NRB makes national identity card mandatory for opening bank accounts

KATHMANDU: Nepal Rastra Bank (NRB) has mandated the use of national identity cards for opening accounts at banks and financial institutions (BFIs). In a circular issued on Thursday, the central bank announced that starting January 15, 2025 (Magh 1, 2081 BS), BFIs must require customers to provide their national identity card for account opening.

The directive, part of an amendment to the Integrated Guidelines 2080 concerning anti-money laundering, applies to commercial banks, development banks, finance companies, microfinance institutions, and infrastructure development banks. BFIs can now authenticate customer details through the electronic records of the national identity card or citizenship certificate.

Key Requirements for Account Opening

Effective January 15, 2025, BFIs must establish a system to verify and record customers’ national identity card details or their corresponding number through access to electronic records. The system ensures that all accounts are opened based on these credentials.

Furthermore, for disbursing government payments like social security benefits, BFIs will rely on details provided by the relevant government body. However, before disbursing funds, they must verify and confirm customer identities in compliance with the directive.

Enhanced Customer Verification Measures

BFIs must ensure the mobile number provided by a customer genuinely belongs to them by implementing a risk-based identification process. In addition, BFIs are required to establish an updated system to regularly verify transactions involving individuals, groups, or organizations listed by the Ministry of Home Affairs.

If any listed individual or group is found holding an account, locker, or funds with a BFI, the assets must be frozen immediately, and the NRB’s Anti-Money Laundering Supervision Department must be notified within three days. A copy of this notification should also be submitted to the Financial Information Unit (FIU).

Focus on High-Risk Accounts and Transactions

The central bank has emphasized prioritizing monitoring and verification of accounts associated with high-risk activities, such as corruption, tax evasion, human trafficking, and businesses like casinos, internet casinos, real estate, and cooperatives. BFIs must identify individuals involved in these activities and monitor their transactions closely.

Additionally, any funds related to legal entities engaged in professional transactions must be processed through the entity’s account. Payments made to or received from personal accounts for business purposes will be considered suspicious transactions and must be reported to the FIU.

Establishing Dedicated AML Units

BFIs are required to set up a dedicated Anti-Money Laundering (AML) and Counter Financing of Terrorism (CFT) unit, headed by a senior implementation officer. This officer must not have close familial or personal ties with regulatory authorities or senior management. If suspicious transaction reports involve family members or close relatives, the institution must assign an alternate officer to handle the reporting.

Mandatory Updates for Accounts of Politically Exposed Persons

By January 15, 2025, BFIs must update the national identity card details of all accounts held by politically exposed persons (PEPs). They are required to classify PEPs into distinct categories, including domestic, foreign, and international organization officials, and maintain their records for at least 10 years after retirement.

Nepal Rastra Bank’s directive aims to enhance transparency and accountability in the banking sector, ensuring stricter compliance with anti-money laundering and financial integrity measures.