SEBON set to amend directive on par with revised MLPA

Securities Board of Nepal, the securities market regulator, has initiated the process of amending the directive on prevention of money laundering and terror financing to make it compatible with the revised Money Laundering Prevention Act. SEBON introduced the directive in January 2013, barring brokerage companies and securities traders from conducting transactions under fake names and making it mandatory for concerned firms and agencies to conduct due diligence of people engaged in securities trading. The directive has also made it mandatory for concerned firms and agencies to report about sales and purchase of securities worth Rs one million or more in a single day to the Financial Information Unit (FIU) at Nepal Rastra Bank. Also, the directive has made it binding for concerned firms and agencies to promptly provide information on any suspicious transaction to the FIU so as to prevent money laundering and terror financing. This directive, however, was framed on the basis of first amendment made to the Money Laundering Prevention Act in 2011. Since then, the act has been revised. “We are now trying to make the directive compatible with the revised act,” said SEBON Spokesperson Niraj Giri. The act, which was amended for the second time in March 2014, has included a provision that enables regulators to slap a fine of up to Rs 50 million on anyone who violates laws, directives and instructions issued to prevent money laundering and terror financing. Also, the revised act has made it mandatory for concerned firms and agencies to report suspicious transactions immediately or within three days to FIU. “The second amendment made to the act has added numerous other provisions which have to be captured by our directive on prevention of money laundering and terror financing. All the new provisions will be incorporated in the revised directive,” said Giri, without mentioning the time frame required to complete this task. SEBON has lately been suspicious of illicit flow of capital into the stock market, as daily turnover starting crossing Rs one billion. To take stock of the situation, SEBON, on July 14, formed a committee. But the committee was later scrapped after investors got the impression that the committee would investigate cases related to money laundering in the secondary market and take action against those engaged in illegal activities. The loss of 88.81 points incurred by Nepal Stock Exchange index on August 8 also prompted the securities market regulator to scrap the committee. “The intention of SEBON is never to dampen the confidence of investors. But investors, especially small and medium, should never make investments in a haphazard manner,” Giri said. Source: The Himalayan Times