Compliance with Anti-Money Laundering (AML) Tax Reporting in Nepal

Nepal has established comprehensive Anti-Money Laundering (AML) tax reporting requirements to combat financial crimes and ensure transparency in financial transactions. These requirements are primarily governed by the Asset (Money) Laundering Prevention Act, 2064 (2008) and its subsequent amendments.

The key AML tax reporting requirements in Nepal include:

1. Customer Due Diligence (CDD): Financial institutions and designated non-financial businesses and professions (DNFBPs) must conduct thorough customer due diligence before establishing business relationships or conducting transactions.
2. Suspicious Transaction Reporting (STR): Reporting entities are required to file Suspicious Transaction Reports (STRs) to the Financial Information Unit (FIU) when they suspect or have reasonable grounds to suspect that a transaction is related to money laundering or terrorist financing.
3. Threshold Transaction Reporting (TTR): Transactions exceeding certain thresholds must be reported to the FIU, regardless of whether they are deemed suspicious.
4. Record Keeping: Reporting entities must maintain records of transactions, customer identification, and due diligence for a minimum of five years.
5. Internal Controls and Procedures: Entities must establish and maintain internal policies, procedures, and controls to prevent money laundering and terrorist financing.
6. Training: Staff members must receive regular training on AML/CFT regulations and procedures.
7. Risk Assessment: Reporting entities are required to conduct regular risk assessments to identify and mitigate money laundering and terrorist financing risks.

Who is required to comply with AML tax reporting?

The following entities and individuals are required to comply with AML tax reporting in Nepal:

1. Banks and Financial Institutions: Commercial banks, development banks, finance companies, and microfinance institutions.
2. Insurance Companies: Life and non-life insurance companies.
3. Securities Firms: Stock brokers, securities dealers, and investment advisors.
4. Cooperatives: Savings and credit cooperatives with transactions above a certain threshold.
5. Money Transmitters and Remittance Companies: Entities engaged in money or value transfer services.
6. Casinos and Gaming Establishments: Licensed gambling operators.
7. Real Estate Agents: Individuals and companies involved in real estate transactions.
8. Precious Metals and Stones Dealers: Businesses dealing in gold, silver, and precious stones.
9. Lawyers, Notaries, and Accountants: When engaged in specific financial transactions for clients.
10. Trust and Company Service Providers: Entities providing services related to company formation and management.
11. Non-Governmental Organizations (NGOs) and Non-Profit Organizations (NPOs): Organizations receiving or disbursing funds above certain thresholds.
12. Foreign Exchange Dealers: Licensed money changers and forex dealers.
13. Designated Non-Financial Businesses and Professions (DNFBPs): As defined by the Financial Action Task Force (FATF) recommendations.

What transactions must be reported under AML rules?

Under Nepal’s AML rules, the following types of transactions must be reported:

1. Suspicious Transactions: Any transaction, attempted transaction, or pattern of transactions that appears unusual, has no apparent economic or lawful purpose, or is suspected to be related to money laundering, terrorist financing, or other criminal activities.
2. Large Cash Transactions: Cash transactions exceeding NPR 1,000,000 (approximately USD 8,300) or its equivalent in foreign currency.
3. Cross-Border Wire Transfers: International wire transfers exceeding NPR 1,000,000 or its equivalent in foreign currency.
4. Multiple Transactions: A series of transactions below the reporting threshold that appear to be structured to avoid reporting requirements.
5. Transactions with High-Risk Countries: Any transaction involving countries identified as high-risk or non-cooperative by the FATF.
6. Politically Exposed Persons (PEPs): Transactions involving PEPs, their family members, or close associates that are deemed unusual or high-risk.
7. Currency Exchange Transactions: Foreign currency exchange transactions exceeding NPR 500,000 (approximately USD 4,150) or its equivalent.
8. Real Estate Transactions: Property transactions exceeding NPR 10,000,000 (approximately USD 83,000).
9. High-Value Purchases: Purchases of goods or services exceeding NPR 1,000,000 in cash.
10. Unusual Loan Repayments: Early repayment of loans or mortgages that raise suspicion.

How often must AML tax reports be submitted?

