KATHMANDU, Aug 12: Wallet companies will now have to halt suspicious online transactions within 24 hours after getting notice of such transactions. Nepal Rastra Bank (NRB) has issued a new set of guidelines making the Payment Service Providers (PSPs) accountable for tracking doubtful transactions carried out through their platforms.
Issuing the ‘Guidelines on Targeted Financial Sanctions for Payment Service Providers’ on Monday, the NRB has delegated the role in monitoring online transactions to the concerned PSPs. Along with this provision, the central bank has come up with a list of rules to be followed by the PSPs on their financial transactions.
There are 10 PSPs operating across the country which includes Nepal Clearing House, Smart Choice Technologies, Fonepay, FirstPay Technology and Nepal Payment Solution, among others. With the digital wallet companies (payment service operators) under these PSPs like Khalti by IME, eSewa and MyPay will also be affected.
According to an NRB official, the central bank has issued the guidelines to comply with the recommendations of the Financial Action Task Force (FATF). While keeping Nepal in greylist in February, the global money laundering and terrorist financing watchdog has suggested Nepal to track two types of the targeted financial prohibition activities—integrated prohibition lists of the United Nations (UN) and the country’s own list of terrorism activities.
NRB proposes upper limit for e-transactions
As per the recommendations of the FATF, the country’s apex monetary and financial authority has made the wallet companies abide by the guidelines. Under the new rule, the PSPs will now have to stay alert on the UN’s integrated lists and the suspicious individuals identified by the Ministry of Home Affairs (MoHA) while allowing financial transactions using their platforms. “Wallet companies must register and subscribe in the UN’s lists, while permitting the notification accordingly,” reads the NRB guidelines.
Likewise, the wallet companies will also have to continuously visit the MoHA’s targeted portal along with remaining updated about the restricted individuals and institutions.
The wallet companies have also been given the task of screening transactions. They must conduct potential matches on a real time basis. They have been asked for mandatory checking of the current customer database, transaction details, potential customers, beneficiaries, direct and indirect relations of the business person, and customer representatives for any matches with individuals or entities on government and UN lists.
Provided the details of their customers match with the individuals in the suspicious lists, the wallet companies need to suspend all the related financial transactions. They have to report the suspended transactions to the Financial Information Unit of the NRB within three days of the incident.
Such reporting will finally fall under the jurisdiction of the Department of Money Laundering Investigation and Inland Revenue Department. These government bodies can even recommend the individuals and institutions under question for blacklisting in the country’s database backed by evidence of cross-matching.
Nepal, as a member of the UN, is mandated to implement the United Nations Security Council Resolutions, including those related to the UN’s sanctions regimes. Nepal is implementing relevant UN’s norms on the suppression and combating of terrorism, terrorist financing and countering the financing of proliferation of weapons of mass destruction, in particular relating to targeted financial sanctions. The sanctions relate to asset freezing and other financial prohibitions and to prevent funds or other assets from being made available, directly or indirectly.
The NRB has warned the PSPs not abiding with the guidelines to face action including scrapping of their operating licenses.
