chhatramani/Nepal-Legal-Text-Corpus-44laws huggingface dataset:
Money Laundering Prevention Act 2064

Chapter-3 Provision On Customer Identification And Transactions

Section 7A: Identifying the Customer
1) The indicting agency shall be subject to sub-sections (3) and (4) on the basis of documents, data or information obtained from reliable sources that accurately identify the client when acting in accordance with the following:
(a) Establishing business relationship,
(b) Opening an account,
(c) Carrying out occasional transactions above a threshold as may be prescribed,
(d) Carrying out wire transfers by electronic means,
(e) There is suspicious about the veracity or adequacy of previously-obtained customer identification information,
(f) There is suspicion of money laundering or terrorist financing,
(g) At any time of the transaction in relation to the highly risked and politically exposed person or
(h) In any other situations as prescribed by the Regulator.
2) The minimum documents to be taken with the customer while identifying the customer will be as prescribed.
3) The Reporting entity shall use reliable and independent source documents, data, and information to identify and verify the customer as per this chapter.
4) The reporting entity shall take the following measures when undertaking the identification and verification of its customers:
(a) Understanding and obtaining information and details clarifying the objectives, purpose and intended nature of business relationships and transactions,
(b) Obtaining name, address and date of birth, including the documents as prescribed in sub-section (2) where the customer is a natural person,
(c) Where the customer is a legal person or legal arrangement, understanding and verifying its ownership and control structure and obtaining such information, including the
documents as prescribed in sub-section (2),
(d)When a person is establishing a business relationship or conducting transactions on behalf of another customer, obtaining identification documents of such person and the person working on behalf of him, including evidence verifying that that such person is properly authorised to act,
(e) Obtaining other information and details regarding customer, transaction and its nature to fulfil the obligations under this chapter,
(f) Applying other measures as prescribed by the Regulator.
5) Following reporting entity as Designated Non-Financial Businesses and Professions (DNFBPs) is not mandatory to take identification and verification measures of the following customer:-
(a)A casino for a customer involving in the transactions of NRs two hundred thousand or lesser in a day,
(b) A precious metal and object business for a customer involving in transactions of NRs one million or lesser in a day
6) Entire liability of accurately identifying and verifying the identity of the customer pursuant to this chapter shall be of the reporting entity.
Money Laundering Prevention Act 2064

Chapter-3 Provision On Customer Identification And Transactions

Section 7B: Special Provision to the Identification of High-Ranking Persons
1) The Reporting entity shall establish a risk management system to identify whether a customer, person seeking to be a customer, or beneficial owner of a customer or transaction is politically exposed.
2) The reporting entity, while evaluating, shall adopt the following additional measures if it finds the customer or beneficial owner is either a foreign Politically Exposed Person (PEP) or a domestically exposed person or internationally politically exposed person evaluated to be of high-risk due to business reasons:
(a) To obtain approval from senior management officials while establishing a business relationship,
(b) To acquire approval from senior management official to continue the business relation with an existing customer if he is identified as a Politically Exposed Person
as per clause (a),
(c) To take all reasonable measures to identify the source of amount/fund and property of such customer or beneficial owner,
(d) To conduct ongoing monitoring of such customer and the business relationship,
(e) To apply Enhanced
Customer Due Diligence (CDD)
measures pursuant to section 7E.
3) Provisions stipulated in sub-sections (1) and (2) shall be applicable to the family members and associated persons of foreign PEP, or international PEP or domestic PEP identified as high risk.

Money Laundering Prevention Act 2064

Chapter-3 Provision On Customer Identification And Transactions

Section 7C: Identification of Beneficial Ownership
1) When establishing a business relationship or conducting transactions with a reporting entity, if beneficial ownership is possible, it must be identified, and reasonable measures must be taken to verify the beneficial owner’s identity.
2) The reporting entity shall ascertain whether a person is acting, establishing a business relationship, or conducting a transaction on behalf of another person.
3) Reporting entity, while ascertaining whether a person is establishing business relation or transaction on behalf of another, shall follow the identification and verification measures as stipulated in clause (d) of sub-section (4) of section 7A
Money Laundering Prevention Act 2064