The frequency of AML tax report submissions in Nepal varies depending on the type of report and the nature of the transaction:

1. Suspicious Transaction Reports (STRs):
   • Must be submitted promptly, within 3 working days of identifying the suspicious activity.
   • There is no set frequency; reports are submitted as suspicious transactions are detected.
2. Threshold Transaction Reports (TTRs):
   • Must be submitted within 15 days of the end of each Nepali month (as per the Bikram Sambat calendar).
   • This effectively means monthly reporting for transactions exceeding the specified thresholds.
3. Cash Transaction Reports (CTRs):
   • Similar to TTRs, these must be submitted within 15 days of the end of each Nepali month.
4. Electronic Funds Transfer Reports (EFTRs):
   • For cross-border wire transfers, reports must be submitted within 15 days of the end of each Nepali month.
5. Annual Compliance Reports:
   • Reporting entities are required to submit an annual compliance report to their respective regulatory authorities.
   • This report typically covers the entity’s AML/CFT activities, risk assessments, and compliance measures for the past year.
6. Ad-hoc Reports:
   • Regulatory authorities may request additional reports or information at any time, which must be provided within the specified timeframe.

What information is required in AML tax reports?

AML tax reports in Nepal require comprehensive information to ensure effective monitoring and analysis. The specific information required may vary depending on the type of report, but generally includes:

1. Suspicious Transaction Reports (STRs):
   • Details of the reporting entity
   • Information about the suspicious transaction(s)
   • Reasons for suspicion
   • Customer identification information
   • Transaction date, amount, and currency
   • Description of the transaction and suspicious activity
   • Any supporting documents or evidence
2. Threshold Transaction Reports (TTRs):
   • Reporting entity information
   • Customer identification details
   • Transaction date and time
   • Transaction amount and currency
   • Type of transaction (e.g., cash deposit, wire transfer)
   • Source and destination of funds (if applicable)
3. Cash Transaction Reports (CTRs):
   • Reporting entity details
   • Customer information (name, address, identification)
   • Transaction date and amount
   • Purpose of the transaction
   • Source of funds (if known)
4. Electronic Funds Transfer Reports (EFTRs):
   • Sender and recipient information
   • Transaction amount and currency
   • Date of transfer
   • Purpose of the transfer
   • Intermediary financial institutions (if any)
5. Annual Compliance Reports:
   • Overview of the entity’s AML/CFT program
   • Risk assessment results
   • Training activities conducted
   • Number of STRs and TTRs filed
   • Internal audit findings related to AML/CFT
   • Any significant changes in AML/CFT policies or procedures
6. Customer Due Diligence (CDD) Information:
   • Full name and any aliases
   • Date and place of birth
   • Nationality
   • Permanent and current address
   • Occupation or nature of business
   • Purpose of the business relationship
   • Expected transaction patterns
   • Source of funds or wealth
   • Beneficial ownership information (for legal entities)

Are there thresholds for AML tax reporting in Nepal?

Yes, Nepal has established specific thresholds for AML tax reporting to ensure that significant transactions are properly monitored and reported. These thresholds are set by the Nepal Rastra Bank (NRB) and the Financial Information Unit (FIU) and are subject to periodic review and adjustment. The current thresholds for AML tax reporting in Nepal are:

1. Cash Transaction Reports (CTRs):
   • Threshold: NPR 1,000,000 (approximately USD 8,300) or its equivalent in foreign currency
   • Applies to: Single transactions or multiple related transactions within a day
2. Electronic Funds Transfer Reports (EFTRs):
   • Threshold: NPR 1,000,000 or its equivalent in foreign currency
   • Applies to: Cross-border wire transfers
3. Foreign Exchange Transactions:
   • Threshold: NPR 500,000 (approximately USD 4,150) or its equivalent
   • Applies to: Currency exchange transactions
4. Real Estate Transactions:
   • Threshold: NPR 10,000,000 (approximately USD 83,000)
   • Applies to: Property purchases, sales, or transfers
5. High-Value Purchases:
   • Threshold: NPR 1,000,000 in cash
   • Applies to: Purchases of goods or services
6. Suspicious Transaction Reports (STRs):
   • No specific threshold
   • Must be reported based on suspicion, regardless of the amount
7. Cooperatives:
   • Threshold: NPR 1,000,000 for savings and credit cooperatives
   • Applies to: Single transactions or cumulative transactions within a month
8. Money or Value Transfer Services:
   • Threshold: NPR 1,000,000 or its equivalent
   • Applies to: Single remittance transactions
9. Casinos and Gaming Establishments:
   • Threshold: NPR 1,000,000 or its equivalent
   • Applies to: Single transactions or cumulative transactions within 24 hours
10. Precious Metals and Stones Dealers:
    • Threshold: NPR 1,000,000 or its equivalent
    • Applies to: Cash transactions for precious metals or stones

