Financial Intelligence Production:

Expectations and Experience

Shyam Krishna Dahal
Deputy Director
Nepal Rastra Bank/FIU

Legal Framework

Assets (Money) Laundering Prevention Act (ALPA), 20

08
(Under this Act, Financial Information Unit (FIU) has been established
with Nepal Rastra Bank on April 22, 2008)

Assets (Money) Laundering Prevention Rules, 2009

FIU Directives to various REs

NRB Directives

Circulars

Scope of FIU

Collection and Receipt Information.

Preliminary Inquiry and Collection of Data.
Analysis.
Disseminate Data/Information, (if necessary) to LEAs.
Arrange Training/Seminar/Workshops for Stakeholder.
Freezing of Bank Accounts.
Issue Instructions to REs
Impose of Penalty, where necessary,
Correspondence and Information Exchange with Other FIU.
Other Required to be Performed ALPA, Rules, Directives
etc.

Organization Structure of FIU

Chief of FIU
Legal Advisor

Dissemination
Committee

Management
Committee

Intelligence
Production

Policy, Planning, External

Relations

Management & Internal

Administration

Major Sources of ML in Nepal

Tax

Evasion
Corruption
Counterfeit Currency
Smuggling etc.

Sources of Information
Suspicious

Transaction Report (STR)

Threshold Transaction Report (TTR)
Newspapers/Magazines
Information/Complaints Received Through
Letters
Information/Complaints Received Over
Phone
Information Received from Other
Organization etc.

What is suspicious transaction ?

That

transaction which has

reasonable ground to suspect and
related to:
Financial

Offences
Money Laundering
Terrorist Financing
Other Criminal Activities etc.

What are Reasonable Ground ?

Financial Capacity
Occupation/Behavior
Identification
Purpose
Cash Transactions
Media

What are Reasonable Ground

Context/Nature/Type

Background/Financial History
Mistrust/Doubt
Normal Practices
Undue Activities
Extra-territorial Transactions

Who is this ? Is it traced?

Possible answers
A masked

or colored but complete person

May be a mad guy
May be a joker
May be an entertainer
May be an actor
May be a beggar
May be a criminal
Again an STR?
So, consider an event from different perspectives !!!

Types of Analysis
Operational
Strategic

Analysis

Analysis

Intelligence Process
Collection
Processing
Analysis
Dissemination /Postponement

Receipts of TTR and STRs

FY

2066/067 2067/068 2068/069 2069/070

TTR

28,11,501

STR

177

30,99,153 38,08,166

256

437

34,12,946

333

Who are the High Risk Customers?

Non face to face Customer

PEPs
Foreign Individuals
Non Profit Organization
Charities
Professional Service Provider
Non BFIs (Casino, Real Estate, High Value Metals, Precious Gems and
Stones Business etc.)

Multiple Account Holder

Frequent Sender and Receiver

Operational Risk and Penalties for

REs
Legal

Action
Regulatory Penalty
High Financial Penalty
Brand Name and Goodwill

Major Problems in Compliance

Understanding differently than required

Environment (Internal, external, regulatory)
Isolation between CSD and A/C
Lack of system (not computerized )
Lack of Red-flagging and auto-pop up
Lack of regular monitoring
Low understanding of its values and
benefits

Our expectations

CDD (Simplified, Enhanced)

Timely Reporting
(TTR within 15 days, STR Immediate)

Give Complete and Correct Information

Be Specific, not generic
Use Specific Format
Do not Tip-off
Do not Share Information
Watch on Frequent Sender and Receiver
Watch on just below the Threshold Level Transactions
Obligation of Wire Transfer.

Question Please!

Thank you !