Financial institutions report 1,351 suspicious transactions in FY 2018/19

Published On: January 15, 2020 07:37 AM NPT By: Sagar Ghimire


The surge in the number of STRs indicates that institutions that carry out financial transactions are detecting more deals that involve a possibility of abuse of their system for money laundering or terrorism financing purposes. 


KATHMANDU, Jan 15: The number of reports on suspicious transactions that the Financial Information Unit (FIU) under  Nepal Rastra Bank  received in  fiscal year 2018/19 has jumped by 52 percent to 1,351. 

In the previous fiscal year of 2017/18, FIU—the country’s financial intelligence agency that is responsible for receiving, processing and analyzing possible money laundering and terrorist financing cases to report  to law enforcement agencies and foreign FIUs—received a total of 887 suspicious transaction reports (STRs), according to an annual report. 

The surge in the number of STRs indicates that  institutions that carry out financial transactions are detecting more deals that involve a possibility of abuse of their system for money laundering or terrorism financing  purposes. 

Financial institutions including banks, remittance companies, money changers, insurance companies and cooperatives are required to be on the alert against transactions of a suspicious nature that pass through their system and to report these immediately to the FIU. 

They have to report any transactions that have unclear financial and business aims or that involve relatively large amounts of cash or are conducted repeatedly or unnaturally. 

NRB spokesperson Gunakar Bhatta attributes the spike in STRs to  growing awareness among  financial institutions about the requirement for flagging such transactions. 

“By reporting any suspicious transactions that pass through their system, the reporting entities want to prevent the possibility of their system getting abused for financial crime. They want to be on the safe side,” he said. 

“The way law enforcement agencies including the Department of Revenue Investigation have become more active has also prompted them to be more vigilant in their financial transactions ,” he added. 

However, not all STRs mean ‘dirty money’ is involved. 

It is only if the FIU concludes though its own analysis  that a transaction involves money launderers or any other criminals  that it contacts the law enforcement agencies or foreign FIU for further investigations.  The data with FIU suggests that it has forwarded 216 reports to various law enforcement agencies including the DRI for further investigations after concluding that such transactions could have a link to money laundering. 

“The criminality most commonly reported in STRs during 2018/19 was tax evasion. The reporting of STRs relating to terrorist financing is relatively very low in Nepal,” said Ramu Nepal,  head of the FIU,  in the annual report. “Reporting entities must continue to focus on preventing the movement of suspicious funds by conducting  proper KYC [know your customer] and CDD [customer due diligence] exercises and reporting any transaction or activity found to be  suspicious,” added Nepal.

 


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