What penalties exist for non-compliance with AML reporting?

Nepal has established severe penalties for non-compliance with AML reporting requirements to ensure strict adherence to the regulations. These penalties are outlined in the Asset (Money) Laundering Prevention Act, 2064 (2008) and its subsequent amendments. The penalties for non-compliance include:

1. Failure to Report Suspicious Transactions:
   • Fine: Up to NPR 5,000,000 (approximately USD 41,500)
   • Imprisonment: Up to 2 years
   • For repeated offenses, the penalties may be doubled
2. Failure to Maintain Records:
   • Fine: Up to NPR 3,000,000 (approximately USD 24,900)
   • Imprisonment: Up to 1 year
   • For repeated offenses, the penalties may be doubled
3. Tipping Off:
   • Fine: Up to NPR 5,000,000
   • Imprisonment: Up to 2 years
   • Applies to individuals who inform the subject of an STR about the report
4. Failure to Implement AML/CFT Measures:
   • Fine: Up to NPR 10,000,000 (approximately USD 83,000)
   • For financial institutions and DNFBPs that fail to implement required AML/CFT measures
5. Obstructing Investigations:
   • Fine: Up to NPR 1,000,000 (approximately USD 8,300)
   • Imprisonment: Up to 6 months
   • For individuals who obstruct or hinder AML investigations
6. False or Misleading Statements:
   • Fine: Up to NPR 1,000,000
   • Imprisonment: Up to 6 months
   • For providing false or misleading information in AML reports
7. Corporate Liability:
   • If an offense is committed by a company or institution, the person responsible for the act and the company itself may be liable for penalties
8. Regulatory Sanctions:
   • Regulatory authorities may impose additional sanctions, including:
     • Suspension or revocation of licenses
     • Restrictions on business activities
     • Mandatory remedial actions
     • Public reprimands or warnings
9. Personal Liability for Directors and Officers:
   • Directors, officers, or employees responsible for AML compliance may be held personally liable for non-compliance
10. Confiscation of Proceeds:
    • The court may order the confiscation of any property or proceeds derived from money laundering activities

How do businesses implement AML tax reporting systems?

Implementing effective AML tax reporting systems is crucial for businesses to comply with regulatory requirements and mitigate risks associated with money laundering and terrorist financing. Here’s a comprehensive guide on how businesses can implement AML tax reporting systems:

