Kathmandu. The Nepal Rastra Bank (NRB) has empowered digital payment service providers to seize the accounts of individuals or entities involved in suspicious financial transactions or property laundering.
Nepal Rastra Bank (NRB) has issued guidelines on financial restrictions for targeted payment service providers (GUIDELINES ON TARGETED FINANCIAL SANCTIONS FOR PAYMENT SERVICE PROVIDERS).
The guidelines provide for two types of sanctions against individuals on the list of financial sanctions:
1. Confiscation of property: Confiscation of property refers to the prohibition of transfer, conversion, sale or transfer of any funds or other financial assets owned or controlled by a designated person. In
a) confiscation of funds and other financial assets and financial resources, and preventing their use, alteration, movement, transfer, or access.
(b) The confiscation of financial resources has options such as prohibiting the use of funds, goods, or services in any manner, including the sale, rent, or mortgage of facilities.
2. Prohibition on funds or financial resources and services: Prohibition from providing funds to any designated person, or providing financial services or other services.
For example, suspending access to mobile wallets or blocking transactions and prohibiting offering digital financial services as a forfeiture measure for payment service providers.
Customers should undergo initial screening before onboarding and/or sometimes before facilitating transactions. After that, daily screening should be done on the initiative of the organization. Additionally, bulk or batch screening should be done if appropriate.
Provisions have also been made for strict regulatory action and penalty against payment service providers for violating the guidelines. Failure to comply with the obligations prescribed under this guideline will have to face action as per the provisions mentioned in Section 29A of the Prevention of Money Laundering Act, 2064.
As per the provisions of Section 7F of the Act against the payment service providers, there is a provision to cancel the license from the warning and impose a fine of Rs 1 million to Rs 2 million.
It will be the responsibility of the concerned payment service provider to obtain up-to-date details regarding the banned person or organization, to monitor the transaction regularly accordingly, to inform the Financial Information Unit and to take action including confiscation.
Customers will have to undergo initial monitoring before unboarding or sometimes facilitating transactions. Then, the organization should be monitored on its own initiative on a daily basis. In addition, bulk or batch monitoring should also be done, if appropriate, on a more comprehensive scale.
Process of withholding fund release:
In the event that a person who is banned due to suspicious transactions has applied for the release of the fund, the Ministry of Home Affairs may, after conducting a necessary inquiry, release the assets or funds properly and necessary for the following purposes, if there is no alternative to basic expenses:-
a) expenditure on daily food, housing and health;
b) expenses for electricity, telephone, taxes for drinking water and other charges paid in accordance with the prevailing law;
c) expenditure on children’s education;
d) expenses for legal protection and judicial proceedings;
e) Expenditure for proper protection of accumulated property or funds.
However, according to the UN list, the Ministry of Home Affairs will facilitate the approval of the UNITED NATIONS Security Council on the basis of the application for the person who has accumulated assets and funds.
Payment service providers may revoke confiscation or restriction against individuals, groups, or entities under the following circumstances:
a) After an inquiry conducted by the Ministry of Home Affairs, it has been concluded that a person, group or institution with a name similar to or similar to the name of the designated person is innocent; or
b) In the event of removal of the designated person from the list of sanctions by the concerned authorities.
