Cash Deposits That Never Quite Reach Ten Lakh
Sagarmatha Hardware Suppliers has held its current account at your branch for 14 months. Declared annual turnover is NPR 1.8 crore. Over the last 45 days the account received 14 cash deposits, each between NPR 8.2 lakh and NPR 9.6 lakh, totalling NPR 1.24 crore. All arrived between 11:00 and 13:00. Most were presented by two individuals, one of whom is not an authorised signatory.
A sister concern's account at the same branch receives NEFT credits from a savings cooperative in the same district, and funds are withdrawn in cash within 48 hours.
Asked for the source of funds, the proprietor said he is doing government contract work and produced a single purchase order for NPR 22 lakh. His PAN is on file, but the beneficial ownership declaration still shows him as sole owner. Three weeks ago the registered mobile number was changed on a written request, and the branch did not take identification for that change.
1. Is this suspicious? Set out exactly what you would do in the next 48 hours and who you would inform.
Read the worked answer
Is it suspicious - yes. Each deposit looks ordinary; the pattern does not:
- 14 deposits in 45 days, all between NPR 8.2 lakh and 9.6 lakh, which sits deliberately below the NPR 10 lakh large-cash reporting line. That is structuring behaviour.
- NPR 1.24 crore against one purchase order of NPR 22 lakh and declared turnover of NPR 1.8 crore.
- Deposits brought by non-account-holders, at a fixed time window - a classic third-party placement method.
- The sister concern receives cooperative NEFT credits and converts them to cash within 48 hours - a layering channel.
- The mobile number was changed without identification. That is an account-takeover precursor and a separate control failure.
Next 48 hours.
- Say nothing to the customer that hints at suspicion.
- Pull statements for both accounts, deposit slips, counter CCTV, the cooperative's NEFT trail, and identify the two depositors.
- Perform EDD: source of funds, contract documents, VAT filings, a site visit, and refresh beneficial ownership against the company registry.
- Escalate the same day to the Branch Manager and the AML/CFT Compliance Officer. The Compliance Officer decides on the STR to FIU-Nepal within the directive's deadline; the branch does not make that call alone.
- Decide on the relationship: enhanced monitoring, no further cash credits without documented source, or exit - and record the reason.
- Preserve all CDD and transaction records for the statutory period after the relationship ends (five years).
2. The proprietor telephones asking whether his account is 'under watch' and demands release of a held deposit. How do you respond, and what are the tipping-off and record-keeping constraints?
Read the worked answer
What you may not say. You cannot confirm, deny or hint that a report has been or may be filed, and you cannot say his transactions are the reason for any hold. That is tipping off, and it is an offence independent of whether the underlying suspicion is later proved.
What you may say. Only the procedural line: 'The credit has been referred for routine verification under our KYC procedures and will be released once documentation is complete.' If a hold is placed, tell him that a hold exists and how to complain - not why.
Practical handling.
- Put the conversation in writing so the wording is controlled, and log the time and the officer who approved it.
- Brief the counter staff who dealt with him; one improvised remark at the counter is enough to create a tipping-off exposure.
- Do not close the account the same week he asks. Abrupt closure is itself a signal; the Compliance Officer decides the timing and method of exit.
- Keep the STR, the analysis and the correspondence in a restricted file, separate from the customer file.
Record-keeping. The record must show the bank formed and acted on a suspicion in good faith, and that it handled the customer's query properly. If the deposit turns out to be genuine and documented, release it and record why - a reasoned 'no suspicion' decision protects the bank as much as an STR does.
If he insists on speaking to the manager, the manager repeats the procedural line and escalates to Compliance. Thresholds, reporting channels and the FIU are never discussed with the customer.