ELITE CA: CLASS NOTES ONLY: FOR CAP III & CA MEMBERSHIP EXAMINATION: ASSETS (MONEY) LAUNDERING PREVENTION

ACT

1. Financial Action Task Force on Money Laundering (FATF)

• The Financial Action Task Force (FATF) is the global money laundering and terrorist financing watchdog. The inter-governmental body sets international
standards that aim to prevent these illegal activities and the harm they cause to society. As a policy-making body, the FATF works to generate the necessary
political will to bring about national legislative and regulatory reforms in these areas.
• With more than 200 countries and jurisdictions committed to implementing them. The FATF has developed the FATF Recommendations, or FATF Standards,
which ensure a coordinated global response to prevent organized crime, corruption and terrorism. They help authorities go after the money of criminals dealing
in illegal drugs, human trafficking and other crimes. The FATF also works to stop funding for weapons of mass destruction.
• The FATF reviews money laundering and terrorist financing techniques and continuously strengthens its standards to address new risks, such as the regulation
of virtual assets, which have spread as crypto-currencies gain popularity. The FATF monitors countries to ensure they implement the FATF Standards fully and
effectively, and holds countries to account that do not comply.
• The Financial Action Task Force (FATF) was established in July 1989 by a Group of Seven (G-7) Summit in Paris, initially to examine and develop measures
to combat money laundering.
• In October 2001, the FATF expanded its mandate to incorporate efforts to combat terrorist financing, in addition to money laundering. In April 2012, it added
efforts to counter the financing of proliferation of weapons of mass destruction.

2. Any act or offence referred to ML/TF/PF of this Act committed abroad may be liable to penalty as if they were committed in Nepal provided that the act or offence
is a punishable offence in that foreign country where such offence were committed. (Section ….)
3. Strict prohibition to launder Assets (Section ….) i.e. What is money laundering?
• Any one committing following acts shall be deemed to have committed offence of money laundering as per this Act.
a) Conceal or disguise illicit origin of assets or
Convert or transfer, with an objective to protect the person involved in commission
of offence from legal consequences, such assets obtained from commission of offence, knowingly or if there
b) Conceal or disguise or exchange the true nature, source, location, disposition, are reasonable basis to know about such.
movement or ownership of rights with respect to,
c) Possess, acquire or use,
• No person shall abet, facilitate, coordinate, provoke, be associated with, encourage or support any of the above acts.
• "Proceeds of Crime" means any property derived from or obtained directly or indirectly through the commission of money laundering or predicate offence
and it shall also include any other property and economic advantage gained or derived from such property or any property transferred or converted into other
property or advantage, in full or in part, from such property or advantage.
• "Means related to offence/ crime" means any means, vehicles, assets, property or other instruments, etc. used fully or partially in offence/ crime of assets
(money) laundering.
• Where Predicate offence means:
Ø Offence relating to any of the following activities, as per prevailing laws:

CA MAHESH GYAWALI 341

 ELITE CA: CLASS NOTES ONLY: FOR CAP III & CA MEMBERSHIP EXAMINATION: ASSETS (MONEY) LAUNDERING PREVENTION ACT

a) Involve in organized criminal groups or illegal n) Murder or physical mutilation or injury to x) Currency, Banking, Financial transactions,
recovery or racketing body parts, foreign exchange, negotiable instruments,
b) Destructive activities including terrorism, o) Kidnap, illegal/ unlawful detention or insurance or cooperatives,
c) Human trafficking and transportation, abduction, y) Black marketing, consumer protection,
d) Sexual Abuse including child and all types of p) Theft or robbery, competition and imports,
other, q) Smuggling (Including customs, excise or z) Election,
e) Trafficking of narcotic drugs, tax), aa) Communication, transmission and
f) Trafficking of arms and ammunitions, r) Tax (Direct or indirect), advertisements,
g) Trafficking of stolen and other illegal goods, s) Extortion, bb) Frauds relating to transportation,
h) Corruption or Bribe, t) Marine Piracy, Education, Health, Medicine or foreign
i) Cheating, u) Market manipulation or insider trading or employment,
j) Forgery, any offence causing negative effect in cc) Firm, Partnership, company or any other
k) Counterfeit currency, securities or commodities market, entities,
l) Piracy of products including manufacturing of v) Ancient monuments, dd) Land, building and real estate,
duplicate goods, w) Forest or wildlife or wildlife reserves or ee) Lottery, gambling or Donations,
m) Environment, national parks, ff) Citizenship, Immigration or Passports.
Notice dated: Poush 18, 2081
Ø relating to human trafficking, relating to hundi, relating to the use of immaterial (virtual) currency, relating to improper transactions,Regarding collusion
and irregularities in the game. Regarding the operation of the casino without obtaining a license
Ø Terrorism Financing,
Ø Any other offences prescribed by GoN by notice in official gazette,
Ø If any of the above offence had been carried out in abroad and if such offence is deemed to be offence in the concerned foreign country as well,
commissioning of such offences.
• Process of Money Laundering
1. Placement: The launders introduces his 2. Layering: The launderer engages in a series of conversions 3. Integration: The layered funds
illegal profits into the financial system. or movements of the funds to distance them from their source. re-enter the legitimate economy.
• “Financing proliferation of weapons of mass destruction” means investment of fund or assets in development, manufacturing, use, production, purchase or
sell, distribution, confiscation, ownership acquisition, transfer, storage, preservation, transportation or its management, import or export of atomic, chemical,
biological or poisonous weapons against any prevailing laws.
4. Strict prohibition to terrorism financing (Section ….) i.e. What is terrorism financing?
• No person shall, in any manner, directly or indirectly to such person or organizations, and willingly, provides or collects funds, support, or attempts to do so, in
order to use them or knowing that these funds will be used in whole or in part for the execution of a terrorist act, or by a terrorist or terrorist organization or
foreign terrorist combats.

CA MAHESH GYAWALI 342

 ELITE CA: CLASS NOTES ONLY: FOR CAP III & CA MEMBERSHIP EXAMINATION: ASSETS (MONEY) LAUNDERING PREVENTION ACT

• No person shall, in any manner, directly or indirectly, provide physical assistance or any make available any means for the execution of a terrorist act, or by a
terrorist or terrorist organization.
• No person shall:
Ø Participate as an accomplice in terrorist acts,
Ø Organize or direct others to commit terrorist acts, or
Ø Contribute or cooperate to the group of persons acting with a common purpose of commission of terrorist acts where such contribution or cooperation is
made intentionally and with the aim of furthering the terrorist act or with the knowledge or the intention of the group to commit a terrorist act.
• Any activities performed as specified in above sub sections, shall be deemed to be an offence if following conditions pertains:
a) Even if there are no terrorist activities,
b) Even if such assets or funds are not used in terrorist activities,
c) Even if such assets or funds are not related to terrorist activities,
c1) Make available assets or fund, directly or indirectly, for preparation of terrorist activities, planning, taking part, providing training for carrying out or cause to carry
out terrorist activities or help in transportation to the person taking part in such activities.
d) Even if the place where terrorist activities is undertaken or is planned to be undertaken is anywhere in Nepal or abroad,
e) Even if the person involved in terrorist activities is in Nepal or abroad,
f) Even if assets or funds supplied for such activities had been obtained from illegal sources.
• Any one committing above acts shall be deemed to have committed offence of financing on terrorist activities as per this Act.
• Risks of money laundering and terrorist financing to banks
Reputational Risks Operational Risk Compliance Risks Legal Risks Financial Risks

5. About Direction/ Governing Committee and Coordination Committee (Section …. & ….)
For monitoring and review of effectiveness of activities of prevention of money Functions, duties and powers of the direction/ coordination committee are as
laundering or terrorism financing or financing proliferation of weapons of mass follows:
destruction, a direction/ coordination committee shall be formed as follows: a) Review the draft national policy for countering of money laundering,
Person Position terrorism activities and financing proliferation of weapons of mass
Minister of Finance, Government of Nepal Chairman destruction provided by the coordination committee and submit it for
Minister of Law, Government of Nepal Member approval to the Government of Nepal,
Attorney General Member b) Implement and review the implementation of national policy for
Chief Secretary, Government of Nepal Member countering of money laundering, terrorism activities and financing
Governor, Nepal Rastra Bank Member proliferation of weapons of mass destruction,
Coordinator of Coordination Committee Member c) Formulate and coordinate the activities to be carried out by sangh,
Secretary, Ministry of Law, Justice and Parliamentary System Member province and local level in relation to Prepare countering of money
Secretary, Ministry of Finance Member laundering, terrorism activities and financing proliferation of weapons of
mass destruction and develop necessary methods,

CA MAHESH GYAWALI 343

 ELITE CA: CLASS NOTES ONLY: FOR CAP III & CA MEMBERSHIP EXAMINATION: ASSETS (MONEY) LAUNDERING PREVENTION ACT

d) Give necessary directions to concerned entities in relation to

implementation of provisions of this act about countering of money
laundering, terrorism activities and financing proliferation of weapons of
mass destruction,
e) Approve the national policy for countering of money laundering,
terrorism activities and financing proliferation of weapons of mass
destruction provided by the coordination committee,
f) Prepare and submit annual report to the Government of Nepal about the
activities undertaken during the year.
There shall be a Coordination Committee to coordinate inter-related entities and to The coordination committee shall have following functions, duties and
provide essential suggestions to the Government of Nepal in regard to the prevention powers in addition to the functions, duties and powers mentioned elsewhere
of laundering of assets (money) or terrorism financing in this Act:
Person Position a) To prepare policy for prevention of laundering of assets (money) or
Secretary, Ministry of Finance Coordinator terrorism financing and financing proliferation of weapons of mass
Secretary, Ministry of Law, Justice and Parliamentary System Member destruction and submit the policy to the Government of Nepal,
Secretary, Ministry of Home Member b) Conduct sectorial and national risk analysis and prepare a consolidated
Secretary, Ministry of Foreign Affairs Member report and submit to direction/governance committee,
Secretary, Ministry of Land Management, Cooperatives and Member c) To instruct concerned agencies for preparation and implementation of
poverty alleviation guidelines for prevention of laundering of assets (money) or terrorism
Secretary, Commission for the investigation of Abuse of Authority Member financing and financing proliferation of weapons of mass destruction and
Deputy Attorney General, office of the Attorney Member to monitor whether or not the instructions are complied with,
Deputy Governor, Nepal Rastra Bank Member d) To recommend and provide directions necessary for maintaining
Inspector General of Police, Nepal Police Member coordination amongst concerned agencies,
Chief, Asset Laundering Prevention Department Member e) To implement or cause to implement the decision of the direction/
governance committee,
Chief, Financial Information Unit Member -
f) To prepare and issue necessary guidelines about confidentiality and
Secretary
usage of documents and information to be maintained as per this Act,
g) To conduct or cause to conduct necessary research about financial
The chief of the Financial Information Unit shall act as a secretary of the Coordination
offences and provide necessary recommendation for its prevention to
Committee and the Financial Information Unit shall work as Secretariat of the
concerned entities,
Coordination Committee.
h) To perform other tasks in relation to coordination.

6. About Financial Information Unit (FIU) (Section …. & ….)

• There shall be an autonomous Financial In addition to the functions, powers and duties mentioned at other places of this Act, the functions, powers
Information Unit in NRB for collection and and duties of the Financial Information Unit shall be as follows:
CA MAHESH GYAWALI 344
 ELITE CA: CLASS NOTES ONLY: FOR CAP III & CA MEMBERSHIP EXAMINATION: ASSETS (MONEY) LAUNDERING PREVENTION ACT

analysis of information relating to laundering of a) To receive threshold transaction report as per this Act,
assets (money) or terrorism financing. b) To receive suspicious transaction reports as per this Act,
• The Governor of NRB shall appoint the chief of c) To receive the report of currency as per this Act,
the FIU from among the first class officers, at d) To receive other relevant information in accordance with the provision of this Act,
the least, of NRB. e) To analyze suspicious transaction report, including others,
• The Office of the FIU shall be placed in NRB f) To disseminate, spontaneously and upon request, analysis and related information to the Department or
and the NRB shall manage the staffs required for other investigation agency, if it suspects money laundering, terrorist financing, or other offence in its
it. analysis pursuant to (e),
• On request of the FIU, GoN or any other public g) To provide training on ML/TF to its own staffs, regulator, reporting entity and relevant government
entities may provide own employees to work in agencies having liability to perform under this Act,
such unit. h) To provide feedback and guidance in relation to, including, the detection of suspicious activity, suspicious
• There shall be a separate budget allocated for the transaction report or information to the reporting entity or concerned agency,
FIU. i) To prepare and submit an annual report, on its activities including the money laundering and terrorist
financing typologies, techniques, methods and trends of offences, to the Government of Nepal through
Rastra Bank,
j) To assist in supervision of RE in coordination with Regulator as per necessity so as to know whether RE
has developed mechanism to identify suspicious activity and reported or provide feedbacks on
supervision report,
k) To conclude MOU with foreign counter parts in order to exchange information upon reciprocity,
l) To carry out other functions as prescribed.
• Financial Information Unit may request any relevant information or cooperation needed to carry out its duties with a foreign counterpart that performs similar
functions, or it may spontaneously or upon request, share its information or otherwise cooperate with such foreign counter part. It shall abide the terms and
conditions mentioned by foreign counter part in relation to the information or cooperation received by it. It shall mention the prescribed terms and condition while
providing information or cooperation to foreign counter part.
• Financial Information Unit, in fulfilling its functions, responsibilities and powers pursuant to this section, may conduct the followings:
a) Request and obtain necessary additional documents, records, details or information from reporting entity,
b) Request and obtain administrative, financial or law enforcement documents, records, details or information or commercial database remained in or with
concerned agency, regulator or public institution.
• Fine up to Rs. 1 Crore to reporting entities for offence of:
a) No reporting of suspicious transactions, or
b) Noncompliance of confidentiality, or
c) Contravening the directions and orders under this act, or
d) Not supplying the information and documents asked for
Reporting entities (RE) means financial institutions as well as non-financial professionals or entrepreneurs.

