Friday, February 8, 2013

Central bank simplifies 'Know Your Customer' provision

The central bank has simplified the Know Your Customer (KYC) forms due to complaints from both banks and financial institutions, and customers.
Nepal Rastra Bank (NRB), in consultation with Nepal Bankers' Association (NBA), today, said that customers must self-declare, if they have no PAN, email, mobile, telephone, passport or profession.
Likewise, it has also relaxed the time period for submitting the
Know Your Customer forms for existing customers. "Existing customers can submit the Know Your Customer forms within this July, whereas new customers must submit all the information at the time of opening the accounts," it said.
Though customers must submit information — names and photocopies of citizenship certificates — of family members, they do not need to submit the information of deceased and legally separated family members, according to the amended Know Your Customer regulations. "If the customer provides logical evidence of inability to submit information of family members immediately, the banks and financial institutions can give them some time to submit the required information."
However, customers who need Enhanced Customer Due Diligence must submit the information and photocopies of citizenship certificates of family members, it added. "If need be, the banks and financial institutions can take interviews before opening the account."
Likewise, for refugees, an identification paper provided by any government agency will be enough, the central bank added.
NRB had brought the Know Your Customer provision for banks and financial institutions last year to keep tab on clients more effectively to control money laundering and fight terrorist financing, according to the international commitment made by the country to Financial Action Task Force (FATF), the inter-governmental agency that keeps watch on money laundering and terrorist financing.
The central bank has made it mandatory for banks and financial institutions to follow it thoroughly.
Though banks and financial institutions had been keeping track of all their clients and reporting suspicious transactions to the Financial Information Unit of the central bank, it has become more strict after some of the banks and financial institutions reported suspicious transactions, and due to the country's commitment to the FATF in fighting the flow of dirty money.
NRB had also asked banks and financial institutions to closely monitor customers with multiple transactions, even if the volume is small, and keep tabs on electronic transfers, both receipts and paid, too.
"They must list their customers under three categories — highly risk, medium risk and low risk — depending on the risks they are exposed to," the central bank said.


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