The directive, which replaced the central bank´s previous circular on know-your-client (KYC), is similar to the directive that Financial Information Unit (FIU) -- the focal anti-money laundering unit -- issued in the past. [break]
The difference is; its issuance by the Banking Regulation Department has made it mandatory for the BFIs to follow it.
“We enforced it as mandatory norms for the BFIs mainly after Financial Action Task Force (FATF) pushed us to do so,” said a senior NRB official.
Going by the new directive, the BFIs would now need to adopt and implement customer due diligence (CDD), which means they will need to keep track of all their clients and report suspicious transactions to the FIU.
It seeks the BFIs to adopt necessary policy and mechanism to identify suspicious transactions and strictly adopt existing law and regulations related with anti-money laundering and terrorism financing in their operations.
“The BFIs must make sure such compliance is maintained in branches as well as subsidiaries,” read the directive.
The directives asks BFIs to closely monitor customers undertaking multiple transactions, even if the volume of such transactions is small, and also watch electronic transfers, both receipts and paid. It seeks BFIs to list out their customers, categorizing them as highly risk, medium risk and low risk depending on the risks they are exposed to.
“BFIs will now need to implement Enhanced CDD to monitor people who are identified as high risk clients, that is: one whose chances of involving into money laundering and terrorism financing are high,” says the directive.
Interestingly, people who would be subjected to Enhanced CDD also include senior government officials and other office bearers, politically influential people and people who transact through other persons.
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