CA MAHESH GYAWALI 345

 ELITE CA: CLASS NOTES ONLY: FOR CAP III & CA MEMBERSHIP EXAMINATION: ASSETS (MONEY) LAUNDERING PREVENTION ACT

"Financial Institutions" means any persons involved in "Non-financial professionals or entrepreneur" means any person engaged in following activities:
the following transactions of its clients or on behalf of 1. Casinos or internet casinos,
them: 2. Real-estate,
1. Accepting deposits or other amounts for 2a. Purchase or sell of vehicles or financing of vehicle purchase,
repayments, 3. Transactions of prescribed precious metals or things,
2. Private banking, 4. Notary publics, audits or accounting professionals or similar activities on behalf of client or
3. Providing any type of credits, party relating to transactions of:
4. Money or value transfer, a) Purchase or sale of real-estate,
5. Issue cheques, drafts, money orders, credit cards b) Management of money, securities, other assets, etc.,
or other electronic instruments for payments, c) Management of savings, deposits, investments, etc.,
6. Financial guarantees or commitments, d) Management of contributions or investments made while incorporating or operating legal
7. Business of following instruments: person,
a) Cheques, bills, deposits certificates, e) Creation, incorporation, registration, accounting, financing or business consultancies or
derivatives and other money market operation or management of corporate entities or corporate legal arrangements,
instruments, E1) Auditing for the purpose of Suspicious transactions reporting u/s 7S,
b) Foreign exchange, f) Purchase or sale of organizations.
c) Money changer, 5. Companies or trusts providing services on behalf of client or party relating to transactions of:
d) Transferable securities, a) Incorporation, management of legal persons or legal arrangements,
e) Instruments relating to commodities market. b) Partner, directors, secretary or other similar officials of such legal persons,
8. Issuance or management of securities, c) Establishing registered office,
9. Single or collective portfolio management, d) Trustees,
10. Locker, e) Share owners or beneficiaries.
11. Underwriting, 6. Other professionals or entrepreneur prescribed by Nepal Government by notice in official
12. Others. gazettee.
Following REs shall be updated on the official website of respective regulators
• Reporting Entities under Departments of Cooperatives: Cooperatives
• Reporting Entities under Inland Revenue Department (IRD): Approved retirement fund, Dealers in Precious Metal and Stones (DPMS)
• Reporting Entities under Ministry of Culture, Tourism and Civil Aviation: Casino or online casino professional
• Reporting Entities under Department of Land Management and Archives: Real estate agents
• Reporting Entities under office of the Company Registrar: Trust or Company Service Providers (TCSPs)
• Reporting Entities under Nepal Bar Council: Law practitioners
• Reporting Entities under The Institute of Chartered Accountants of Nepal (ICAN): Auditors and Accountants
• Reporting Entities under Nepal Notary Public Council: Notary Public
• Reporting Entities under Department of Transport Management: Automobile selling company

CA MAHESH GYAWALI 346

 ELITE CA: CLASS NOTES ONLY: FOR CAP III & CA MEMBERSHIP EXAMINATION: ASSETS (MONEY) LAUNDERING PREVENTION ACT

Notice dated: Poush 18, 2081

Financial institutions and non-financial professionals or business entities Regulatory bodies
Business entities providing loans for the purchase of vehicles Nepal Rastra Bank
Social Security Fund Nepal Rastra Bank
Business entities selling vehicles Department of Transport Management
Investment Company with: Nepal Securities Board
Paid up capital or Annual Turnover Date
³ 5 Crores ³ 10 Crorers From 2081 Poush end
< 5 Crores < 10 Crorers Date prescribed, on the basis of risk
• The FIU shall provide a reasonable opportunity to the concerned reporting entities to submit clarification.
• Reporting entities not satisfied with the punishment may appeal to the High Court within thirty five days of such punishment.
• Information to FIU (Section …)
Ø Reporting entities as well as government entities (including office of company registrar, land revenue office or others as prescribed) shall provide a report
information, in the format as prescribed, about transaction made by a person at once or from time to time within time prescribed by the Rastra Bank exceeding
limit prescribed by the Rastra Bank to the Financial Information Unit within fifteen days.
Ø Financial Information Unit, in fulfilling its functions, responsibilities and powers pursuant to this section, may conduct the followings:
a) Request and obtain necessary additional documents, records, details or information from reporting entity,
b) Request and obtain administrative, financial or law enforcement documents, records, details or information or commercial database remained in or with
concerned agency, regulator or public institution.
Ø Link with Suspicious Transaction Reporting & Suspicious Activity Reporting (STR/SAR), Threshold Transaction Report (TTR), etc.
• Confidentiality (Section …)
Ø Information, documents, details on STR, TTR and other transactions received by FIU shall remain confidential and the analysis of such reporting shall be used
only as intelligence for the investigation of an offence or as within the limit prescribed in such dissemination.
Ø Every person who has duties for or within the FIU is required to keep any information obtained within the scope of his or her duties confidential even after
the termination of his duties, except as otherwise provided in this Act or as ordered by a court.
Ø FIU shall develop and implement mechanisms and procedures for management and confidentiality, secure use of information received pursuant to this Act,
its use, analysis, dissemination, and exchange with foreign counterpart, and access to such information.

7. Asset Laundering Prevention Department (Section …. & ….)

• The GoN shall establish an Asset Laundering Prevention Department to make investigation and inquiry of offences under this Act.
• The chief of the Department shall be a first class officer of civil service at least.
• The organizational structure of the Departmental and required number of staffs shall be as prescribed by the GoN.

CA MAHESH GYAWALI 347

 ELITE CA: CLASS NOTES ONLY: FOR CAP III & CA MEMBERSHIP EXAMINATION: ASSETS (MONEY) LAUNDERING PREVENTION ACT

• Department may request or provide for the exchange of the information of investigation with its foreign counter part carrying out the functions of similar
nature, on the basis of reciprocity, upon demand or upon its own request. It may if it considers necessary, conduct investigation of money laundering and
terrorist financing together with foreign counter part carrying out the functions of similar nature.
• The Department may develop mutual arrangement with foreign counterpart carrying out the functions of similar nature to determine the method, terms and
conditions and procedures for the exchange of cooperation.

8. Reporting entities shall not open accounts or enter into any type of transactions with benami or fictitious name. (Section ….)
9. No person shall open or operate shell banks in Nepal or by using territory of Nepal and also no financial institutions of Nepal person shall establish or continue
business relations with shell banks or entities having transaction with shell banks. (Section ….)
Where "Shell Bank/entity" means a bank or entity, which has no physical presence in the country in which it is incorporated, licensed or located, and which is not
affiliated with a regulated financial services group that is subject to effective consolidated supervision. Presence of local agent or junior level staff does not
constitute physical presence.
One of the classic tax avoiding activities can be buying or selling of Shell Companies established in tax havens to disguise actual profits. A firm can also carry out
its international operations through these types of entities and not report to its home country about the sum involved and thereby avoid tax.

10. Customer to be identified i.e. KYC (Section ….)

While performing following functions:
a) Establish business relations, Reporting entities except:
b) Open accounts, Casinos Transaction less than or equal
c) Conducting emergency transactions for amount higher than as prescribed i.e. Rs. to Rs. 2,00,000.00 per day
1,00,000.00 or equivalent foreign currency, Precious metals or things Transaction less than or equal
d) Wire transfer, to Rs. 10,00,000.00 per day
e) Obtain additional surety if there is suspicion of inadequacy of documents, information
obtained earlier, shall obtain documents, information and details for customer
f) If there is suspicion of money laundering or financing of terrorist activities, identification and verification.
g) Transaction with high risks or high level persons
h) Other acts as prescribed.
Wire transfer means any transaction carried out on behalf of an originator (both natural persons and legal entities) through the bank by electronic means with a
view to making an amount of money available to a beneficiary person at another FI. The originator and the beneficiary may be the same person.
• Reporting entities shall obtain documents, information and details from independent reliable source for customer identification.
• Bank, financial institution or non-financial institution shall keep a separate record of documents and transactions of each customer, including date and nature of
transactions, type of account if any and symbol number.
• For the purpose of proper identification of customers, reporting entities shall use following measures:

CA MAHESH GYAWALI 348

 ELITE CA: CLASS NOTES ONLY: FOR CAP III & CA MEMBERSHIP EXAMINATION: ASSETS (MONEY) LAUNDERING PREVENTION ACT

a) Take proper information or details about transactions or business relations or objectives or nature of business,
b) Natural Person: c) Legal Person d) Others
i. Full name, i. Name i. In case of a natural person his/her name, family
ii. Permanent and present residence address or details ii. Registered address, surname, copy of citizenship or passport including
about correspondence, telephone, email, website other necessary documents evidencing his/her
iii. Date of birth and sex, iii. Nature of business permanent residential address and profession or
iv. Father or mother’s full name iv. Registration certificate, business,
v. Nationality license, approvals, ii. In case of the person or firm except provided in Clause
vi. Citizenship or voter ID card or driving license or renewals along with issue (i), copy of the document certifying incorporation,
passport, along with issue date, place of issue as well as date, issuing authority and establishment or registration of the institution,
validity validity documents that presenting name, surname, address,
vii. In case of Nepali minor, Birth certificate and guardian’s v. Documents required for profession, business of board of directors and executive
citizenship or voter ID card or driving license or registration director or proprietor of firm or partners of partnership
passport, along with issue date, place of issue as well as vi. Personal details of senior firm,
validity officials iii. In case of business relation or transactions to be
viii. Person who have not obtained citizenship, vii. Details of shareholders established or made on behalf of someone else,
recommendation from municipality or rural with more than 10% shares documents relating to principal's identity, address
municipality, viii. Personal details of account including power of attorney clarifying his/her business,
ix. In case of Foreign person, passport, along with issue operator iv. Name, surname, address of close relative, person or
date, place of issue as well as validity ix. Name and address of institution benefiting from the transaction of the
x. In case of Indian national without passport, document beneficiaries business relationship,
providing his nationality, its number, issuing authority, x. PAN v. In case of transactions made through negotiable
date and place of issue instruments, name, surname and address of the issuer
xi. In case of refugees, identification number issued by and payee of or from such instrument,
relevant government or international entity, date of vi. Other documents as prescribed by the Financial
issue, validity and place of issue. Information Unit from time to time.
11. Identification of high level persons (Section ….)
• Reporting entities shall establish a risk management system for identification of high level persons along with their family members as well as associated persons,
who are its customers or beneficial owners or who are going to be its customers.
Ø Where, "High level persons" means domestic high level persons, foreign high level persons, high level persons of international organizations and this term
shall also include other persons as designated by the Government of Nepal upon the recommendation of National Coordination Committee.
Ø Where, "Domestic high level persons" means the President, Vice-President, Prime Minister, Chief Justice, Speaker of House of Representatives, chairman
of National Assembly, Province Heads, Ministers of Government of Nepal, Chief Minister of Province Government, Members of federal Parliament, officials
of the constitutional bodies, Speaker of Provincial Assembly, Ministers of province government, Officials remained in the special class or equal to special

