NRB issues stern warning to BFIs on money laundering: strict actions to follow

KATHMANDU: The Nepal Rastra Bank (NRB) has issued a stern warning to the executive officers of banks and financial institutions (BFIs), cautioning them not to overlook the rising concerns related to money laundering within their organizations.

In a move to strengthen anti-money laundering measures, the central bank announced on Tuesday that BFIs’ executives who fail to take prompt actions against employees found violating the money laundering prevention laws will face severe consequences. According to the newly amended unified directives, those responsible could face a hefty cash fine ranging from Rs 1 million to Rs 50 million or dismissal from their positions, or both.

“The officials concerned and directors of the reporting BFIs could face a cash fine between Rs 1 million to Rs 50 million or dismissal from their jobs or both,” the directive warned.

The NRB has made it mandatory for all BFIs to comply with the laws aimed at curbing money laundering practices. To further reinforce this initiative, a dedicated unit named the ‘Money Laundering Prevention Supervision Division’ has been established to oversee money laundering cases within financial institutions.

This action comes in the wake of a sharp increase in suspicious transactions across the banking sector. According to NRB’s Financial Information Unit, 2023 saw a staggering 6,255 suspicious transactions worth around Rs 40 billion, marking a 57% increase compared to previous years. Suspicious transactions in 2021 had already surged by 68%, while 2022 recorded more than 3,979 such cases.

To tackle these challenges, the central bank has instructed BFIs to conduct risk assessments related to anti-money laundering and to revise their risk-based annual work plans within the first quarter of each fiscal year. The BFIs have been given a 15-day deadline following the end of the stipulated time to report back to the NRB’s Money Laundering Prevention Supervision Division about the systems they have implemented for risk assessment.

This new directive signifies NRB’s strict stance on financial integrity, as the rise in money laundering cases has raised concerns about the financial sector’s stability and its impact on Nepal’s economy.