1. Risk Assessment:
   • Conduct a thorough risk assessment to identify potential money laundering and terrorist financing risks specific to the business.
   • Consider factors such as customer base, products/services offered, geographical locations, and distribution channels.
2. Develop AML Policies and Procedures:
   • Create comprehensive AML policies and procedures tailored to the business’s risk profile.
   • Ensure these policies cover customer due diligence, transaction monitoring, record-keeping, and reporting requirements.
3. Appoint a Compliance Officer:
   • Designate a qualified individual as the AML Compliance Officer.
   • Ensure they have the necessary authority, resources, and access to senior management.
4. Implement Customer Due Diligence (CDD) Procedures:
   • Establish robust CDD procedures for customer onboarding and ongoing monitoring.
   • Implement enhanced due diligence for high-risk customers, such as Politically Exposed Persons (PEPs).
5. Transaction Monitoring System:
   • Implement an automated transaction monitoring system capable of detecting suspicious activities and threshold-based transactions.
   • Ensure the system can generate alerts for further investigation.
6. Reporting Mechanisms:
   • Establish clear procedures for filing Suspicious Transaction Reports (STRs) and Threshold Transaction Reports (TTRs).
   • Implement a secure system for submitting reports to the Financial Information Unit (FIU).
7. Record-Keeping:
   • Implement a robust record-keeping system to maintain transaction records, customer information, and due diligence documents for at least five years.
8. Training Program:
   • Develop and implement a comprehensive AML training program for all employees, with specialized training for those in high-risk roles.
   • Conduct regular refresher training to keep staff updated on new regulations and typologies.
9. Internal Audit and Review:
   • Establish an internal audit function to regularly review and test the effectiveness of AML systems and controls.
   • Conduct periodic independent audits to assess compliance with AML regulations.
10. Technology Integration:
    • Integrate AML systems with existing IT infrastructure to ensure seamless data flow and reporting.
    • Consider implementing advanced technologies such as artificial intelligence and machine learning for more effective transaction monitoring.
11. Sanctions Screening:
    • Implement a sanctions screening system to check customers and transactions against various sanctions lists.
12. Ongoing Monitoring and Updates:
    • Regularly review and update AML systems to address new risks, regulatory changes, and technological advancements.
13. Vendor Management:
    • If using third-party AML solutions, establish a robust vendor management process to ensure their compliance and effectiveness.
14. Reporting to Management:
    • Implement a system for regular reporting to senior management on AML compliance activities, risks, and issues.
15. Collaboration with Regulators:
    • Establish channels for effective communication and collaboration with regulatory authorities.

What role do financial institutions play in AML reporting?

Financial institutions play a pivotal role in AML reporting and are at the forefront of combating money laundering and terrorist financing. Their responsibilities and roles in AML reporting include:

1. Customer Due Diligence (CDD):
   • Conduct thorough CDD on all customers before establishing business relationships.
   • Implement enhanced due diligence for high-risk customers, including Politically Exposed Persons (PEPs).
   • Regularly update customer information and risk profiles.
2. Transaction Monitoring:
   • Implement sophisticated transaction monitoring systems to detect suspicious activities.
   • Analyze transaction patterns and flag unusual or potentially illicit transactions.
3. Suspicious Transaction Reporting (STR):
   • File Suspicious Transaction Reports to the Financial Information Unit (FIU) when suspicious activities are detected.
   • Ensure timely and accurate reporting of all suspicious transactions.
4. Threshold Transaction Reporting (TTR):
   • Report all transactions exceeding the specified thresholds to the FIU.
   • Implement systems to aggregate related transactions for accurate threshold reporting.
5. Record Keeping:
   • Maintain comprehensive records of all transactions, customer information, and due diligence documents.
   • Ensure records are kept for at least five years and are readily accessible for regulatory inspections.
6. Risk Assessment:
   • Conduct regular institutional risk assessments to identify and mitigate money laundering and terrorist financing risks.
   • Develop risk-based approaches to AML compliance based on these assessments.
7. Training and Awareness:
   • Provide regular AML training to all staff members, with specialized training for high-risk roles.
   • Foster a culture of compliance within the institution.
8. Internal Controls and Procedures:
   • Develop and maintain robust internal controls and procedures to prevent money laundering and terrorist financing.
   • Regularly review and update these controls to address new risks and regulatory requirements.
9. Compliance Officer:
   • Appoint a qualified AML Compliance Officer responsible for overseeing the institution’s AML program.
   • Ensure the Compliance Officer has direct access to senior management and the board of directors.
10. Cooperation with Authorities:
    • Cooperate fully with regulatory authorities and law enforcement agencies in AML investigations.
    • Respond promptly to information requests from the FIU and other relevant authorities.
11. Sanctions Screening:
    • Implement effective sanctions screening processes to ensure compliance with national and international sanctions lists.
12. Correspondent Banking:
    • Conduct enhanced due diligence on correspondent banking relationships to prevent the misuse of these services for money laundering.
13. New Product and Service Assessment:
    • Assess money laundering and terrorist financing risks associated with new products, services, or technologies before their introduction.
14. Reporting to Management:
    • Provide regular reports to senior management and the board of directors on AML compliance activities, risks, and issues.
15. Technology Implementation:
    • Invest in and implement advanced technologies to enhance AML detection and reporting capabilities.
16. Cross-Border Transactions:
    • Implement additional controls and monitoring for cross-border transactions, which often pose higher money laundering risks.
17. Ongoing Monitoring:
    • Conduct ongoing monitoring of customer relationships and transactions to detect changes in risk profiles or suspicious activities.
18. Audit and Review:
    • Undergo regular internal and external audits to assess the effectiveness of AML programs and identify areas for improvement.