CA MAHESH GYAWALI 349

 ELITE CA: CLASS NOTES ONLY: FOR CAP III & CA MEMBERSHIP EXAMINATION: ASSETS (MONEY) LAUNDERING PREVENTION ACT

class or their senior of the Government of Nepal, judge of the Appellate Court and apex court and their senior, Co-speaker of Provincial Assembly, Members
of provincial Assembly, senior politician, central member of national political party, Mayor i.e. head and Deputy Mayor i.e. deputy of municipalities, rural
municipalities or senior executives of any institution partially or fully owned by the Government or any person with such authority.
• Before establishing business relations, for the purpose of proper identification of high level customers, reporting entities shall use following measures:
a) Obtain permission from a high level management authority.
b) If it is found that existing customer is high level person, obtain permission as per clause (a).
c) Adopt adequate measures for identification of assets and funds of customer or beneficial owners.
d) Continuously monitor and supervise the business relations with customers.
e) Adopt methods for enhanced customer due diligence.
12. Identification of the beneficial owner (Section …)
• When establishing business relationship or conducting transaction with by reporting entity, if there is any possibility of the involvement of beneficial ownership,
it has to be identified and reasonable measures have to be taken to verify the identity of the beneficial owner. Reporting entity shall ascertain whether a person is
acting or establishing business relationship or conducting transaction, on behalf of another person. Reporting entity, while ascertaining whether a person is
establishing business relation or transaction on behalf of other, shall follow the identification and verification measures.
Where, "Beneficial Owner" means natural person who, directly or indirectly, owns or controls or directs or influences a customer, an account, or the person on
whose behalf a transaction is conducted, or exercises effective control over a legal person or legal arrangement or remains as an ultimate beneficiary or owner of
such activities.
13. Risk Based Approach and Customer Due diligence
• Reporting entities shall, for the purpose of identification, assessment, understanding and mitigation of risk develop a risk management system including explicit
consideration to key risk factors such as customers, products/services, transactions, country, geographic areas and coverage of banking activities and delivery
channel and with varying degrees of impact and levels of risk adopt a risk-based approach. While identifying and evaluating risk, reporting entity shall consider
risk analysis done by national risk analysis or regulatory entity.
Currently, following are the categories of due diligence specified in NRB directive:
1. Standard/Normal Customer Due Diligence:
This is conducted for low risk customers who do not fall under enhanced and simplified customer due diligence.
2. Simplified Customer Due Diligence (SCDD): (Section.…)
Ø This can be conducted for customers who fall under low risk customers having characteristics as specified by NRB directive i.e. financial institutions
supervised by NRB, customers whose identity is publically available and controlled by national system and other specified by regulator from time to
time.
Ø Reporting entity may adopt a simplified CDD for identification and verification of a customer and transaction where the risk of money laundering or
terrorist financing is identified to be lower. However no such simplified measures of identification and verifications shall be applied if there is suspicion
of ML and TF, high risked customer or transaction.
Ø Assets (Money) Laundering Prevention Regulation, 2073: No simplified CDD for following customers
a) Foreign customers

CA MAHESH GYAWALI 350

 ELITE CA: CLASS NOTES ONLY: FOR CAP III & CA MEMBERSHIP EXAMINATION: ASSETS (MONEY) LAUNDERING PREVENTION ACT

b) Customer of a country in which there is noncompliance of international standards on prevention of money laundering and financing terrorism
or customer’s major clients is in such place
c) Customer is listed in stock exchange of a country in which there is noncompliance of international standards on prevention of money laundering
and financing terrorism
d) The details of beneficial owners of legal person or legal arrangements are not available publicly
e) Customer or beneficial is high level person
f) High risk or suspicious transactions
g) Annual turnover is of Rs. 1,00,000.00 or more
3. Enhanced Customer Due Diligence (ECDD): (Section ….)
Ø Enhanced Customer Due Diligence is conducted for high risk and medium risk customers. It refers to the additional due diligence pertaining to the
identity of the customer, source of income, nature and value of transaction and others specified by directives.
Ø Reporting entity shall follow appropriate measures of enhanced Customer Due Diligence (CDD) when establishing business relationship or conducting
transaction with/of following customer:
a) Customer identified as high risk. d) PEP, his family member and person associated with
b) Customer who conducts complex, unusual large transactions and unusual patterns PEP,
of transactions or which have no apparent economic or visible lawful purpose, e) Customer who need special monitoring,
c) Transaction with customer of a country, which is internationally, identified as a f) Customer consuming high risk products and services,
deficient or non-compliant country of international AML/CFT standards, g) Customer suspected of ML, TF or other offence,
h) Other customers as prescribed by the Regulator.
Ø Reporting entity shall adopt other measures as prescribed by the Regulator in the course of enhanced CDD.
Ø Assets (Money) Laundering Prevention Regulation, 2073: Minimum measures to be adopted for ECDD
1. Location of the business 12. Third-party documentation
2. Occupation or nature of business 13. Local market reputation through review of media sources
3. Purpose of the business transactions 14. Obtaining additional identifying information from a wider variety or
4. Expected pattern of activity in terms of transaction types, dollar volume, more robust sources and using the information to inform the individual
and frequency customer risk assessment
5. Expected origination of payments and method of payment 15. Carrying out additional searches (e.g., verifiable adverse media searches)
6. Articles of incorporation, partnership agreements and business to inform the individual customer risk assessment
certificates 16. Commissioning an intelligence report on the customer or beneficial
7. Understanding of the customer’s customers owner to understand better the risk that the customer or beneficial owner
8. Identification of beneficial owners of an account or customer may be involved in criminal activity
9. Details of other personal and business relationships the customer 17. Verifying the source of funds or wealth involved in the business
maintains relationship to be satisfied that they do not constitute the proceeds from
10. Approximate salary or annual sales crime
11. AML policies and procedures in place

CA MAHESH GYAWALI 351

 ELITE CA: CLASS NOTES ONLY: FOR CAP III & CA MEMBERSHIP EXAMINATION: ASSETS (MONEY) LAUNDERING PREVENTION ACT

18. Seeking additional information from the customer about the purpose and
intended nature of the business relationship
14. Time Frame for the Identification of the Customers
Before establishing business relationship or opening an account (Section ….)
• Reporting entity shall identify and verify its customer and beneficial owner before establishing business relationship or opening an account, during the course of
business relationship or when carrying out occasional transaction.
• However, Reporting entity, may make delayed verification of identity of the customer in the following circumstances, after the establishment of business
relationship:
a) If verification may occur as soon as reasonably practical,
b) If it is impossible to verify the identification of customer due to practical reasons and verification would interrupt the normal conduct of business,
c) If risk of ML/TF is effectively managed.
• No delayed verification of a customer shall be made if following circumstances exist:
a) If the customer is PEP, or of high risk or its family members or person associated with such customer,
b) If the activities of customer is suspicious.
Ongoing (Section ….)
• Reporting Entity is required to exercise ongoing due diligence including by carrying out the following activities:
a) To closely examine the transactions of customer in order to ensure that such transactions are consistent with the information of customer, the customer's
business and risk profile thereon,
b) To request for or examine the source of funds if it is necessary in relation to inquiry pursuant to clause (a),
c) To review and update the document, data, details or information of customers including PEP, high risk customer or of beneficial owner, their business
relation, transaction in order to ensure that are kept up- to-date,
d) To regularly monitor cross border correspondent banking and wire transfer and such customer,
e) To perform other functions as prescribed by the Regulator,
f) To perform other functions as reporting entity finds deemed necessary.
15. Identification and Verification by Third Party i.e Outsourcing (Section ….)
• Reporting entity may rely on a third party in undertaking some elements of customer identification and verification in the following circumstances:
a) If reporting entity is satisfied that all identification and verification of customer is carried out as per this chapter,
b) If information of identification and verification required by this chapter will be made available to reporting entity without delay as per necessity, and
c) If reporting entity is satisfied that all copies of identification and verification data and documents will be made available from the third party upon request,
without delay.
• No identification and verification of a customer made by a third party shall be acceptable for reporting entity:
a) If such third party or institution belongs to a country identified as a deficient country in compliance of the international AML/CFT standards, or
b) If such third party or institution does not have measures in place consistent with the requirements set out in this chapter,
c) If such institutions are not under regulation, control and supervision to prevent and combat money laundering and terrorism financing.

CA MAHESH GYAWALI 352

 ELITE CA: CLASS NOTES ONLY: FOR CAP III & CA MEMBERSHIP EXAMINATION: ASSETS (MONEY) LAUNDERING PREVENTION ACT

• Ultimate responsibility for customer identification and verification under this chapter shall remain with the reporting entity relying on the third party.
16. New Technology & Non-face to face Customer or Transactions (Section ….)
• Reporting entity shall identify and assess the money laundering or terrorist financing risks that may arise in relation to the use of new or developing technology
or development of new products, business practices, delivery channels, non-face to face customer or transaction.
• Such identification and assessment of risk shall be undertaken before the launch of the new product, business practice or the use of new or developing technology.
• Reporting entity shall take adequate measures to manage the risks identified and assessed.
• Reporting entity shall adopt policies and procedures to address risks of money laundering and terrorist financing in relation to non-face to face customer when
establishing a business relationship, conducting transaction or conducting customer due diligence with such customer.
• Assets (Money) Laundering Prevention Regulation, 2073: Customers who do not need to present themselves means the customers carrying on following
transactions:
a) Business relations established via internet, telephone, fax, post or other similar means,
b) Transactions through internet,
c) Transactions through ATMS,
d) Telephone or mobile banking,
e) Orders or directions to be provided for transaction through fax or other electronic means,
f) Transactions through prepaid cards or other electronic means.
17. Obligations to be fulfilled by the financial institutions regarding wire transfers (Section ….)
• Financial institution, mandated to undertake wire transfer services as per prevailing laws, shall accurately identify and verify the customer before dealing with
wire transfer in any currency of any amount by obtaining the following information and details including
a) Name of the originator,
(Clarification: For the purpose of this section the term "Originator" also includes the beneficial owner transferring the money.)
b) Account number of the originator or in the absence of it, a unique reference number,
c) Originator's address or, in the absence of the address, the citizenship or national identity number or customer identification number or date and place of birth,
(Reporting entity may not require this information if the transfer is NRs. 75,000.00 or lower.)
d) Name of beneficiary and account number or in the absence of an account number, a unique reference number,
e) Other information or details as prescribed by the Regulator.
• Above Provisions shall also be the same for wire transfers bundled into a batch file. But above provisions shall not be applicable if transfer is executed as a
result of credit card, debit card or prepaid card transaction for the purchase of goods or services provided that the credit card, debit card or prepaid card
number accompanies the transfer resulting from such transactions, or transfer between the accounts of financial institutions as mandated by prevailing laws.
• Reporting entity may not conduct identification and verification if the originator or beneficiary is existing customer and the reporting entity has already
obtained and verified the information required by this section and there is no suspicion of ML/TF.
• Ordering financial institution shall include and ensure that information required as above are attached with the payment message throughout the payment
chain and to the receiving institution.

CA MAHESH GYAWALI 353

 ELITE CA: CLASS NOTES ONLY: FOR CAP III & CA MEMBERSHIP EXAMINATION: ASSETS (MONEY) LAUNDERING PREVENTION ACT

• Any institution working as an intermediary or receiving instituting in the chain of wire transfer in Nepal shall ensure that all information as above have been
received. If information is not received, the RE shall demand such information from the ordering institution or institution in payment chain.
• Any financial institution in Nepal, working as an intermediary or receiving institution, may suspend, deny or make payment of wire transfer in accordance
with its policy and procedures of wire transfer if the information demanded is not available.
• Any financial institution in Nepal dealing wire transfer shall develop and implement a risk based on risks policy and procedures including for monitoring,
inquiry, suspension, denial, identification of beneficial owner or beneficiary, payment of wire transfer.
• Any financial institution dealing with wire transfers shall conduct monitoring to ensure whether information of originator and beneficiary is included or not.
• Financial institution engaged on wire transfer as ordering, intermediary or receiving institution shall keep all details and records of wire transfer for 5 years
at minimum.
• Financial institution servicing for wire transfer shall manage the followings in regards to its agents:
a) Implementing the program of prevention and combating money laundering and terrorism financing and monitoring whether it is implemented or not.
b) Preparation of up-to-date information of agent and publish it in its website publicly.
18. Provision on Cross-border Correspondent Banking (Section ….)
• Financial institution shall undertake the following measures while entering into cross-border correspondent banking and similar relationships or conducting
transaction:
a) To identify and verify the identification of respondent institution,
b) To get adequate information on the nature of the respondent institution's activities,
c) To fully understand the nature of the respondent's business from the information pursuant to clause (b),
d) To evaluate the respondent institution's reputation and the quality of supervision to which it is subject to, including whether it has been subject to a money
laundering or terrorism financing investigation or regulatory action based on publicly- available information,
e) To evaluate the controls implemented by the respondent institution with respect to money laundering or terrorist financing and to ascertain their adequacy
and effectiveness,
f) To obtain approval from senior management before establishing a correspondent banking relationship,
g) To understand and establish an arrangement on the respective responsibilities of each party under the relationship regarding AML/CFT,
h) To ensure whether the respondent institution has conducted customer due diligence on customers in the case of a payable- through account, and has
implemented mechanisms for ongoing monitoring with respect to its customers, and is capable of providing relevant identifying information on request,
i) Not to enter into or continue correspondent banking relations with a shell bank,
j) To satisfy itself that a respondent financial institution does not permit its accounts to be used by a shell bank.
• Where, "Correspondent Banking" means banking services provided by one financial institution (correspondent bank) to the customer of another financial
institution (respondent bank) and respondent bank means, A Bank that uses the services of another bank called a correspondent bank for performing certain
services, e.g. check clearing and collection, purchase and sale of foreign exchange etc.
• Nested or downstream correspondent banking refers to the use of a bank’s correspondent relationship by a number of respondent banks trough their relationships
with the bank’s direct respondent bank to conduct transactions and obtain access to other financial services.