Chapter-3 Provision On Customer Identification And Transactions

Section 7D: Provisions for the Risk Assessment and Management
1) The reporting entity shall identify and assess risks of Money Laundering  and Terrorist Finance  in accordance with its business or profession, scope, customer, products or services, transactions or delivery channel, etc
2) The reporting entity, while conducting risk assessment pursuant to sub-section (1), shall also take into account the findings of the national and regulatory risk assessment.
3) The reporting entity shall, while conducting risk assessment pursuant to sub-section (1), determine the level of risks by analysing all relevant risk factors
4) The reporting entity shall maintain records of the conclusion of risk assessment and all related details and information.
5) The reporting entity shall conduct and update the risk assessment pursuant to subsection (1) periodically or as per necessity.
6) The reporting entity shall make available to the Regulator any risk assessment undertaken pursuant to subsection (4) and also make it available to other concerned agencies upon demand.
7) The Reporting entity shall undertake customer due diligence measures in accordance with the level of risks as identified pursuant to this section, establish appropriate policy, procedural, and risk management measures to manage and mitigate such risks and update such measures.
8) The reporting entity shall regularly monitor the execution of policy, procedural, and risk management measures pursuant to sub-section (7) to ascertain whether they are in implementation or not.

Money Laundering Prevention Act 2064

Chapter-3 Provision On Customer Identification And Transactions

Section 7E: Identification of the Customer Due Diligence (CDD)
1) The Reporting entity shall follow appropriate measures of enhanced Customer Due Diligence (CDD) when establishing business relationships or conducting transactions with/of the following customer:-
(a) Customer identified as high risk in accordance with sections 7D,7U and 35,
(b) Customer who conducts complex, unusual large transactions and unusual patterns of transactions or which have no apparent economic or visible lawful purpose,
(c) Transaction with the customer of a country which is internationally identified as a deficient or non-compliant country of international Anti Money Laundering /The Financing Of Terrorism,
(d)
Politically Exposed Person (PEP)
, his family member and person associated with
Politically Exposed Person
,
(e) A consumer carrying on business according to sub-section (1) of section 7N,
(f) Customers who use new high-risk products or services,
(g) Customer suspected of Money Laundering/ Financing Of Terrorism or other offence,
(h) Other clients designated by the regulatory body.
2) The indicting agency shall also take such additional measures as may be prescribed by the regulatory body while identifying the bulk customers of the customers under sub-section (1).
3) Other arrangements for identifying the bulk customers will be as prescribed.
Money Laundering Prevention Act 2064

Chapter-3 Provision On Customer Identification And Transactions

Section 7F: Simplified Customer Identification System
1) The indexing organisation may adopt a simplified client identification and enrichment system for clients or transactions found to be low-risk related to financial investment in money laundering and terrorist activities.
2) The simplified customer identification and enrichment provisions under sub-section (1) shall not be adopted in the case of transactions involving high-risk customers, the risk of financial investment in the purification of business or property, and terrorist acts.
3) Simplified customer identification and other arrangements related to enrichment will be as prescribed.

Money Laundering Prevention Act 2064

Chapter-3 Provision On Customer Identification And Transactions

Section 7G: Provision for Identification of Existing Customers
1)The Indicating Entity shall, after reviewing the identity and adequacy of the existing customer and the customer in respect of the real estate entity who was operating the account or maintaining the business relationship at the time of the commencement of this section, identify and satisfy the customer in accordance with this section based on the type and nature of such customer and the real estate entity, the type and nature of the business relationship, the kind of business relationship, the business, the product or service, the country or geographical area or the risk of the distribution system.
2) The regulatory body shall prescribe the period for the customer’s identification and verification under sub-section (1).

Money Laundering Prevention Act 2064

Chapter-3 Provision On Customer Identification And Transactions

Section 7H: Time Frame for the Identification of the Customers
1) The Reporting entity shall identify and verify its customer and beneficial owner before establishing a business relationship, opening an account during the relationship, or carrying out occasional transactions.
2)Notwithstanding whatever is written in subsection (1),  may make delayed verification of the identity of the customer in the following circumstances after the establishment as soon as possible within three days:
(a) If verification may occur as soon as reasonably practical,
(b) If it is impossible to verify the identification of a customer due to practical reasons and verification would interrupt the normal conduct of business and
(c) If the risk of Money Laundering or terrorist acts is effectively managed.
3) Notwithstanding anything contained in sub-section (2), the indicting agency shall verify the identity of the customer and the actual beneficiary by sub-section (1) concerning the following customers and transactions:
(a) the client is a high-risk or high-profile individual or a family member or associate of such individual or
(b) If the activities of the customer are suspicious.
Money Laundering Prevention Act 2064

Chapter-3 Provision On Customer Identification And Transactions

Section 7I : Continuous Monitoring
The reporting Entity is required to exercise ongoing due diligence, including by carrying out the following activities:
(a) To closely examine the transactions of customers in order to ensure that such transactions are consistent with the information of a customer, the customer‘s business and risk profile thereon,
(b) To request for or examine the source of funds if it is necessary in relation to inquiry pursuant to clause (a),
(c) To review and update the document, data, details or information of customers, including
Politically Exposed Person
(PEP), high-risk customers or beneficial owners, their business relations, and transactions to ensure that persons kept up-to-date,
(d) To regularly monitor cross-border correspondent banking and wire transfer and such customers,
(e) To perform other functions as prescribed by the Regulator, Other functions as the reporting entity finds deemed necessary.
(f) To perform other functions that the Institute may deem fit.