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How does Nepal cooperate internationally on AML matters?

Nepal actively participates in international cooperation efforts to combat money laundering and terrorist financing. The country’s approach to international cooperation on AML matters includes:

1. Membership in International Organizations:
   • Nepal is a member of the Asia/Pacific Group on Money Laundering (APG), a FATF-style regional body.
   • Participates in mutual evaluations and peer reviews conducted by the APG.
2. Implementation of International Standards:
   • Nepal has committed to implementing the Financial Action Task Force (FATF) recommendations on AML/CFT.
   • Regularly updates national laws and regulations to align with international standards.
3. Mutual Legal Assistance:
   • Nepal has enacted the Mutual Legal Assistance Act, 2070 (2014) to facilitate international cooperation in criminal matters, including money laundering.
   • Provides and requests mutual legal assistance in investigations, prosecutions, and judicial proceedings related to AML/CFT.
4. Extradition:
   • Nepal has extradition agreements with several countries to facilitate the extradition of individuals involved in money laundering and related offenses.
5. Information Exchange:
   • The Financial Information Unit (FIU) of Nepal has signed Memoranda of Understanding (MoUs) with FIUs of other countries for information exchange.
   • Participates in the Egmont Group, facilitating secure information exchange among FIUs worldwide.
6. Cross-Border Supervision:
   • Cooperates with foreign supervisory authorities for cross-border supervision of financial institutions.
   • Participates in supervisory colleges for internationally active banking groups.
7. Asset Recovery:
   • Engages in international cooperation for tracing, freezing, seizing, and confiscating proceeds of crime.
   • Implements mechanisms for sharing confiscated assets with foreign jurisdictions.
8. Capacity Building:
   • Participates in international training programs and workshops on AML/CFT.
   • Hosts and attends regional and international conferences on AML matters.
9. Technical Assistance:
   • Receives technical assistance from international organizations and developed countries to enhance its AML/CFT regime.
10. Bilateral Agreements:
    • Enters into bilateral agreements with other countries for cooperation in AML/CFT matters.
11. International Sanctions Implementation:
    • Implements United Nations Security Council Resolutions related to terrorist financing and proliferation financing.
12. Cooperation in Investigations:
    • Collaborates with foreign law enforcement agencies in transnational money laundering investigations.
13. Participation in Global Forums:
    • Actively participates in global forums and initiatives focused on combating money laundering and terrorist financing.
14. Regulatory Harmonization:
    • Works towards harmonizing AML/CFT regulations with international standards to facilitate cross-border cooperation.
15. Joint Operations:
    • Participates in joint operations with foreign law enforcement agencies to combat transnational financial crimes.
16. Risk Information Sharing:
    • Shares information on money laundering and terrorist financing risks with international partners.
17. Cooperation with International Financial Institutions:
    • Collaborates with institutions like the World Bank and IMF on AML/CFT assessments and technical assistance programs.

What training is required for AML tax reporting compliance?

Effective training is crucial for ensuring compliance with AML tax reporting requirements. In Nepal, financial institutions and designated non-financial businesses and professions (DNFBPs) are required to provide comprehensive AML training to their staff. The training requirements include:

1. Initial Training:
   • All new employees must receive AML training as part of their induction program.
   • This training should cover basic AML concepts, legal requirements, and the institution’s AML policies and procedures.
2. Role-Specific Training:
   • Employees in different roles should receive tailored training relevant to their specific responsibilities.
   • For example, front-line staff may focus on customer due diligence, while compliance officers may receive more in-depth training on risk assessment and reporting.
3. Regular Refresher Training:
   • All employees should undergo annual refresher training to stay updated on the latest AML regulations and typologies.
   • This training should cover any changes in laws, regulations, or internal policies.
4. Specialized Training for High-Risk Roles:
   • Employees in high-risk roles, such as compliance officers, senior management, and those dealing with high-risk customers or products, should receive more frequent and in-depth training.
5. Training on Reporting Requirements:
   • Specific training on how to identify and report suspicious transactions.
   • Guidance on threshold reporting and the use of reporting systems.
6. Risk Assessment Training:
   • Training on how to conduct risk assessments and apply a risk-based approach to AML compliance.
7. Technology Training:
   • Training on the use of AML software and transaction monitoring systems.
8. Customer Due Diligence Training:
   • Detailed training on customer identification, verification, and ongoing due diligence procedures.
9. Sanctions Compliance Training:
   • Training on sanctions screening processes and compliance with national and international sanctions lists.
10. Record-Keeping Training:
    • Guidance on proper record-keeping practices and the importance of maintaining accurate and complete records.
11. Ethical Training:
    • Training on ethical considerations in AML compliance and the importance of maintaining integrity.
12. Case Study Analysis:
    • Use of real-life case studies to illustrate money laundering techniques and red flags.
13. Regulatory Updates:
    • Regular briefings on changes in AML regulations and their implications for the institution.
14. Testing and Assessment:
    • Regular assessments to ensure employees have understood and retained the training content.
15. Management Training:
    • Specialized training for senior management on their AML oversight responsibilities.
16. Third-Party Training:
    • Training on managing AML risks associated with third-party relationships and outsourcing.
17. Cross-Border Transactions Training:
    • Specific training on the risks and compliance requirements for cross-border transactions.
18. Audit and Compliance Training:
    • Training for internal audit staff on how to assess the effectiveness of AML controls.

How are suspicious transactions identified and reported?

Identifying and reporting suspicious transactions is a critical component of AML compliance. In Nepal, the process of identifying and reporting suspicious transactions involves several steps:

1. Transaction Monitoring:
   • Implement automated transaction monitoring systems to flag unusual or potentially suspicious activities.
   • Set up rules and scenarios based on known money laundering typologies and risk factors.
2. Red Flags Identification:
   • Train staff to recognize common red flags, such as:
     • Unusually large cash transactions
     • Frequent transactions just below reporting thresholds
     • Complex transaction structures with no apparent economic purpose
     • Transactions inconsistent with the customer’s profile
     • Unusual patterns of account activity
3. Customer Due Diligence:
   • Conduct ongoing due diligence to understand customers’ normal transaction patterns.
   • Use this information to identify deviations that may indicate suspicious activity.
4. Alert Generation:
   • When the monitoring system or staff identifies potentially suspicious activity, generate an alert for further investigation.
5. Initial Review:
   • Conduct an initial review of the alert to determine if it warrants further investigation.
   • This may involve reviewing the customer’s transaction history and profile.
6. In-Depth Investigation:
   • If the initial review suggests potential suspicious activity, conduct a more thorough investigation.
   • Gather additional information about the customer and the transaction(s) in question.
7. Analysis and Decision-Making:
   • Analyze all available information to determine if the activity is genuinely suspicious.
   • Document the analysis and decision-making process.
8. Reporting Decision:
   • If the activity is deemed suspicious, decide to file a Suspicious Transaction Report (STR).
   • If not suspicious, document the reasons for not reporting.
9. STR Preparation:
   • Prepare the STR using the prescribed format provided by the Financial Information Unit (FIU).
   • Include all relevant details about the suspicious activity and the reasons for suspicion.
10. Internal Approval:
    • Obtain necessary internal approvals before submitting the STR.
    • This may involve review by the AML Compliance Officer or a designated committee.
11. STR Submission:
    • Submit the STR to the FIU within 3 working days of the decision to report.
    • Use secure electronic means for submission, as prescribed by the FIU.
12. Confidentiality:
    • Maintain strict confidentiality about the STR filing.
    • Ensure that the subject of the STR is not tipped off about the report.
13. Record-Keeping:
    • Maintain detailed records of the suspicious activity, investigation process, and reporting decision.
    • Keep these records for at least five years.
14. Follow-Up:
    • Be prepared to provide additional information to the FIU if requested.
    • Continue monitoring the reported customer’s activities for any further suspicious transactions.
15. Ongoing Monitoring:
    • Adjust monitoring parameters based on identified suspicious activities to enhance future detection capabilities.
16. Reporting to Management:
    • Provide regular reports to senior management on suspicious transaction reporting activities.
17. Training and Feedback:
    • Use insights from identified suspicious transactions to enhance staff training and awareness.
18. Cooperation with Authorities:
    • Cooperate fully with any investigations initiated by the FIU or law enforcement agencies based on the STR.