CA MAHESH GYAWALI 354

 ELITE CA: CLASS NOTES ONLY: FOR CAP III & CA MEMBERSHIP EXAMINATION: ASSETS (MONEY) LAUNDERING PREVENTION ACT

19. Special Monitoring of Certain Transactions (Section ….)

• The transactions which need special monitoring by the reporting entities are:
a) All complex, unusual large transactions and all unusual patterns of transactions or which have no apparent economic or visible lawful purpose,
b) Business relationships and transactions relating to the customer and financial institution of a country internationally identified as a country that do not or
insufficiently comply with AML/CFT international standards,
c) Such other transactions prescribed by the Regulator.
• Reporting entity shall examine as far as reasonably possible the background and purpose of transactions referred above and record the conclusion drawn therein
and reporting entity shall keep the records of such measures taken for five years at minimum and shall be made available promptly if requested by the Financial
Information Unit or Regulator or a competent authority.
20. Reporting entity shall not establish an account or continue business relationship or conduct transaction with the following customer: (Section ….)
a) Customer who cannot provide documents, information and details required for the customer identification and verification pursuant to this chapter,
b) Documents, information and details provided pursuant to this Chapter seem conflicting to the identity of the customer,
• Reporting entity shall terminate the relationship with the existing customer referred above and may inform Financial Information Unit (FIU) if necessary.
• Assets (Money) Laundering Prevention Regulation, 2073: It shall be the policy of the reporting entities not to do the followings and if such conditions occur
in existing customers, end business relation with them and report to FIU also.
a) Establish or maintain dummy accounts, anonymous accounts, or accounts in fictitious names or transact in such accounts or cause to do so;
b) Maintain relationship with shell Banks or other banks which deals with shell bank or shell entities;
c) Establish an account or continue business relationship or conduct transaction with the customer who cannot provide documents, information and details required
for the customer identification and verification as required by law and regulation. However, in case customer submits valid reason for inability of presenting
some document or information and bank become satisfied with the reason, relationship can be established and transaction can be done with maintaining record
of the information of non-existence of document/information;
d) Customers who provide conflicting Documents, information and details;
e) Maintain relationship with the banks operating in offshore jurisdictions;
f) Maintain relationship with persons and entities sanctioned by major sanction authorities such as United Nations, Office of Foreign Assets Control- United States,
Her Majesty’s Treasury-United Kingdom;
g) Payment orders with an inaccurate representation of the person placing the order;
h) Acceptance of payment remittances from other banks without indication of the name or account number of the beneficiary;
i) Use of accounts maintained by bank for technical reasons, such as sundries accounts or transit account, or employees’ accounts to filter or conceal customer
transactions;
j) Maintaining accounts under pseudonyms that are not readily identifiable;
k) Opening Accounts without name or with notional name;
l) Acceptances and documentation of collateral that do not corroborate with the actual economic situation or documentation of fictitious collateral for credit granted
on trust;
m) Payable through Accounts;

CA MAHESH GYAWALI 355

 ELITE CA: CLASS NOTES ONLY: FOR CAP III & CA MEMBERSHIP EXAMINATION: ASSETS (MONEY) LAUNDERING PREVENTION ACT

n) Providing Downstream Correspondent Banking;

o) Maintain relationship with shell entities or other entities or individuals which deals with shell bank or shell entities.
21. Responsibilities of Reporting Entity (Section ….)
• It is the responsibility of the Reporting Entity to develop and implement AML/CFT Policy and Procedures compatible with its scope, geographic coverage, size
of business, customer, transaction and risks for the prevention of money laundering and financing of terrorism and implementation of this Act, rules and directives
thereunder. Such Policy and Procedures shall include the following:
a) Internal policies, procedures and controls relating to relating to customer due diligence measures, information on transaction, verification, record keeping,
monitoring, reporting,
Contents of such policy are:
Ø Risk Based Approach (RBA) Ø Due diligence of correspondent banking relationships
Ø Risk Assessment and Management Ø Recognition and reporting of suspicious activities and
Ø Commitment of Senior Management transactions
Ø Prohibited customers and transactions Ø Cooperation to lawful enforcement agencies
Ø Governance, Oversight, Structure and Reporting Ø Safe Keeping of customer’s transaction record
Ø Know your Customer (KYC) and Customer Due Diligence Ø Roles and responsibilities of board, Risk Management
Ø Due diligence of Employees Committee (RMC), Assets (Money) Laundering Prevention
Ø Due Diligence of vendors, service providers, consultants and business Committee, Chief Executive Officer (CEO) and others.
partners Ø Others as prescribed by regulatory body.
b) Ongoing monitoring,
c) Arrangement to implement obligations as per this Act, rules and directives there under,
d) Adequate screening procedures to ensure high standards when hiring employees,
e) Ongoing and refreshment training for officers and employees,
f) Independent and effective measures to review, verify and update and make compliance,
g) Measures for detection and information of suspicious transaction,
g1) Exchange information with concerned entities in relation to activities or transactions conferred in section 7J, 7L and 77M,
g2) Measures for use and compliance of terms related to risks management in customer identification,
h) Other measures to fulfill the obligations as per this Act, rules and directives
i) Other measures as prescribed by the Regulator.
• Reporting entities shall have to appoint compliance officer at management level to comply the obligation pursuant to the provision of this Act or others rules and
directives issued in accordance with this Act. Reporting entity shall ensure the following powers and necessary resources for the compliance officer:
a) Access to any documents, records, registers and accounts necessary for the performance of his tasks,
b) Power to request and obtain any information, notice, details or document from any employee of the reporting entity,
c) Other responsibilities as prescribed by the Regulator,
d) Other functions necessary to implement the Act, rules, and directives.

CA MAHESH GYAWALI 356

 ELITE CA: CLASS NOTES ONLY: FOR CAP III & CA MEMBERSHIP EXAMINATION: ASSETS (MONEY) LAUNDERING PREVENTION ACT

• Reporting Entities shall, at least once in a year as per necessity, update and submit to the regulatory body its organizational policy, procedures and workplan on
the basis of amendments in prevailing laws, risk analysis, changes in business and technologies and changes in nature and modus operandi of committing offence.
• Reporting Entity shall make arrangement for customer identification, monitoring of transactions, threshold transactions reporting, suspicious transactions
reporting, risk analysis and management, implementation of policies and workplan and all then activities to be performed as per this Act in electronic medium
also. However, regulatory body may exempt such reporting entity as to not to make arrangement in electronic medium if there is less risk.
22. Record Keeping (Section ….)
• Reporting entity shall maintain following documents and records accurately and securely for minimum five years after the termination of business relationship
or from the date of transaction in case of occasional transaction:
a) All documents and other information related to the identification and verification of customer and beneficial owner,
b) All documents, records and conclusion of the analysis of customer or beneficial owner and transaction,
c) Documents and details of account and business relation of reporting entity,
d) All documents and records relating to domestic and foreign transactions,
e) Record and documents on attempted transactions,
f) Other documents and records as prescribed by regulators.
• Reporting entity shall keep some prescribed documents and records for more than five years securely as prescribed. Reporting entity shall keep and maintain the
documents and records in such a way that it shall be sufficient to reconstruct such information for the use of legal action as evidence.
• Documents and records to be maintained pursuant to this section should be kept in such way that it could be made readily available to competent authorities upon
demand. Reporting entity shall keep the report of suspicious transaction for five years.
• Information, documents and details obtained from customers as per this act and prevailing laws, shall be kept confidential except as per prevailing laws. If any
person violates such confidentiality, the regulatory body may punish such person pursuant to section 7V.
23. Branches or subsidiaries also to follow this act (Section ….)
• Reporting entities operating in Nepal as well as abroad under same group or reporting entities with branch outside Nepal or reporting entities establishing another
entity with majority ownership shall comply this act or rules or regulations or directives issued.
For the purpose of this section majority ownership means fifty percent or more ownership.
• A group policy shall be prepared and implement with following additional contents:
a) Information exchange on customer identification and risk management for prevention of money laundering and terrorism financing.
b) Exchange information about customers, accounts, transactions, audit, group compliance, etc.
c) Monitor the secrecy and use of information exchanged.
24. Obligation of Reporting Suspicious Transactions (Section ….)
• Reporting Entity shall make a suspicious transaction report to the FIU as soon as possible if they find following circumstances in relation to any customer,
transaction or property.
a) If it suspects or has reasonable grounds to suspect that if the property is related to ML/TF/PF or other offence, or
b) If it suspects or has reasonable grounds to suspect that the property is related or linked to, or is to be used for, terrorism, terrorist, terrorist acts or by terrorist
organization or those who finance terrorism.

CA MAHESH GYAWALI 357

 ELITE CA: CLASS NOTES ONLY: FOR CAP III & CA MEMBERSHIP EXAMINATION: ASSETS (MONEY) LAUNDERING PREVENTION ACT

• Reporting entity shall also submit the report of attempted transactions or activity to FIU as mentioned above.
• Suspicious Transactions means a transaction, including an attempted transaction, whether or not made in cash, which to a person acting in good faith;
Ø Gives rise to a reasonable ground of suspicious that it may involve proceeds of an offenses specified in law and regulations, regardless of the value involve.
Ø Seeks to conceal or disguise the nature or origin of funds derived from illegal activities
Ø Appears to have no economic rationale or bona-fide purpose
Ø Appears to be in circumstances of unusual, or unjustified complexity
Ø Appears to be deviated from profile, character and financial status
Ø Seems to be made with the purpose of evading the legal and regulatory reporting requirements
Ø Found to be conducted to support the activities relating to terrorism
• Guidelines for Threshold Transactions Reporting, 15th January 2014
The threshold amount may be reached by a single transaction or by a series of transactions in cash into a single account or by a single customer over a period of
one working day. It may be considered to be an aggregate transaction in cash exceeding the prescribed threshold.
Explanation:
Indications of when a series of smaller amounts combine to form a “composite” transaction that exceed the prescribed threshold are the following:
a) the period within which such a series of smaller transactions take place;
b) the fact that the series of transactions consists of a repetition of the same type of transaction e.g. cash payments or cash deposits;
c) the smaller amount transactions involve the same person or account holder, or relates to the same account.
Threshold Transactions Reporting Obligation of Different Reporting Entities
Reporting obligation to Threshold
Banks and Financial • Deposit or withdrawal of Rs 1 million or more into or out of the same account in one transaction or in a series of transactions
Institutions in one day.
• Inward or outward remittance of Rs 1 million or more into or out of the same account in one transaction or in a series of
transactions in one day or inward or outward remittance of Rs 1 million or more by a customer (in case of non-account-holder
customer) in one transaction or in a series of transactions in one day.
• Exchange of foreign currency equivalent to Rs 5,00,000/- or more by a customer in one transaction or in a series of transactions
in one day.
Money Remitter Inward remittance of Rs 1 million or more in the name of a customer in one transaction or in a series of transactions in one day.
Money Changer Exchange of foreign currency equivalent to Rs 5,00,000/- or more by a customer in one transaction or in a series of transactions
in one day.
Insurance Business • Purchase of life insurance policy with an annual premium of Rs 1,00,000/- or more, irrespective of whether paid once or
multiple times in a year.
• Purchase of non-life insurance policy with an annual premium of Rs 3,00,000/- or more, irrespective of whether paid once or
multiple times in a year.

