Compliance

Meaning of Money Laundering

Money laundering is the process by which illegally obtained funds are given the appearance of having been legitimately obtained. Every year, huge amounts of funds are generated from illegal activities such as drugs trafficking, tax evasion, smuggling, theft, terrorism, arms trafficking and corrupt practices. These funds are mostly in the form of cash.

Sources of Money Laundering

Money laundering may not just involve wealth related to Drug Trafficking, Terrorism financing, etc. List of crimes identified as generators of criminal wealth also include:

• illegal arms sales,
• Organized crime including drug trafficking and prostitution,
• Embezzlement & Tax evasion,
• Smuggling (including movement of nuclear materials),
• Counterfeiting (including making of imitation and copies of original products/goods),
• Fraud, especially computer-supported fraud,
• Benefiting from insider trading,
• Bribery and kickbacks.

Stages of Money Laundering

Placement: This is the first stage where illicit funds are separated from their illegal source. Typically placement is the stage when illegal funds are placed into the financial system. Some of the common methods are as follows:

• Structuring (Smurfing) – Involves breaking high value transaction into many small value transactions that may involve numerous accounts of the same person or various persons,
• Taking loans and making accelerated loan repayment,
• Purchase of valuable assets or commodities.

Layering: This stage involves the process of creating multiple layers of transactions to distance the illegal funds from their illegal sources. The purpose of layering is to obscure or to make it difficult to trace the origin of the funds. Examples are:

• Multiple transfer of Money,
• Repeat invoicing for the same transaction,
• Re-sale of assets originally purchased in cash (illicit funds) for cheque or electronic bank transfer

Integration: This is the final stage that completes a money laundering operation where laundered proceeds are successfully integrated into the economy as legitimate funds. The transaction normally involves buying properties or high value items or engaging in legal business. It is difficult at this stage to detect the illegal funds as the funds would appear legitimate. Integration normally involves the following activities:

• Trading activities that involve invoice manipulation to remit money abroad,
• Engaging in legal business by providing capitals or loans,
• Buying properties or high value items.

What is Terrorism Financing

“Terrorism financing is the act of providing financial support, either through legitimate or illegitimate source, to terrorist or terrorist organizations to enable them to carry out terrorist acts.”

While most of the funds originate from criminal activities, it may also be from legitimate sources, for example, through the use of non-profit organizations to raise funds as donations.

Why Must We Combat Money Laundering

REMIT2NEPAL Pvt. Ltd is fully committed that it will not let its services to be used for illegal purposes, and it is always ready to extend its cooperation to regulators and other Government authorities in this regard.

In response to the international community’s growing concern about the problem of money laundering and potential terrorist financing, many countries around the world are enacting or strengthening their laws and regulations regarding this subject.

Our AML policy guide is active in processing all our transactions including: knowing the customer through our CIP (Costumer Identification Procedures), approving transactions, handling suspicious cases, and other activities while in the thrust to countering or combating the possibility of money laundering practices of its clientele or of its employees.

Know Your Customer Standards (KYC Policy)

The objective of the KYC guidelines is to prevent REMIT2NEPAL Pvt. Ltd from being used, intentionally or unintentionally, by criminal elements for money laundering activities. KYC procedures enable REMIT2NEPAL Pvt. Ltd to know/understand their customers and their financial dealings better which in turn help them manage their risks prudently. The KYC policy of REMIT2NEPAL Pvt. Ltd incorporates the following three elements:

• Customer Acceptance Policy (CAP): Must be clear with explicit criteria. Perform due diligence with background checks to ensure that customer/entity is using their real name and not involved in terrorism or other illegal activities by checking valid photo ids.
• Customer Identification Procedures (CIP): Must be clearly outlined for and performed at every stage of the company relationship: establishing an account, carrying out a transaction, resolving doubts about the authenticity of previously obtained identification, etc. Identify and verify all customers’ identities and purposes (using reliable, independent data, information, and/or source documents) to the bank’s satisfaction.
• Monitoring of Transactions: Effective KYC procedures require continuous monitoring of your customer base and its normal behavior to reduce risk. High-risk transactions (classified based on country of origin, fund sources, etc.) or activities (such as complex or unusually large transactions and those with no visible lawful purposes) should undergo extra scrutiny. Company can set thresholds for transaction amounts that warrant enhanced due diligence.

A Customer For The Purpose of KYC Policy Is Defined As:

• A person or entity that maintains a business relationship with the REMIT2NEPAL,
• One on whose behalf the transaction is maintained (i.e., the beneficial owner),
• Beneficiaries of transactions conducted by professional intermediaries, such as Stock Brokers, Chartered Accountants, Solicitors, etc as permitted under the law,
• Any person or entity connected with a financial transaction which can pose significant reputational or other risks to the REMIT TO NEPAL PVT.LTD.

Process Of KYC

• Registration of customer,
• Due Diligence of customer through OFAC and Contradiction list to ensure that customer/entity is using their real name and not involved in terrorism or other illegal activities,
• Examination legitimacy of customer,
• Source of Income,
• Relationship with beneficiary and origin of country,
• Multiple transaction tracking/Monitoring transaction,
• Checking daily limit for sender/receiver,
• Follow standard and specific rules and regulation described by FCA/AMLR.