Nepal Insurance Authority Tightens Oversight to Curb Black Money in Insurance Sector

Kathmandu – The Nepal Insurance Authority has intensified its efforts to curb the flow of black money into the insurance sector, particularly through single premium and high-value insurance policies. In response to growing concerns, the Authority is preparing to establish a dedicated branch to monitor potential money laundering activities.

Madan Dahal, Chairman of the Insurance Authority, revealed that steps are being taken to enhance compliance by requiring insurance companies to establish mandatory money laundering departments. Compliance officers at these companies have been instructed to remain vigilant against suspicious transactions and investments.

Under the Money Laundering Act 2064, insurance companies must report any dubious transactions to the regulatory body. Furthermore, firms have been directed to update and submit details of auditors, underwriters, agents, and other service providers annually.

Authorities suspect illegal funds are being funneled into the sector, particularly through single premium payment policies. The Authority has already issued warnings to ten companies, including two reinsurance firms, for failing to comply with directives in the current fiscal year. Non-compliance could lead to penalties, including financial fines and restrictions on business activities, from the upcoming fiscal year.