CA MAHESH GYAWALI 358

 ELITE CA: CLASS NOTES ONLY: FOR CAP III & CA MEMBERSHIP EXAMINATION: ASSETS (MONEY) LAUNDERING PREVENTION ACT

Securities Business Purchase or sale of securities of Rs 1 million or more by a customer in one transaction or in a series of transactions in one day.
Real Estate Business Purchase or sale of real-estate property of Rs 10 million or more by a customer in one transaction or in a series of transactions in
one day.
Business of precious gems, Purchase or sale of precious gems, stones and metal (gold, silvers, platinum, etc.) of Rs 1 million or more by a customer in one
stones and metal (gold, transaction or in a series of transactions in one day.
silvers, platinum, etc.).
Casinos Purchase or sale of casino chips of Rs 2,00,000/- or more by a customer in one transaction or in a series of transactions in one
day.
Accountants, Auditors and Purchase or sale of property or management of fund equivalent to Rs 1 million or more on behalf of a client in one transaction
Notary Public or in a series of transactions in one day.

Regulation and Supervision of Reporting Entities by respective Regulators (NRB, NIA, OCR, etc.)
• Regulation, supervision and monitoring of reporting entity under this Act shall be conducted by the Regulator mandated for the regulation and supervision of
such entity pursuant to prevailing laws. The GoN, in case the event there is no Regulator mandated to regulate and supervise any reporting entity under prevailing
laws may designate an agency or Regulator to work as a Regulator of such reporting entity, upon the advice National Coordination Committee. Regulator, in
relation to the regulation and supervision of reporting entity, shall undertake the functions, responsibilities and powers set out in this Act, in addition to the
functions, responsibilities and authorities prescribed under other prevailing laws. (Section ….)
• The functions, responsibilities and powers of the Regulator shall be as follows for the purpose of this Act: (Section ….)
a) To undertake risk assessment to identify, evaluate, monitor risk in the reporting entity, its sector, periodically or as per necessity and adopt adequate measures
to effectively manage risks,
b) To require reporting entity to undertake risk assessment to identify, evaluate, monitor risk within the entity periodically or as per necessity and adopt adequate
measures to effectively manage risks,
c) To implement or cause to implement this Act and the Rules and directives issued there under,
d) To impose mandatory conditions to comply the provisions of this Act for a person or institution while registering, licensing or issuing permissions or license
for reporting entity or in the course of business,
e) To develop and implement appropriate financial and other fit and proper test requirements while registering, licensing or issuing permissions to reporting
entity and while approving those owning, controlling, or participating, directly or indirectly, in the establishment, management or operation or business of
such entity, including the beneficial owner or beneficiary of such shares of the reporting entity or cause to do so,
f) To require RE to apply the AML/CFT measures under Core Principles for prudential supervision,
g) To conduct on-site inspection, off-site supervision and monitoring of reporting entity in order to ascertain the compliance of the provisions of this Act and
rules, directives or order issued there under,
h) To issue directives and determine additional measures to REs for complying their responsibilities,

CA MAHESH GYAWALI 359

 ELITE CA: CLASS NOTES ONLY: FOR CAP III & CA MEMBERSHIP EXAMINATION: ASSETS (MONEY) LAUNDERING PREVENTION ACT

i) To issue necessary directions and standards for risk analysis and to conduct comprehensive monitoring whether such directives and standards had been
complied or not of the risk assessment and ECDD carried out by the RE in relation to the customer or transactions belonging to a country internationally
identified as a non or partially compliant of standards for AML/CFT and prevention of financing proliferation of weapons of mass destruction.
j) To order reporting entity to make any type of documents, books, records or details and any other information available for the compliance of this Act, and
rules and directives or order issued there under,
k) To regularly publish notice in its website about status of implementation of standards on AML/CFT and prevention of financing proliferation of weapons of
mass destruction,
l) To provide necessary assistance in investigation,
m) To make special assessment of the reporting entity about its mechanisms developed for the detection of suspicious transaction, its evaluation, reporting
management on ML, TF pursuant to section 7S, or in other activities suspected or having reasonable grounds to suspect and their effective implementation,
n) To inform FIU if any entity is found to have not submitted suspicious transaction report,
o) To train or cause to conduct training programs to the RE on AML/CFT,
p) To carry out other functions as prescribed.
• Regulator may issue necessary order or directives or guidelines to reporting entity to implement or cause to implement the tasks under this Act and the provisions
of international standards on AML/CFT. It may enter into cooperation and sharing arrangements with domestic or Foreign Regulators regarding the regulation
and supervision of reporting entities operating under the same group and for the exchange of relevant supervisory information.
• Financial Regulator may make necessary arrangements with domestic or similar Foreign Regulators regarding the system of regulation and supervision, and
exchange of regulatory and supervisory information including other cooperation for AML/CFT system.
• Regulator may take any or all of the following actions or sanctions against a reporting entity failing to comply with any provisions of this Act, Rules, or Directive
issued there under or order. (Section ….)
a) To issue written reprimand and warnings,
b) To impose fines as follows on the basis of gravity of violation of this Act, rules or order or directives issued there under,
Casinos Rs. 10,00,000.00 to Rs. 5,00,00,000.00
Financial Entities Rs. 10,00,000.00 to Rs. 5,00,00,000.00
others Rs. 1,00,000.00 to Rs. 1,00,00,000.00
c) Impose fines per offence as per (b) above as per gravity of offence, risk, capital of reporting entities or annual transactions, if is found that there is
contravention of this act, rules, regulation or directives from time and again,
d) Impose full or partial restriction on the business or transaction,
e) Suspend the registration or permission or license,
f) Revoke the permission or license or registration,
g) Other appropriate sanctions.
• Regulator may impose other appropriate sanctions under prevailing laws if the sanctions provided as above are not sufficient for the violation of the provisions
of this Act or Rules or directives or order thereunder. The imposed sanctions shall be effective, proportionate and dissuasive.

CA MAHESH GYAWALI 360

 ELITE CA: CLASS NOTES ONLY: FOR CAP III & CA MEMBERSHIP EXAMINATION: ASSETS (MONEY) LAUNDERING PREVENTION ACT

• Reporting entity shall take appropriate action against a staff or an official if it faces regulatory actions or sanctions under this Act due to the activities of such staff
or official as per its law or prevailing laws.
• If the reporting entity do not take appropriate action, the regulatory body shall use power of the reporting entity to punish such staff or official and impose fines
as per gravity of offence to the director or concerned officer of such reporting entity or remove from their post or both.
• It shall provide reasonable opportunity of clarification to reporting entity before taking regulatory action or sanction pursuant to this section.
• A reporting entity as well as the staff or official, which is not satisfied with the action or sanction of the Regulator, may appeal to the related High Court within
35 days.

25. Provisions relating to investigation and Inquiry

a. Complaint (Section ….)
• If any person obtains information that any of the following offence is committed or is going to be committed by any person, such person shall immediately
submit a complaint or inform about such, in written or oral form or in electronic form:
a) Terrorist activities or financing proliferation of weapons of mass destruction: To Police Office
b) Predicate offence: To Investigation Office
c) Other than predicate offence but related to money laundering: To Department
• Such complaint, application, information or notice to the Department in writing or oral form and the Investigation Office shall register complaint,
application, information or notice if it is received in writing and the Department shall transcribe the oral complaint, application, information or notice it
receives and then register it.
• If anyone complains with an intention to keep his name confidential, a code as designated by the Chief of the Department should be used in place of the
name of the complainer while registering such complaint.
• Information should be officially registered as complaint if any staff of the Department knows by any means that certain person(s) has committed or is
committing or is going to commit money laundering or terrorist financing.
• Complainer may be asked to endorse the complaint if so required. If the complainer endorsing requests for confidentiality of name, address, it shall be
kept confidential.
b. Preliminary Inquiry or Investigation (Section ….)
• The chief shall make or cause to make preliminary inquiry if he receives complaint or information. The chief may designate any of his staffs to conduct
preliminary investigation and provide adequate time. The officer designated for the preliminary investigation may exercise the powers of the investigation
officer available in this Act.
• Once complaints are received, the department shall confirm whether such offence is predicate offence or not and if department is convinced, it shall write
about such to the investigation authority and if required, an investigation team shall be formed by the authority.
c. Functions, Duties and Powers of the Investigation Officer (Section ….)
a) To order any government agency, regulator, reporting entity and related person to provide documents, records, statements, notices and/or information
related to the offence of money laundering and terrorist financing,

CA MAHESH GYAWALI 361

 ELITE CA: CLASS NOTES ONLY: FOR CAP III & CA MEMBERSHIP EXAMINATION: ASSETS (MONEY) LAUNDERING PREVENTION ACT

b) To conduct a search of any government entity, regulator, reporting entity, a person and any other place at which any document, write-up, material, facts,
information, or instruments that may constitute evidence of an offence of money laundering and terrorist financing is reasonably believed to be located,
and to seize such document, write- up, material, facts, information, or instruments or property or instrumentality related with the offence, provided that a
written receipt in a prescribed form is given to the concerned person or official for all items seized in the course of the search,
c) To arrest a person and detain a person, as per prevailing laws, if the investigation officer has reasonable grounds to believe that such person accused of
or suspected of involving in money laundering or terrorist financing may abscond or destroy or hide evidences or likely to obstruct or create adverse
influence in the investigation process,
d) To require any person with information or reasonably believed to have information related to the offence of money laundering or terrorist financing to
provide information, statement or supplementary statement, If the person while giving statement or supplementary statement is found it necessary to
provide additional information, he can be released on investigation officer's own undertaking by taking a written commitment or ask for bail and in case
of inability to provide bail, detain with the consent of the court,
e) To trace, identify and evaluate the properties and instrumentality fully and effectively in order to freeze or seize such property or instruments,
f) To write to Financial Information Unit if there is reasonable ground to believe that foreign Financial Intelligence Unit may have any information,
g) To carry out the other functions as prescribed.
h) The chief may fine up to Rs. 500,000.00 against a person disobeying the order given in the course of investigation, upon the report of the investigation
officer.
d. Keeping Under Custody for Investigation (Section ….)
• A detention warrant shall be provided to a person accused of or having reasonable grounds to suspect that he is involved in the offence of money
laundering and terrorist-financing before detaining him. The investigation officer shall present a person detained in money laundering and terrorist
financing offence within 24 hour of arrest, except the time for arrival, and may be detained further upon the order of the adjudicating authority.
• The Investigating officer shall, while producing the suspect for remand, clearly mention the charges against the detainee, reasons and grounds thereon,
description of suspect's statement, if any, and the reason to detain the suspect for investigation. If remand is requested for investigation and inquiry, the
adjudicating officer may, after reviewing the concerned documents and whether or not the investigation and inquiry has been satisfactory, remand the
suspect for ninety days, not exceeding thirty days at a time.
• In case remand is requested, the detainee may petition before the adjudicating officer thereby stating reasons and grounds for him not to be remanded.
• The investigation officer shall give prior information to the Chief of the Department before arresting, detaining or requesting the adjudicating authority
to extend the detention time of a person pursuant to this Section. However, if a person is required to be arrested right away, the investigation officer
should inform the Chief as soon as possible after arresting such person.
e. Order for Freezing Assets (Section ….)
• The investigation officer may freeze (If any assets or instruments is to be freezed for more than one year, approval from court shall be obtained) or seize
the following property or instrumentality or property or instrumentality suspected of being related with such property or instrumentality of anyone in the
course of investigation, regardless of persons whoever owns, possesses, entitles, or has any kind of interest in:
a) Laundered property,
b) Instruments used or intended to be used in the commission of the offence of money laundering,

CA MAHESH GYAWALI 362

 ELITE CA: CLASS NOTES ONLY: FOR CAP III & CA MEMBERSHIP EXAMINATION: ASSETS (MONEY) LAUNDERING PREVENTION ACT

c) Property related with the offence of terrorist financing,

d) Property used or intended to be used in the offence of terrorist financing, or property used or intended to be used or allocated for the use in
terrorist act or by (for the use of) individual terrorist, terrorist group or terrorist organization,
e) Instrumentality used or intended to be used in the offence of terrorist financing.
• The investigation officer shall freeze or seize the property of corresponding value of the person suspected of engaged in ML/TF if it is not possible to
freeze or seize the property or instruments, due to the disposal, concealment, use or consumption of such proceeds or instrumentality or by any other
reason that disables to freeze or seize.
• The investigation officer may apply following measures while freezing or seizing the property or instruments:
a) To self seize such property or instrument or through the concerned government agency,
b) To order concerned agency to freeze such property or instrumentality ex-parte and without prior notice to the person related.
• The investigation officer may issue freezing order against the property of the person, under the investigation of ML/TF, who does not present before him
within the time given or as delivered till such date such person presents oneself.
• The concerned agency or institution shall immediately freeze if it is asked in writing to do so pursuant to freeze in such a way that such property or
instrumentality could not be transferred, mortgaged, sold, distributed, transacted or taken any benefit by anyone.
• The investigation officer shall give prior information to the Chief before giving order to freeze or seize the property or instruments.
Provided that, if such property or instrumentality is required to be frozen or seized right away, the investigation officer should inform the Chief as soon
as possible after such freezing or seizing.
• The investigation officer shall give notice of freezing or seizing of the property to the person whose property or instrumentality is frozen within 3 days
of such action.
• Person who is dissatisfied by the act of freezing or seizing made pursuant to this section may submit a complaint to the court for the release of such
property or instrumentality.
• Release of freezed assets: The court may, upon the receipt of complaint and if the property or instruments frozen or seized is found to be belonging of
the complainant, release such property or instrumentality if it finds the following circumstances:
a) If the complainant is not found to be involved in any offence of money laundering or terrorist financing,
b) If it is found that such property or instrumentality is not related with the offence of money laundering or terrorist financing or there is no ground to
believe so, and
c) If the property or instrumentality is not found to be related with other offence committed by the complainant.
• Notwithstanding whatever written in the prevailing law, investigation officer shall be vested with powers to prevent or void any contractual or other
liabilities going to be created or created by any person that prejudices in the capacity of freezing, seize or confiscating the property and instrument that
is subject to confiscation.
• The investigation officer shall submit a report of any freezing or seizing of the property made to the court within 3 days of such action.
• The court may issue appropriate and necessary order upon the report as above.

