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Supervisors Perspective
Pradeep Bhattarai
Act. Deputy Director
Nepal Rastra Bank
Areas of Supervision
Compliance Management
Customer Due Diligence
Risk Assessment
Special Issues
Special Monitoring Issues
Reporting
Record Keeping
Independent Auditing
Training and AML/CFT Awareness
Compliance Management
Compliance Officer of Managerial Level ?
Has AML/CFT compliance been an integral part
of compliance program?
Is there Internal AML/CFT policy and
Procedure? If yes, does it addresses all the
obligations of bank?
Is there effective implementation of the policy
and procedure?
Power of the Compliance Officer and
Compliance Department
Owner
3. Establishing Intended Nature and Purpose of
Business Relationship
4. Conducting ongoing Due Diligence and Scrutiny
of the relationship
5. Customer Acceptance Policy
Identification and
Verification
of
Customer
Anonymous Account?
What is identified? [name, address, present address,
occupationetc]
How is it verified?
Checking against international and national terrorist
/sanction list?
Are proper documents used for verification?
Identification and verification in all type of account ?
Compliant with schedule 1 of Directive No. 19 of
Unified Directives?
Identification and
Verification
of
Beneficial
Does Bank have any policy and procedure on
identification
and verification of beneficial owner?
Owner
(BO)
beneficial owner?
BO
What if beneficial owner of a legal person is
Customer Acceptance
Policy
Is there any customer acceptance Policy?
Who do you accept as your customer and who
dont accept?
Any Document threshold?
Any business type?
Timing of CDD
establishing business relationship
opening an account,
carrying out occasional transactions above a threshold as
may be prescribed,
carrying out wire transfers by electronic means,
there is suspicious about the veracity or adequacy of
previously-obtained customer identification information,
there is suspicion of money laundering or terrorist
financing,
at any time of transaction in relation to the high risked
and politically exposed person,
in any other situations as prescribed by the Regulator
Risk Assessment
High, medium and low risk categories
Customer Risk on the basis of assigned risk
weights of
Business of customers
Geography (high risk jurisdiction)
products, services, delivery channel
counter measures
Every AML measures to be risk based.
Ultimate responsibility
for CDD rests with the
institution doing the
business.
Special Issues
Politically Exposed Persons
Cross Border Correspondent Banking
Wire Transfer
Non-Face to Face Transaction
Politically Exposed
Persons
Family Member and Associates are also PEPs.
International PEPs: any person who is or
PEPs
Foreign PEPs: Heads of State or of government,
PEPs
Does BFI determine if the customer is a PEP?
Does BFI determine if a BO of a customer is a
PEP?
How does BFI determine?
Who approves a/c opening of PEPs? [at least one
step higher than the usual a/c opening officer]
Is a PEP treated as high risk customer?
Are measures applied to determine the source of
fund of PEPs?
Does BFI apply ECDD and enhanced monitoring
for PEPs?
Cross Border
Correspondent Banking
Correspondent banking is the provision of banking
Cross Border
Correspondent
Banking:
a) Gather sufficient information about the
respondent institution and its business
What
to do?
activities.
b) Information on reputation, supervision,
c) Assess the respondents AML/CFT controls,
Wire Transfer
Identification and verification of originator and
beneficiary?
Account number of unique reference no of
originator ?
Originators address or, in the absence of the
address, the citizenship or national identity
number or customer identification number or date
and place of birth, ( may not apply for amount
below Rs 75000.00 ?
No identification and verification if customer is
existing customer ?
Reporting
Regular reporting of TRR?
Any STRs reported?
Any attempted STRs reported?
Timely reporting?
Grounds of STRs mentioned in the internal
procedure?
Process for identifying, detecting and
reporting STRS and TTRs ?
Awareness among staff about STRs?
Reporting exemptions considered?
Independent Auditing
Is there independent audit of AML/CFT
compliance?
Has internal audit mentioned anything about
AML/CFT compliance?
Who does auditing?
Is there management influence on the
auditor?
Previous audit reports?
Thank
You