KATHMANDU: The Nepal Rastra Bank (NRB) has released the Bank Supervision Report, revealing that banks in Nepal are failing to regularly conduct Know Your Customer (KYC) verification for high-profile individuals, particularly politically exposed persons (PEPs).
According to the NRB, most financial institutions lack systems for maintaining information and records of these individuals.
Many high-profile figures are found using details of third parties, and banks lack information on their family members and past generations, as noted in the report.
Nepal currently finds itself in the grey list, denoting a high-risk status, of the Financial Action Task Force (FATF), an international body combatting money laundering and terror financing.
The FATF maintains a blacklist for “High-Risk Jurisdictions subject to a Call for Action,” which includes North Korea, Iran, and Myanmar.
The grey list, on the other hand, signifies countries with strategic deficiencies in their anti-money laundering regimes.
While not subject to sanctions, grey listing indicates heightened transactional risks for international banking with the country concerned.
Currently, Nepal is undergoing a mutual evaluation on money laundering, with FATF scheduled to submit its report in February 2025.
In a recent mutual evaluation conducted in Canada, Nepal demonstrated compliance with 21 of the 40 FATF recommendations, thus avoiding blacklisting.
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