CA MAHESH GYAWALI 363

 ELITE CA: CLASS NOTES ONLY: FOR CAP III & CA MEMBERSHIP EXAMINATION: ASSETS (MONEY) LAUNDERING PREVENTION ACT

• Notwithstanding whatever written in prevailing laws, the investigation officer may order the concerned entity to hold the passport or travel document of
the person accused of in the offence of money laundering or terrorist financing. The concerned entity, if it is ordered, shall not issue a passport or travel
document to such person or it shall take control of such document if it is ordered to take control.
• The investigation officer should keep the assets, vehicles, instruments and documents seized in course of inquiry and investigation under this Act safe.
f. Request to the Concerned Country (Section ….)
• The Department, if it finds in the course of investigation that any property or instruments of any person related with money laundering or terrorist
financing is in a foreign country, shall immediately request to freeze such property or instruments pursuant to the prevailing laws. It shall include the
more possible information about the place of the property or name of banks or financial institutions of such person.
g. Special Investigation Measures (Section ….)
a) Controlled delivery
b) Depute of informants
c) Undercover operations
d) Telephone or communication medium interception
e) Arrest over (Not to arrest immediately for obtaining additional information
f) Reach computer or other electronic mediums or system
g) Others as prescribed
h. Monitoring Order (Section ….)
• The investigation officer may issue a monitoring order to a reporting institution directing it to provide information to the Department in respect of
transactions of a person under the investigation of money laundering or terrorist financing offence with a form to report. While issuing monitoring order
the deadline shall be given no more than three months, in general.
• A reporting institution served with a monitoring order shall regularly monitor the transaction of the person and report it to the department regularly in
accordance with the terms of the order.
• Notwithstanding whatever written in prevailing laws, the investigation officer may order the concerned entity to hold the passport or travel document of
the person accused of in the offence of money laundering or terrorist financing. The concerned entity shall not issue a passport or travel document to such
person or it shall take control of such document if it is ordered to take control.
i. Demand support from other entities (Section ….)
• The investigating office may demand support of any entities or public corporate bodies in the course of conducting inquiry and investigation of offence
under this Act and it shall be the duty of such entities and bodies to provide support to the investigating office at the time of demand.
• The investigating office may also demand support of Nepal police in course of inquiry and investigation of offence under this Act.
It shall be the duty of the concerned police officer or of the police staff to provide support to the investigating office if such support is demanded.
The investigating office if it deems by the nature of offence under investigation and inquire, consult with the specialist belonging with an entity or involve
him/her in investigation and inquiry and such entity shall have to avail or depute such specialist to the investigating office notwithstanding whatever has
been mentioned in prevailing laws.

CA MAHESH GYAWALI 364

 ELITE CA: CLASS NOTES ONLY: FOR CAP III & CA MEMBERSHIP EXAMINATION: ASSETS (MONEY) LAUNDERING PREVENTION ACT

j. Filing of Case (Section ….)

• On completion of investigation, the investigation officer shall make an investigation report and submit it to the concerned government attorney and on
study and examination of such report, if there are adequate reasons to believe that a case can be filed, the concerned government attorney may file a case.
• There shall be no limitation to file a case relating to the offence under this Act. The Government of Nepal shall be the plaintiff in the case relating to an
offence under this Act.
• If any act constituting an offence under this Act is also punishable under any other existing law, one may also be charged under such law. If it is evident
from investigation of an offence under any existing law that one has committed an offence under this Act, the entity or officer conducting investigation
and inquiry of such offence shall inform the same to the Department.
• The Department shall inform other related investigation agency if it finds in course of its investigation that there is a link or possibility of filling another
case or punishment under other prevailing laws. It shall send all available information and complaint or file comprising the collected evidences, documents
and conclusion in the course of investigation of money laundering or terrorist financing but not related with the offence of money laundering or terrorist
financing to other related investigation agency under prevailing laws.
• No Investigation Officer or any staff or person involved in the investigation and inquiry shall, unless the prevailing law otherwise requires, breach
confidentiality of any matter or document s/he encounters with during investigation and inquiry or while performing his/her duty.
• Any organized institution established under the prevailing laws or civil servant shall be deemed to be automatically suspended for a period he/she is
detained as per this Act or until the case filed against him/her is settled.
k. Source of the Property to be Proved (Section ….)
• In connection with investigation of an offence related to money laundering against a person based on complaint received or the information received by
the department through any other means, if no offence is found after investigation, but the assets of such person is abnormal compared to his income or
financial condition or he has abnormally high standard of living or it is seen that he has made a donation, gifted, granted, contributed, loaned or incurred
any type of transaction to someone beyond his capacity, he should be asked for the source of such assets/ property.
• In relation to complaint lodged against a person in accordance with this act, form the evidence obtained by the investigating officer during the investigation,
there is no case against him for any offence, but the property of such person is abnormal compared to his source of income or financial condition or he
lives abnormally high standard of living or it is seen that he has made a donation, gifted, granted, contributed, loaned or incurred any type of transaction
to someone beyond his capacity or a large amount of cash or other moveable property is found with him or there is no any business or source of regular
income which can be earned, the inquiry officer, along with his opinion shall issue a letter regarding the complaint shall be forwarded to the department
for necessary actions.
• The department shall make the person investigated to disclose the source from which such property was acquired.
• In the case of a person investigated in accordance with the prevailing laws for a predicate offence or money laundering as per this Act, the assets of such
person are found to be more than the assets acquired from the offence, a case shall be filed for confiscation of such assets from offence.
• Such assets other than assets not obtained from offence shall be confiscated.
• In the matters received or in case the department itself has conducted investigation, where source of assets is disclosed and the investigated person is not
prosecuted for offence under this act or under prevailing laws, the extent of the source of income and assets that have not been disclosed shall be sent in
writing to the Inland Revenue Department for tax assessment and collection.

CA MAHESH GYAWALI 365

 ELITE CA: CLASS NOTES ONLY: FOR CAP III & CA MEMBERSHIP EXAMINATION: ASSETS (MONEY) LAUNDERING PREVENTION ACT

• Upon receipt of information the Inland revenue Department ascertains whether he has committed a tax related offence or not, if no offence is found, if
such person also declares that he has not acquired the property through any offence, his property/ assets shall be treated as income for the current income
year and the maximum tax according to the prevailing law, it has to be determined and collected.
• But if it is found that tax related offence has been committed, then the department shall investigate the offence itself and if the investigating agency is
another, the investigation should be carried out for that, a written information shall be sent to such agency.
• The name, surname and address of the person whose tax has been collected shall be kept on the website of the department and the details of his income
and revenue shall be sent to the department as well as the financial information unit.
• Notwithstanding anything mentioned elsewhere in this section, if it is found that the property recovered or confiscated is obtained from any wrong doings,
there shall be no obstruction to take action or prosecute in accordance with prevailing laws.
• The Inland Revenue Department shall prepare a terms and conditions about prevention of AML/CFT and prevention of financing proliferation of weapons
of mass destruction and implement it.
l. No Obstacle to Prosecute (Section ….)
• It shall not be an obstacle to investigate, prosecute or punish a person on an offence of money laundering only due to the reason that no investigation has
been conducted on predicate offence or not prosecuted even after the investigation or nor convicted on predicate offence or the charge of predicate
offence has been dismissed.

26. Provisions related to currency and bearer negotiable instruments

a. Declaration and Enquiry of Currency and Bearer Negotiable Instruments (Section ….)
• Any person entering into or leaving Nepal, who is in possession of currency or bearer negotiable instruments or who arranges for the transportation of such items
of NRs or its equivalent in foreign currency by cargo, courier, postal service or any other means of the amount or more as prescribed by the Rastra Bank shall
make an accurate written declaration as prescribed. While making declaration, a person who is in possession of such currency or BNI shall declare it before the
customs and a person who is sending or receiving such items by cargo, courier, postal service or any other means, it shall be declared before such agency.
• A cargo, courier, postal service or any other means providing such service shall submit the declaration of currency or BNI to the nearest custom officer in a
prescribed format. Custom officer may require disclosure of items declared or open the cargo, parcel or envelop submitted to him, if he suspects on the declaration
or information submitted.
• Custom officer may inquire about the origin and intended purpose of currency or BNI being carried into or out of Nepal in the following circumstances:
a) If he suspects the declaration is not made or such declaration is false, or
b) If there are adequate reasonable grounds to suspect that it is related with an offence.
• Custom officer shall confiscate the currency or BNI if he finds such currency or BNI undeclared or falsely declared or related with an offence and also fine equal
to such amount. Custom officer shall have to notify the reasons of confiscation to the concerned person.
• Custom officer shall send a suspicious transaction report to FIU and inform the concerned investigation agency immediately, of the currency or BNI suspected
as above. The Department of Customs shall send the details of declaration made pursuant to section 29A to Financial Information Unit every month.
b. Commodity under the Customs Act (Section ….)

CA MAHESH GYAWALI 366

 ELITE CA: CLASS NOTES ONLY: FOR CAP III & CA MEMBERSHIP EXAMINATION: ASSETS (MONEY) LAUNDERING PREVENTION ACT

For the purpose of this Act, currency or bearer negotiable instruments shall be deemed to be an item under the definition of commodity (Malbastu) under the
prevailing customs laws. Other provisions regarding declaration of currency or BNI, inquiry, search, seizure, confiscation, action or appeal pursuant to this chapter
shall be as the provisions of the prevailing Customs laws.

27. Provisions related to freezing of property and funds

a. Information of Terrorist, Terrorist Group or Terrorist Organization (Section ….)
• The Ministry of Foreign Affairs shall without delay publish the list of terrorist, terrorist group or organization and of those engaged in proliferation of weapons
of mass destruction designated under the provisions of the resolutions of United Nations Security Council in its website and submit the same to the Ministry of
Home Affairs by electronic means.
• The Ministry of Home Affairs shall, without delay, issue a freezing order against the properties or funds of terrorist, terrorist group or organization designated
in the above list in order to freeze such properties or funds immediately in accordance with this chapter.
• The Ministry of Home Affairs shall immediately publish its order in its website.
• The Ministry of Finance, Regulator, concerned agency, FIU, reporting entity or legal person or natural person shall ensure that they are aware of the updated
lists of person, group or organization regularly consulting the lists.
b. Enlisting as a Terrorist, Terrorist Group or Terrorist Organization (Section ….)
• The Ministry of Foreign Affairs, if it receives a request from a foreign country in order to freeze the properties or funds of a person, group or organization
related/involved with or suspected of being a terrorist or terrorist group or organization, shall send such request to the Ministry of Home Affairs without delay.
• The Ministry of Home Affairs shall make necessary inquiry against a person, group or organization involved or suspected of involving in terrorist act either
upon the receipt of request of Ministry of Foreign Affairs or of Nepali or foreign citizen, group or organization involved in or having reasonable grounds of
suspicion of being involved in terrorist act inside or outside of Nepal, in its own initiative.
• The Government of Nepal may designate a person, group or organization as a terrorist, terrorist group or organization, if it finds or has reasonable grounds to
believe that such person, group or organization is involved or going to be involved in terrorist activities or of section 4 or in any terrorist act pursuant to prevailing
laws in Nepal or any other country under prevailing laws and issue freezing order against the properties or funds of such person, group or organization.
• The Government of Nepal may delist a person, group or organization listed if it does not find grounds for keeping such person, group or organization into such
list.
• The Ministry of Home Affairs shall, if any person, group or entity is delisted by the Government of Nepal, immediately publish its notice in its website.
c. Freezing of Properties and Funds (Section ….)
• Natural Person, legal person, concerned agency or reporting entity shall immediately and without delay and without prior notice, freeze the properties or funds
of a person, group or organization listed pursuant to section 29E & 29F and of person, group or organization engaged or financing in the proliferation of weapons
of mass destruction.
• While freezing the properties or funds all the following properties or funds shall be frozen without delay:
a) All properties or funds belonging to or wholly or jointly, directly or indirectly, owned or possessed or held or controlled by such person, group or
organization,
b) All properties or funds derived or generated from the property or funds pursuant clause (a),
c) All properties or funds of a person, group and organization acting on behalf of, or at the direction of such person, group or organization.

