The move followed central bank´s directive on ´know your customers´. In February, Nepal Rastra Bank (NRB), the central bank, issued a directive instructing all banks and financial institutions (BFIs) to focus on customer. [break]
As per this provision, BFIs should keep track of transactions of political figures, high-ranking government and corporate officials, businesspersons and those who use nominees to conduct business, among others.
Citing unusual and suspicious transactions conducted by these people are likely to provide breeding ground for financial crimes like money laundering and terror financing, banks have also been asked to keep these figures under ´high risk´ category.
Since the responsibility of identifying these ´high risk´ clients also lies with BFIs, the Nepal Bankers´ Association (NBA), the umbrella organization of commercial banks, started preparations on steps that need to be taken to comply with the central bank´s instruction.
“In the initial phase, we are tallying our guideline on ´know your customer´ formulated in the past with the recently issued central bank directive,” said Ashok Shumsher Rana, president of the NBA and CEO of Himalayan Bank.
“Once the gap analysis is complete, NBA delegation will formally meet with NRB officials to inform them about tasks that can be executed by us and support the central bank needs,” Rana informed.
Currently, the central bank is asking BFIs to modify their application forms and make them more extensive so that greater amount of information can be extracted from clients opening new accounts.
“If customers are made to declare sources of funds, beneficiaries and official positions held at present and in the past, banks can have an insight into profile of the accountholder,” an NRB official said on condition of anonymity.
However, some bankers argue such disclosures may not be enough to identify ´high risk´ clients.
“We want the central bank to take the responsibility of supplying a list so that we can be sure who we are dealing with,” they told Republica on condition of anonymity.
To make the task of identifying ´high risk´ clients easier, the NBA has also floated the idea of creating a consolidated database of people whose transactions need to be scrutinized, which, it says, can be shared by all banks via Credit Information Bureau (CIB). “But not all banks have agreed to the proposal,” Rana said.
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