Rs 40bn worth of suspicious transactions reported to NRB

Banks and financial institutions, and other entities reported suspicious transactions amounting to Rs 40bn to the NRB in 2023, a recent report of the central bank states.

The report unveiled recently by the Financial Intelligence Unit (FIU) of the central bank shows banks and financial institutions, stock brokers, remittances companies, life insurance companies, cooperatives and merchant bankers flagged transactions worth Rs 40bn as suspicious in 2023. 

Most of these transactions were handled by commercial banks. According to the FIU, transactions worth Rs 38.72bn handled by Class ‘A’ banks in 2023 were found to be suspicious. This involved 5,282 transactions. Likewise, 330 transactions worth Rs 472.22m handled by development banks were flagged as suspicious during the year. 

The report also shows the involvement of black money in the securities market. According to the FIU’s report, stockbrokers reported 62 transactions worth Rs 429.6m as suspicious during the year. Likewise, finance companies and remittance companies reported 99 transactions worth Rs 265.16m and 156 transactions worth Rs 111.31m, respectively, as suspicious.

According to the report, life insurance companies reported 26 transactions worth Rs 36.18m as suspicious, while cooperatives, merchant bankers and microfinance companies flagged transactions worth Rs 4.85m, Rs 4.1m and Rs 2.2m as suspicious.

A total of 6,255 transactions were reported as suspicious to the FIU in 2023. The number was more than 50 percent higher compared to 2023 when 3,979 such transactions were reported. The number of such transactions were 2,021 in 2021 and 1,103 in 2020.

The highest number of suspicious transactions appear to be related to money laundering. In 2023 alone, there were 3,199 such transactions. This mainly includes assets with undisclosed sources. Similarly, 1,863 transactions were found suspicious in tax evasion/smuggling/tax crimes. Likewise, 1,040 suspicious transactions were seen in banking, finance, and foreign currency.

Similarly, there were 565 fraudulent transactions, and 405 suspicious transactions related to casino and gaming activities. Also, 288 activities related to firms, partnerships, companies, and associations were found suspicious. Besides these, 70 cases in education, health, medicine, and foreign employment also appeared to be suspicious. In one year, 47 corruption activities and 26 forgery activities were found. Likewise, 20 real estate and property-related transactions were also found suspicious.

Eighty cases related to citizenship, immigration and passport were found suspicious in the review period. Similarly, other suspicious cases were related to human trafficking, smuggling, insider trading/market manipulation, counterfeit currencies, robbery or theft, participation in organized criminal groups/racketeering, counterfeiting and piracy of products/IPR violations, communication, broadcasting, advertising related, election related, kidnapping, illegal control and hostage-taking activities.

Apart from these, incidents of sexual exploitation, narcotic drugs and psychotropic substances, murder and serious physical injury, theft and illegal transportation of other goods, and ransom incidents have also been found.

As many as 1.78m threshold transaction reporting (TTR) were made in 2023. This report of transactions exceeding the specified limit appears to have decreased slightly compared to 2022. It was around 1.85m in 2033 and even higher at 2.68m in 2021.

The Money Laundering Prevention Act, 2008, and its regulations require bank and financial institutions and other entities to report any suspicious transactions and activities to the FUI. “No person shall perform or cause to perform any act contrary to law. It is wrong to convert or transfer illicit property in any way, knowing or having reasonable grounds to believe that it is property obtained from crime, with the intention of concealing or evading the illegal source of property (illicit origin) or assisting a person involved in the crime to avoid legal action,” the act states.

The Financial Intelligence Unit has been working as the central focal point of Nepal’s anti-money laundering regime to combat money laundering, terrorism financing and proliferation financing. 

Nepal recently underwent the third round of mutual evaluation by the Asia/Pacific Group on Money Laundering (APG) in 2022/23. The APG published Nepal’s Mutual Evaluation Report in September 2023.