CA MAHESH GYAWALI 367

 ELITE CA: CLASS NOTES ONLY: FOR CAP III & CA MEMBERSHIP EXAMINATION: ASSETS (MONEY) LAUNDERING PREVENTION ACT

• Properties or funds frozen pursuant to this section shall be frozen in such a way that such properties or funds shall not be, could not be transferred, mortgaged
or sold or distributed or transacted by anyone, except in the execution of the provision of this Act and rules there under.
• Natural or legal person, concerned agency and reporting entity shall make necessary management that the such properties or funds or other economic resources
or financial or other benefits frozen shall not be, directly or indirectly, available or in use of or be beneficial to the individual, group or organization designated
under sections 29E and 29F.
• Natural or legal person, concerned agency shall submit the report of such freezing to the Ministry of Finance and reporting entity to the Regulator, within three
days of freezing.
• Regulator shall submit the detail of the freezing of the property or funds received to Ministry of Finance within three days of receipt.
d. Delisting or Defreezing the Properties and Funds (Section ….)
• Any person, group or organization designated in the list of section 29E, and 29F may submit an application to the Ministry of Foreign Affairs and Ministry of
Home Affairs respectively. Any person, group or organization affected by the freeing of properties or funds or on other matters due to the order under section
29G may submit an application to the Ministry of Foreign Affairs if the designation has been made pursuant to section 29E and to Ministry of Home Affairs if
the designation has been made pursuant to section 29F.
• The concerned Ministry shall make an inquiry if it receives an application pursuant to above and the Ministry of Foreign Affairs shall submit it to the UNO if
the applicant is under the list of section 29E. The Ministry of Home Affairs shall submit it to the concerned foreign country through the Ministry of Foreign
Affairs if the applicant is under the list of section 29F.
• The Ministry of Home Affairs shall make an inquiry if it receives an application pursuant to above from the person, group or organization designated upon it
own initiative under the list of 29F. It may delist such person, group or organization if it does not find any ground to keep applicant under the list of section 29F
and shall make defreezing order for his frozen properties or funds.
• Other provisions including the effective implementation of United Nations Security Council Resolutions including listing o rdelisting of terrorist, terrorist group,
terrorist organization, listing or delisting of terrorist, terrorist group, terrorist organization pursuant to section 29F defreezing properties or funds frozen pursuant
to section 29G, appealing against the listing or freezing order, proper protection of bona-fide third party, providing minimum properties or funds for the
subsistence of person whose property or funds is frozen shall be as prescribed.
e. Requests to Concerned Country (Section ….)
The Ministry of Home Affairs shall immediately send the list of person, group or organization listed pursuant to section 29F through the Ministry of Foreign Affairs
with a request to freeze properties or funds of such person, group or organization if it finds that their properties or funds may be located in another country. The
Ministry of Home Affairs shall send the name of person, group or organization if it is delisted through the Ministry of Foreign Affairs in order to defreeze property
or funds that are frozen.
f. Punishment for Violations (Section ….)
• Regulator may impose sanction pursuant to section 7V if it finds any reporting entity is not freezing the properties or funds pursuant to section 29G.
• Departmental action shall be taken against responsible officials of the concerned agency not freezing the property or funds pursuant to section 29G.
• The Ministry of Home Affairs may fine up to one million rupees to a natural or legal person violating the section 29G.
• Notwithstanding whatever written above, case of TF may be initiated or filed against a natural person, legal person or responsible official of concerned agency
or reporting entity who does not freeze the properties or funds with an intention to support the commission of offence of ML or TF, or to terrorist, terrorist group
or organization or terrorist acts.

CA MAHESH GYAWALI 368

 ELITE CA: CLASS NOTES ONLY: FOR CAP III & CA MEMBERSHIP EXAMINATION: ASSETS (MONEY) LAUNDERING PREVENTION ACT

• The provisions under this Act, for tracing properties and instrumentality, freezing, seizing, investigation and confiscation of the properties or funds of terrorist,
terrorist group or organization and other related matters, s shall be applicable to offences under this chapter if so required.

28. Offence and Penalty

Section Offence Fine
30(1) Any person who has committed the offence of money laundering Imprisonment: 2 to 15 years as per the gravity of offence and
Fine: two times of the proceeds
30(2) Any person who has committed any offence of helping Half of punishment under section 30(1)
conspiracy to commit the money laundering
30(3) Any person who has committed any offence of terrorist financing Imprisonment: 7 to 20 years as per the gravity of offence and
Fine: five times of the proceeds, if it is apparent and up to 5 crore if proceeds is not apparent
(ascertainable)
30(4) Any person who has committed the offence of helping terrorism Half of punishment under section 30(3)
financing
30(5) If a person commits the offence of ML/TF through or by the use of a legal person or legal arrangement, such person, official or staff shall be punished.
30(6) The chief of legal person working during the period of commission of the offence shall be punished pursuant to prevailing laws if the particular person
committing such offence is not traced.
30(7) Punishment to a public servant or chief or staff of a reporting entity shall be punished 10 % more of the punishment stipulated above if he is found to have
committed offence of ML/TF.
30(7a) A person who has a duty to prevent the commission of an offence while having reasonable grounds to know that an offence under this act may be committed or is
about to be committed may be imprisoned for one year if he allows for offence to be committed without fulfilling his responsibilities.
30(8) If any legal person or arrangement commits any offence of money laundering or terrorist financing, one or all following punishment shall be awarded on the basis
of the gravity of offence:
a) Fine up to five times of the fine stipulated above,
b) Prohibiting in public procurement by prescribing time limit
c) Prohibiting in subscribing goods or services by prescribing time limit
d) Cancel or evoke license or permission,
e) Liquidating legal person.
30(9) If any anyone, who violates any provision of this Act and rules Confiscation of property and
issued there under beyond sub-section (1) to (8) Fine equal to vale of property if value is apparent and if value not apparent, up to Rs. 100,000.00
Interest of innocent third parties must be protected
1) When paying compensation for damages in accordance with section 34B or when revoking a legal person or legal arrangement or when revoking the license of permit of
such person or legal arrangement, subject to the prevailing laws, it should be done in such a way that the financial interest of third parties are protected.
2) If the license or permit of a legal person or arrangement is revoked, further management of the assets and liabilities of such legal person or arrangement and necessary
actions after cancellation shall be done as per prevailing laws.
31 Not maintaining secrecy as prescribed in the act Imprisonment: 1 to 3 months or

CA MAHESH GYAWALI 369

 ELITE CA: CLASS NOTES ONLY: FOR CAP III & CA MEMBERSHIP EXAMINATION: ASSETS (MONEY) LAUNDERING PREVENTION ACT

Fine: up to Rs. 1,00,000.00 or

both.
32 Offence of concealing or destroying evidence related to acts Imprisonment: 1 month to 3 months or
Fine: Rs. 50,000.00 to 1,00,000.00 or
both in accordance with the degree of offence committed and
person assisting for committing such act shall be punished half of such punishment.
33 Creates obstacles in the proceedings of investigation and inquiry Imprisonment: up to 6 months or
Fine: up to Rs. 5,000.00 or
both based on the report of investigation Officer.
33A If it is proved that complaint was false and was filed just to harass
Fine: up to Rs. 10,000.00
others
Not to investigate or prosecute maliciously
1) The investigating or prosecuting officer shall not investigate or prosecute maliciously with the intention of ensnaring innocent persons, harming, harassing or protecting
real culprit.
2) Whoever commits or cause to commit an offence under sub section (1) shall be punished with imprisonment for a term up to 6 months or a fine of up to Rs. 1 lakh or
both and shall also be subject to departmental action as per prevailing laws relating to his service conditions.

29. Other Miscellaneous Provisions

a. Risk Assessment to be carried out (Section ….)
Ø Regulatory bodies, investigative bodies, reporting entities and other bodies related with this act shall prepare risk assessment on financial investment in
money laundering, terrorist acts or proliferation of weapons of mass destruction, risky technologies, new dimensions of risk, persons who commits such
acts, registration, permission as well as actions to be taken not less than once a year after identifying, evaluating and understanding the risks.
Ø Prior to making risk assessment, the reporting entity shall prepare and submit methodology and objectives of evaluation to regulatory body.
Ø The regulatory body may issue necessary instructions if the risk assessment report of the reporting entity is not found to be objective and effective.
Section 35A – 35 I
Particulars of the real owner must be submitted:
1) When a person invests capital in shares or any other way and establishes, registers or obtains a license for any company, cooperative organization, private
firm, partnership firm or any other type of legal entity, such company, cooperative organization, private firm, partnership firm, directly or indirectly or through
someone else's name or through a single, joint or group investment of fifteen percent or more shares or capital or in any other way as the real owner of the
same, the details of the owner should be submitted to the legal entity establishment, registration or licensing authority.
2) Until the details as per sub section (1) are not submitted, the relevant body will not register, establish or grant license to such legal person.
3) A company, cooperative organization, private firm, partnership firm or a legal person established by investing in any type of shares or any other way,
registered or licensed in accordance with sub-section (1) according to prevailing laws, may issue bearer shares or other related financial instruments.
However, if a foreign legal person issues a bearer or other related financial instrument according to the law of his country, he must give the information to
the relevant registration body. If there is a regulatory body of such a legal person, such information should also be given to that body.

CA MAHESH GYAWALI 370

 ELITE CA: CLASS NOTES ONLY: FOR CAP III & CA MEMBERSHIP EXAMINATION: ASSETS (MONEY) LAUNDERING PREVENTION ACT

4) A person who does not provide the information as per this section or who gives incorrect information regarding the real wealth, the amount of capital of the
person who does not give the information or gives false information, the regulatory body or, if there is no such body, the registering body will confiscate and
the real owner will be fined as Rs. 10 lakhs to 50 lakhs and information about such shall be given to the Financial Intelligence Unit and the concerned agency
for investigation or law enforcement.
5) The details of the above concerned company, cooperative organization, private firm, partnership firm or any legal person established by investing in shares
or other methods shall be updated regularly for five years from the date of termination of the status of real owner and provided to the government or reporting
entity and others as requested and it should be kept in such a way that it is available as specified.
6) The legal person registration body and the regulatory body shall keep the records related to the actual assets of such legal person for at least five years from
the date of termination of such legal person.
7) A company, co-operative society, private firm, partnership firm or a legal person established by any kind of share investment or capital investment in any
other way shall submit the details of the real owner according to this section to the body that registers such legal person or the licensing body within one year
from the date of commencement of this section.
The details of those who actually control or receive financial benefits must be kept:
1) Domestic or foreign persons operating legal arrangements, establishing and protecting such legal arrangements, natural persons who actually control such
legal arrangements, persons who receive high financial benefits from such legal arrangements or The details of the persons providing financial, accounting,
tax or investment management and agency services related to the category or such legal arrangement shall be updated and the integrated cost of such details
shall also be sent to the relevant regulatory body.
2) Conducting legal arrangements in accordance with sub-section (1) or natural person who has real control over such legal arrangement should also disclose the
related details when he becomes a customer to the reporting entity.
3) If there is any change in the details under this section, such legal person shall immediately inform the relevant regulatory body.
4) The regulatory body may impose a fine of up to Rs. 1 lakh on the legal arrangement or person who does not provide details, gives false details or does not
provide information to the reporting organization in accordance with this section.
5) The legal arrangements in operation at the time of commencement of this section shall submit the details according to this section to the regulatory body within
one year from the date of commencement of this section.
6) Records as per sub-section (1) shall be preserved for at least five years from the date such person is separated from involvement in legal arrangements.
Details should be kept:
1) Notwithstanding anything written elsewhere in the existing law the legal persons prescribed in section 35A shall keep their name, address, registration and
license, legal form and status, field of operation, regulatory laws and the identity of the official of the body, board of directors or other similar committees in
such a way that it is publicly available.
2) If there is someone as a real owner in the legal person mentioned in section 35A above, such legal person should also disclose the details of such real owner
when he becomes a client of the reporting entity.
3) The legal person who does not update the details as per sub-section (1) or does not disclose the details of the real owner as per sub-section (2) may be fined
by the regulatory body, if there is such body, or by the registering body if there is t no such body, from Rs. 5 lakhs to 50 lakhs.
The work of a non-profit organization registering or regulating body:

