Kathmandu. Nepal Rastra Bank (NRB) is preparing to implement central KYC system for the purpose of transactions of banks and financial institutions.
The bank in the current fiscal year 2082. Nepal Rastra Bank (NRB) has announced to implement central KYC in its public monetary policy for 83 years. Nepal Rastra Bank (NRB) has assigned the responsibility to the Credit Information Centre to make necessary preparations for the implementation of central KYC.
The Central KYC system, which is being developed for the purpose of banks and financial institutions, can also be useful for insurance companies. For this, the Nepal Insurance Authority (NEA) should take initiatives to institutionally include insurance companies in the central KYC system and ensure access.
Life Insurance Association, Nepal Insurance Association and Small Insurers Association should take initiative to make arrangements in the central KYC system to address the needs of insurance companies by taking institutional initiatives through the AUTHORITY.
The Financial Action Task Force (FATF) has included Nepal in the grey list. It will be easier to control money laundering if the central KYC system is put into use for the entire financial sector.
CDSC has already implemented central KYC for the purpose of share trading from July 1, 2080. Rastra Bank is preparing another central KYC system. All of these have the same purpose, that is the identity of the person.
Instead of introducing different systems for customer identification, it is easier to adopt austerity in the cost of infrastructure and human resources by introducing an integrated system.
It is mandatory for the insurance company to confirm the identity of the customer while accepting the insurance offer, paying the insurance fee or paying the insurance claim. There may be different people with the same name and surname. In such a situation, if the insurance company is not sure about the identity of the concerned insured, then the risk of misuse of insurance money and being cheated increases.
As the size of the business of insurance companies increases, the incidence and size of financial irregularities have also increased.
Due to the weakening of the internal control system, there have been a series of incidents of misuse of money by employees or third parties in the name of the insured by paying money and taking insurance loans. The main reason for this is that insurers do not have a reliable system to confirm whether the bank account number provided for insurance claims belongs to the concerned insured or someone else with a similar name.
Cdsc and Credit Information Center have introduced separate systems regarding customer identification, which will pose a challenge in integrated monitoring of customer transactions. Apart from this, it would be effective to implement the same system for all types of financial services rather than establishing a separate central KYC system of other financial institutions, reinsurers, life insurers and non-life insurers, cooperatives.
