Nepal’s clampdown on gold-based money laundering

Nepal’s Inland Revenue Department (IRD) has recently been designated the regulator of the domestic bullion market.

It has been charged with enforcing a raft of legislation that is not new, but which has yet to be effectively enforced in the South East Asian country.

IRD directive

The IRD is developing a directive that aims to make it clear what dealers in gold and precious metals must do under the Money Laundering Prevention Act (MLPA).

It categorises bullion traders as reporting entities and requires them to keep records of customers.

KYC enforcement

The directive makes it mandatory for bullion traders to enforce the Know Your Customer (KYC) provisions in the existing MLPA legislation.

Nepal’s gold traders will also have to ask their customers to fill in a form or submit a photocopy of their identity card for transactions involving gold and other precious metals.

Traders will also be obliged to report suspicious transactions and those above one million Nepalese rupees (US$8,775) to the regulator.

Effective regulator

While Nepal’s financial institutions have by and large implemented the requirements of the MLPA, the country’s gold and precious metal dealers have not, mainly due to the absence of a strong regulator of the sector.

Officials hope that with the IRD effectively becoming the regulator of bullion trade, these regulations will soon be met in the gold and precious metal sectors.


Categories: Trade Based Financial crimes News

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