Money Laundering Prevention Act 2064

Chapter-3 Provision On Customer Identification And Transactions

Section 7J: Identification and Verification by Third Party
1) The reporting entity may rely on a third party to undertake some elements of customer identification and verification in the following circumstances:
(a) If the reporting entity is satisfied that all identification and verification of the customer is carried out as per this chapter,
(b )If information on identification and verification required by this chapter will be made available to the reporting entity without delay as per necessity, and
(c) If the reporting entity is satisfied that all copies of identification and verification data and documents will be made available from the third party upon request, without delay.
2) Notwithstanding whatever is written in sub-section (1), no identification and verification of a customer made by a third party shall be acceptable for the reporting entity:
(a) If such a third party or institution belongs to a country identified as deficient country in compliance with the international anti-money laundering and combating
financing of terrorism
standards, or
(b) If such a third party or institution does not have measures in place consistent with the requirements set out in this chapter,
(c) If such institutions are not under regulation, control and supervision to prevent and combat money laundering and terrorism financing.
3) Notwithstanding the identification and verification of the Customer by a third party under sub-section (1), the ultimate responsibility for customer identification and verification under this chapter shall remain with the reporting entity relying on the third party.
Money Laundering Prevention Act 2064

Chapter-3 Provision On Customer Identification And Transactions

Section 7K: New Technology or Non-Face to Face Customer or Transactions
1) The reporting entity shall identify and assess the money laundering or terrorist financing risks that may arise in relation to the use of new or developing technology or the development of new products, business practices, delivery channels, non-face-to-face customers or transactions.
2) Such risk identification and assessment pursuant to sub-section (1) shall be undertaken before the launch of the new product, business practice or the use of new or developing technology.
3) The reporting entity shall take adequate measures to manage the risks identified and assessed pursuant to sub-section (1).
4) The Reporting entity shall adopt policies and procedures to address the risks of money laundering and terrorist financing in relation to non-face-to-face customers when establishing a business relationship, conducting a transaction, or conducting customer due diligence with such customers.
Money Laundering Prevention Act 2064

Chapter-3 Provision On Customer Identification And Transactions

Section 7M: Provision on Cross-Border Correspondent Banking
1) Financial institutions shall undertake the following measures while entering into cross-border correspondent banking and similar relationships or conducting transactions:
(a) To identify and verify the identification of the respondent institution,
(b) To get adequate information on the nature of the respondent institution‘s activities,
(c) To fully understand the nature of the respondent‘s business from the information pursuant to clause (b),
(d) To evaluate the respondent institution‘s reputation and the quality of supervision to which it is subject, including whether it has been subject to a money laundering or terrorism financing investigation or regulatory action based on publicly available information,
(e) To evaluate the controls implemented by the respondent institution with respect to money laundering or terrorist financing and to ascertain their adequacy and effectiveness,
(f) To obtain approval from senior management before establishing a correspondent banking relationship,
(g) To understand and establish an arrangement on the respective responsibilities of each party under the relationship regarding
anti-money laundering and combating  financing of terrorism
,
(h) To ensure whether the respondent institution has conducted customer due diligence on customers in the case of a payable through account, has implemented mechanisms for ongoing monitoring with respect to its customers, and is capable of providing relevant identifying information on request,
Explanation:
1
For the purposes of this section, “payable through account” means a correspondent account used directly by a third party in connection with a transaction.
(i) Not to enter into or continue correspondent banking relations with a shell bank,
(j) To satisfy itself that a respondent financial institution does not permit its accounts to be used by a shell bank.
2) A financial institution shall comply with sub-section (1) provisions in the conduct of business relations or transactions relating to cross-border correspondence banking carried out by itself or on behalf of a customer.
1
Added by Act, 2080 to amend certain Acts relating to Prevention of Money Laundering and Promotion of Business Environment.
Money Laundering Prevention Act 2064

Chapter-3 Provision On Customer Identification And Transactions

Section 7N: Special Monitoring of Certain Transactions
1) There has to be special monitoring of certain transactions. The transactions which need special monitoring by the reporting entities are:
(a) All complex, unusual large transactions and all unusual patterns of transactions or which have no apparent economic or visible lawful purpose,
(b) Business relationships and transactions relating to the customer and financial institution of a country internationally identified as a country that does not or insufficiently comply with international standards,
(c) Such other transactions prescribed by the Regulator.
2) The reporting entity shall examine as far as reasonably possible the background and purpose of transactions referred in accordance with sub-section (1)  above and record the conclusion drawn therein.
3) The reporting entity shall keep the records of such measures in accordance with sub-section(2) taken for five years at the minimum and shall be made available promptly if requested by the Financial Information Unit or Regulator or a competent authority.

