Most of the banks have asked their account holders to update their information in compliance with Nepal Rastra Bank’s directive of filling the Know Your Client (KYC) form where most of us think it is done against corruption. But reality is KYC is not just being done for the purpose of public it has been imposed by the US government with pressure to blacklist us if we do not take initiative against the money laundering. Nepal was in the line of being blacklisted internationally for failing to comply with international money laundering rules and regulations. The Financial Action Task Force (FATF), a global anti- money laundering body, was considering blacklisting Nepal if the government had failed to introduce a law against organized crime. In a worst-case scenario, all banking correspondence could stop, and flow of aid and grants come to a standstill.
If blacklisted, foreign banks may not approve the letters of credit issued by Nepali banks. Such a scenario will also severely diminish Nepal’s prospects of getting foreign aid and investments.
The KYC forms is based on Anti Money Laundering and Combating Finance to Terrorism regulations, that require detailed information of the account holder, including citizenship certificate numbers and issue date of the kin, including that of grandparents, parents, sons, daughters and daughters-in-law. Likewise, the banks also require proof of address or the details of landlords. Know Your Customer refers to the procedures needed to be undertaken by financial institutions to identify and understand their customers in order to detect any sign of abnormal financial activities in their account. The insistence by banks that customers provide the citizenship numbers of their grandparents has irked account holders the most. The forms that require the citizenship numbers of the customers’ grandparents and daughters-in-law seem to keep potential customers away.