What documentation must be maintained for AML purposes?

Proper documentation is essential for AML compliance in Nepal. Financial institutions and designated non-financial businesses and professions (DNFBPs) are required to maintain comprehensive records for AML purposes. The key documentation requirements include:

1. Customer Identification Records:
   • Copies of official identification documents (e.g., citizenship certificate, passport)
   • Proof of address documents
   • Photographs of customers
   • Any other documents used for customer identification and verification
2. Account Opening Documents:
   • Account opening forms
   • Know Your Customer (KYC) questionnaires
   • Risk assessment forms
   • Beneficial ownership information for legal entities
3. Transaction Records:
   • Details of all transactions, including date, amount, currency, and parties involved
   • Supporting documents for transactions (e.g., invoices, contracts)
   • Wire transfer records, including originator and beneficiary information
4. Suspicious Transaction Reports (STRs):
   • Copies of all STRs filed with the Financial Information Unit (FIU)
   • Internal reports and analysis leading to STR decisions
   • Any follow-up correspondence with the FIU regarding STRs
5. Threshold Transaction Reports (TTRs):
   • Copies of all TTRs submitted to the FIU
   • Supporting documentation for threshold transactions
6. Due Diligence Records:
   • Customer Due Diligence (CDD) reports
   • Enhanced Due Diligence (EDD) reports for high-risk customers
   • Ongoing due diligence and customer review records
7. Risk Assessment Documents:
   • Institutional risk assessments
   • Customer risk assessment records
   • Product and service risk assessments
8. AML Policies and Procedures:
   • Written AML policies and procedures
   • Updates and revisions to these documents
9. Training Records:
   • AML training materials
   • Attendance records for AML training sessions
   • Training assessment results
10. Compliance Reports:
    • Internal compliance reports
    • Reports to senior management and the board of directors
    • Annual compliance reports submitted to regulatory authorities
11. Audit Reports:
    • Internal audit reports related to AML compliance
    • External audit reports on AML systems and controls
12. Correspondence with Regulators:
    • All correspondence with regulatory authorities regarding AML matters
    • Regulatory inspection reports and responses
13. Sanctions Screening Records:
    • Records of sanctions screening checks
    • Any matches found and actions taken
14. Transaction Monitoring Alerts:
    • Records of alerts generated by transaction monitoring systems
    • Investigation reports for alerts
15. Business Relationship Records:
    • Documentation of the purpose and intended nature of business relationships
    • Periodic review records of business relationships
16. Source of Funds/Wealth Documentation:
    • Records verifying the source of funds or wealth for high-value transactions or high-risk customers
17. Politically Exposed Persons (PEPs) Records:
    • Documentation related to the identification and monitoring of PEPs
18. Third-Party Reliance Documents:
    • Agreements and due diligence records for any third parties relied upon for CDD
19. Record Retention Logs:
    • Logs detailing the retention periods for various types of AML-related documents
20. Technology and System Records:
    • Documentation of AML software and systems used
    • System configuration and update records

Which authority oversees AML tax reporting in Nepal?

In Nepal, several authorities are involved in overseeing AML tax reporting, with each playing a specific role in the overall AML/CFT framework. The key authorities include:

1. Financial Information Unit (FIU):
   • Primary authority for receiving, analyzing, and disseminating financial intelligence
   • Responsible for receiving Suspicious Transaction Reports (STRs) and Threshold Transaction Reports (TTRs)
   • Operates under the Nepal Rastra Bank (Central Bank of Nepal)
2. Nepal Rastra Bank (NRB):
   • Central bank and primary regulator for banks and financial institutions
   • Issues AML/CFT directives and guidelines for the financial sector
   • Conducts on-site and off-site supervision of financial institutions for AML compliance
3. Department of Money Laundering Investigation (DMLI):
   • Investigative authority for money laundering and terrorist financing cases

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