Money Laundering Prevention Act 2064

Chapter-3 Provision On Customer Identification And Transactions

Section 7O: Not Conduct Transaction
1) The reporting entity shall not establish an account, continue business relationships, or conduct transactions with the following customer:-
(a) Customer who cannot provide documents, information and details required for the customer identification and verification pursuant to this chapter,
(b) Documents, information, and details provided pursuant to this chapter seem to conflict with the identity of the customer customer’s identity.
2) The reporting entity shall terminate the relationship with the existing customer referred in accordance with sub-section (1) and may inform the Financial Information Unit (FIU) if necessary.
Money Laundering Prevention Act 2064

Chapter-3 Provision On Customer Identification And Transactions

Section 7Q: Liability of Branch Office or Subsidiary Company
1) Under the same group, the indicator institution operating in Nepal or abroad, or the indicator institution establishing an institution with a branch office or majority ownership in a foreign country will have to comply with the provisions regarding the purification of assets and the prevention of financial investment in terrorist activities in accordance with this Act or the rules made under this Act or the guidelines issued or the instructions given.
Explanation: For this clause, “majority ownership” means ownership of fifty percent or more.
2) The indicting agency, pursuant to sub-section (1), shall formulate and implement a group policy and procedure, including the following matters, with respect to the prevention of the laundering of assets and the financing of terrorist acts;
(a) to exchange information on the identification and enrichment of clients and the management of risks related to the laundering of assets and the financing of terrorist activities,
(b) to exchange information in a group manner, including information on clients, transactions, accounts, audits, group management and programs related to the purification of assets and the prevention of financial investment in terrorist activities, as prescribed by the regulatory body, and
(c) adequate arrangements to protect the confidentiality and use of information exchanged pursuant to clauses (a) or (b).
3) If there is a difficulty in complying with the provisions of sub-sections (1) and (2) due to the laws of the country concerned, the indicting institution operating under the same group or establishing an institution with a branch office or majority ownership in a foreign country shall inform the regulatory body and such institution shall take additional measures to manage the risks related to asset laundering and financial investment in terrorist activities.
4) If it is found that the additional measures adopted pursuant to subsection (3) are not sufficient to manage the risks related to the laundering of assets and the financing of terrorist acts, the regulatory body may take action pursuant to section 7U against an institution that has opened a branch office or majority ownership abroad or cause such branch or institution to be closed.
Money Laundering Prevention Act 2064

Chapter-3 Provision On Customer Identification And Transactions

Section 7R: Record Keeping
1) The Reporting entity shall maintain following documents and records accurately and securely for a minimum of five years after the termination of the business relationship or from the date of the transaction  in case of occasional transactions:-
(a) All documents and other information related to the identification and verification of the customer and beneficial owner,
(b) All documents, records and conclusion of the analysis of customer or beneficial owner and transaction,
(c) Documents and details of account and business relation of reporting entity,
(d) All documents and records relating to domestic and foreign transactions,
(e) Record and documents on attempted transactions,
(f) Other documents and records as prescribed by regulators.
2) Notwithstanding anything contained in sub-section (1), the reporting entity shall keep some prescribed documents and records for more than five years.
3) The reporting entity shall keep and maintain the documents and records in such a way that it shall be sufficient to reconstruct such information for the use of legal action as evidence in accordance with sub-sections (1) and (2).
4) Documents and records to be maintained pursuant to this section should be kept so that they can be made readily available to competent authorities upon demand.
5) The reporting entity shall keep the report of suspicious transactions for five years.
1
5A) The information and details taken from the customer by the indicting institution by this Act or the prevailing law shall be kept confidential except in cases where the prevailing law must disclose it. If someone violates such confidentiality, the regulatory body can act against such an indicting entity per Section 7U.
6) The indexing institution will make other arrangements to preserve documents, details and records as prescribed.
1
Added by Act, 2080 to amend certain Acts relating to Prevention of Money Laundering and Promotion of Business Environment.