KYC/AML and NRB Directives
KYC/AML questions test customer due diligence, beneficial ownership, PEPs, ongoing monitoring, record retention, and reporting to the FIU. Nepal’s AML/CFT framework includes the Asset (Money) Laundering Prevention Act and NRB AML/CFT directives; the exam expects risk-based application, not form-filling.
Core rules and concepts
- Identify the customer and verify identity using reliable, independent documents. For legal persons, identify the beneficial owner and controllers.
- Apply enhanced due diligence to PEPs, high-risk jurisdictions, and unusual structures. Senior management approval is required where policy demands it.
- Conduct ongoing monitoring and update KYC. Retain records for the prescribed period after the relationship ends.
- File STRs on suspicion without a value threshold; file TTRs for prescribed high-value cash transactions (commonly NPR 1 million-confirm the current threshold). Never tip off the customer.
- Screen against sanctions lists and report matches; document the disposition.
Worked example
A customer deposits NPR 450,000 cash three times in one day, totalling NPR 1,350,000. The branch must aggregate same-day deposits, not treat each as below threshold. File a TTR and assess structuring. If the customer cannot explain the source of funds or the pattern is inconsistent with the profile, file an STR as well. Record the decision and the documents reviewed.
Traps
Threshold-only thinking, ignoring related accounts, tipping off the customer, accepting a photocopy without verification, and failing to update KYC after a ownership change.