary public, trust and company service providers are required to report any suspicious transaction to the FIU.
Similarly, government agencies like the Office of the Company Registrar, Land Revenue Offices and Department of Customs, among others, are also legally obliged to report suspicious transactions to the FIU.
Likewise, the FIU last year received 400 complaints under suspicious transactions reporting also from development banks, finance companies, microfinance, insurance, remit companies, Securities Board of Nepal, cooperatives and government bodies.
Citing growing cases of illegal transactions, the central bank a few days ago asked the BFIs concerned to take precautions while handling suspicious transactions. These transactions, according to the NRB, might also have been generated out of black money and terrorism financing.
Directing BFIs, the NRB, has underlined that the big transactions that involve third-party involvement mainly pose the risk of money laundering. “The directors and top management teams of the BFIs have an important role to play in the evaluation of risks related to money laundering,” the central bank has stated.
In addition, the central bank has also set up a separate unit named ‘Money Laundering Prevention Supervision Division’ to look after the cases of money laundering. Issuing a public notice on Friday, the NRB informed that the new Division would be used to inspect and supervise the prevention of financial investment in money laundering and terrorist activities.
The Asia Pacific Group of the Financial Action Task Force (FATF) is currently evaluating the government’s efforts to curb the cases of money laundering inside the country. If the country fails to meet the needful criteria prescribed by the international organizations, they might keep the nation under their blacklists, experts say.
Although Nepal had stepped up measures to amend the existing Money Laundering Prevention Act 2008 and related regulations to ensure effective checking of the transactions of black money, it has remained in limbo due to various reasons. Recently, the process was delayed due to the elections to the House of Representatives and provincial assemblies.