CA MAHESH GYAWALI 371

 ELITE CA: CLASS NOTES ONLY: FOR CAP III & CA MEMBERSHIP EXAMINATION: ASSETS (MONEY) LAUNDERING PREVENTION ACT

1) In accordance with the prevailing law, the body that registers a non-profit organization, grants affiliation or regulates such an organization shall do the following
in relation to prevention of financial investment in money laundering or terrorist acts or the proliferation of weapons of mass destruction:
a) To make necessary arrangements so that the property of the non-profit organization cannot be used for money laundering or acts of terrorism or in the
proliferation of weapons of mass destruction or in any other activity contrary to this Act,
b) To inform to Financial Information Unit about suspicious information on asset laundering or terrorist acts or proliferation of weapons of mass destruction,
c) To make the operation of the non-profit organization transparent and reliable, to create or implement the criteria necessary to identify the persons or groups
who receive benefits from such organizations,
d) To carry out or arrange for sectoral or institutional assessment of risk and its management,
e) Based on the risk of the operation relating to money laundering and financial investment in terrorist activities, the related organization shall bear the cost
to carry out or have an audit related to the effectiveness in accordance with this Act,
f) Inspection, supervision or monitoring based on risk.
2) According to the prevailing law, the agency that registers or gives affiliation to a non-profit organization or the regulatory body of such an organization may
give necessary instructions to the related non-profit organization regarding the operations as per sub-section (1).
3) It shall be the duty of the concerned organization to comply with the instructions given under sub-section (2).
4) Non-profit organizations that do not comply with the given instructions as per sub section (2) may be fined up to Rs. 5 lakhs for the first time and up to Rs. 10
lakhs for the first time, by the regulatory body of such an organization, and if not, by the organization that registers such an organization.
The compliance report must be submitted:
1) To ensure the appropriateness and effectiveness of the work to be carried out according to section 35F, Banks and financial institutions, insurance, casinos,
securities trading institutions, real estate commercial trading institutions, savings and loan cooperatives, the reporting entities or other entities prescribed by the
Government of Nepal by publishing a notice in the Nepal Gazette, shall submit a compliance report to the regulatory body by conducting verification on the
following matters every year by the listed compliance examiner:
a) regarding the necessary policy, institutional, technical and control structures and their suitability;
b) risk assessment in accordance with institutional scope, establishment of risk-based system and its effectiveness;
c) regarding implementation of annual action plan, reporting system and monitoring;
d) relating to identification and correction of weaknesses in risk assessment, policy, institutional, technical control, implementation, structure and
effectiveness;
e) Other related matters determined by the regulatory body.
2) The verification as per sub-section (1) shall be completed within six months from the end of the financial year and the report shall be submitted.
3) If the regulatory body is not satisfied with the report according to sub-section (2) or if it finds it necessary to conduct a detailed audit of any indicator
organization, it may at any time carry out verification of any indicator organization at the own expense of the concerned reporting entity.
Listing of Compliance Examiners:
1) A person who wants to work as a compliance examiner should submit an application to the Financial Information Unit for listing by attaching the specified
details and documents.
2) On receipt of the application as per sub-section (1), the financial information unit shall carry out the necessary investigation and if the applicant is found to be
qualified to work as a compliance examiner, the applicant should be listed and informed about it.
CA MAHESH GYAWALI 372
 ELITE CA: CLASS NOTES ONLY: FOR CAP III & CA MEMBERSHIP EXAMINATION: ASSETS (MONEY) LAUNDERING PREVENTION ACT

3) If the applicant cannot be listed in accordance with sub-section (1), the basis and reason thereof shall be informed to the applicant.
4) A person who is listed as per sub section (2) as a compliance examiner will not be allowed to work as a compliance examiner if he does not maintain the
qualifications as per Section 35. In such a case, the Financial Information Unit will remove his name from the list.
Eligibility of Compliance Examiner:
In order to be listed as a Compliance Examiner, the following qualifications should be met:
a) At least Master’s degree in prevention of money laundering or financial investment in terrorist activities, economic or financial management, management,
public accounting, finance management, law or economics or chartered accountancy degree and at least five years of experience in the field of prevention of
money laundering or investment in terrorist financing;
b) Received prescribed training in the field of prevention of money laundering or terrorist activities, and
c) Not disqualified as per section 35J.
Persons disqualified to be a Compliance Examiner:
1) The following persons shall be ineligible to be listed as Compliance Examiners a under section 35G
a) non-Nepalese citizen,
b) Bankrupted due to failure to pay debts within Nepal or abroad,
c) Blacklisted or defaulted in any transaction with banks or financial institutions or cooperatives within Nepal or abroad, or, five years has not elapsed from
the date of release from the blacklisted defaulter, if any,
d) Incumbent directors, officers and employees of the reporting entities, regulatory body or investigating body,
e) With financial interest in the reporting entity or a with ownership or personal interest in any type of contracts with the reporting entity,
But for the purposes of this section, holding less than one percent of shares or being a legal advisor or auditor shall not be deemed to be a personal or
financial interest.
f) Taxes not paid as per prevailing laws,
g) Convicted by the court for offenses related to money laundering, acts of terrorism or financial investment in proliferation of weapons of mass destruction
or other serious offenses or felony convictions,
h) Not completely served punishments ordered by court, if any or not paid fines required to be paid.
Work, duties and rights of the compliance examiner:
a) To obtain access to any particulars and documents of the reporting entities;
b) To obtain necessary information from any officer and employee of the reporting entities;
c) To follow the instructions or directions given by the financial information unit and the regulatory body in relation to the verification or to use the information
given in relation to the reporting entity while conducting the verification;
d) To use the duties, duties and rights assigned to the external auditor as per prevailing laws;
e) To submit the following report to the following bodies by the end of Poush every year:
i. Verification report: to the board of directors or head of the reporting entity
ii. Long firm reports: to the regulatory bodies,
iii. The relevant part of the threshold transactions reporting or suspicious transactions reporting: to the financial information unit.
f) To do other work as specified in connection with the inspection.
CA MAHESH GYAWALI 373
 ELITE CA: CLASS NOTES ONLY: FOR CAP III & CA MEMBERSHIP EXAMINATION: ASSETS (MONEY) LAUNDERING PREVENTION ACT

b. Property or Instrumentality to Be Released (Section ….)

Ø In case the property or instruments frozen proves to have no criminal origin, the Department if case has not been filed, or the court hearing the case if
the case has been filed, shall order the concerned authority which has frozen the property or instrumentality to release such property or instrumentality
and the concerned entity shall release such property or instrumentality upon such order.
c. Not to be Liable for Providing Information (Section ….)
Ø No staff or official of RE is supposed to have violated the professional or financial norms prescribed under other prevailing laws if such act has been
carried out in the course of discharging duties under this Act up to the level of performance mandated under this Act.
Ø No criminal, civil, disciplinary or administrative action or sanction shall be taken against a government agency, reporting entity or any of their official
or staff who in good faith submit reports or provide report, document, information, notice or records in accordance with the provisions of this Act, rules
and directives issued thereunder as a breach of secrecy provision under prevailing laws or contractual, administrative or regulatory liability.
d. Provisions Relating to Delivery of Notice (Section ….)
Ø A summon to be served to a foreign national in connection with an offense under this Act shall be served to the office or representative of such person
in Nepal, if any, and the notice so served shall be deemed to have been duly served.
Ø In case no office or representative as stipulated above exists, the notice shall be served to the main place of business of such person or his/her permanent
residential address or the mailing address if provided by him/her in course of business, through telex, tele-fax or other means of tele-communication or
through registered mail and the summon so served shall be deemed to have been duly served.
Ø It shall not bar to serve the summon to the foreign national as per the specific provision contained in the treaty which Nepal or the Government of Nepal
is a party to, if there is any.
e. Publication of Notice (Section ….)
In case a notice or summon cannot be served to any person as per this Act or any other prevailing law because the address of such a person is not identified
or because of any other reason and a report thereof is received, a notice containing a brief detail of the case shall be published in national level newspaper (in
English daily in case of foreign national) at least twice requiring the concerned person to appear within thirty days before investigating authority or
adjudicating authority where charge has been filed. If such notice is so published, it shall be deemed to be duly served to such person, notwithstanding
anything contained in prevailing laws.
f. Waiver of Penalty (Section ….)
Ø The investigation officer may present an accused person cooperating with the investigation and inquiry proceedings as his witness and may provide such
person with full or partial waiver of penalty in the case initiated under this Act.
Ø However, notwithstanding anything mentioned in this Act or in prevailing laws a law suit may be reregistered against such person if his cooperation
could not be corroborated by other evidence or if such accused makes statement before the adjudicating officer against the cooperation extended to the
investigation and inquiry officer.
g. Tipping Off and Related Provision (Section ….)
Ø No reporting entity, nor its official or staff shall disclose to its customer or to any other person that a following report, document, record, notice or
information concerning suspected money laundering or terrorist financing or predicate offence has been or is being submitted:-
a) Report of suspicious or threshold transaction,

CA MAHESH GYAWALI 374

 ELITE CA: CLASS NOTES ONLY: FOR CAP III & CA MEMBERSHIP EXAMINATION: ASSETS (MONEY) LAUNDERING PREVENTION ACT

b) Report of ongoing monitoring order pursuant to section 19A,

c) Any document, record or information provided to the Financial Information Unit, investigation officer or investigation authority pursuant to
prevailing laws or regulator,
d) Other details or information to be provided by reporting entity under this Act, rules and directives there under,
e) Individual introductory detail of an official or staff providing report, document, document, notice or information from (a) to (d).
Ø The Department, investigation officer or staff of the Department, investigation authority pursuant to prevailing laws shall not disclose any information
about the personal or institutional detail of the reporting institution, Financial Information Unit or their official or staff submitting a notice or report or
document, record or information that will identify or is likely to identify the RE or FIU and a person or official reporting or disseminating in relation to
the offence of money laundering, terrorist financing or predicate offence to anyone.
Ø No information shall be disclosed even in judicial proceedings that discloses or may disclose the introduction of official or staff or agency or institution
stipulated above. Following authority may impose following sanction at each event of violation of the provision of this section as follows:
a) Regulator to fine up to Rs. 1 lakh to the bank and financial institution or to casino,
b) Regulator to fine up to Rs. 2 lakhs to other designated non-financial business and profession,
c) Reporting entity to take departmental action to its official or staff under their own laws,
Ø Notwithstanding whatever written in the prevailing laws of service, concerned authority to take departmental action against the Chief, investigation
officer or staff of the Department or investigation officer pursuant to prevailing laws.
Ø Notwithstanding whatever written in the prevailing laws of service, departmental action to the head and staff of Financial Information Unit.
h. Confidentiality Provision (Section ….)
Ø Notwithstanding whatever written in prevailing laws, no document, record, detail, notice or information stated to be remained confidential under the
prevailing laws shall be confidential to the Department or Financial Information Unit for the performance of the duty under this Act.
Ø The concerned agency, official or person shall make available the document, record, detail, notice or information if they were asked by the Department
or Financial Information Unit specifying the objective.
i. Nominal Expenses may be allowed (Section ….)
Where all asset of an individual is frozen in course of investigation and inquiry of the offence of ML/TF or in course of the proceeding of the case and there
is no other means or source of livelihood for the concerned person or his/her dependents, the court may order the investigation officer to release the portion
of the asset required for basic condition of livelihood. The investigating officer shall act upon the order of the court.
j. Reward (Section ….)
Any person who files complaint or provides information and cooperates with the investigation or evidence collection shall be entitled to receive ten percent
of the claimant value or Rs. 1o lakhs, whichever is lower, if allegation is established. In case the persons are more than one, such amount shall be distributed
proportionately.

CA MAHESH GYAWALI 375