NIA Sets Up Dedicated Department to Combat Money Laundering in Insurance Sector

Kathmandu – In a landmark move to enhance financial integrity, the Nepal Insurance Authority (NIA) has established a separate Money Laundering Department to intensify surveillance of money laundering activities within the insurance sector. The new department is expected to play a pivotal role in ensuring compliance with financial regulations and mitigating risks related to illicit transactions.

The department has been formed under the legal framework of the Prevention of Money Laundering Act, 2064 (2007) and the Insurance Act, 2079 (2007), granting it the authority to enforce stringent monitoring measures. Acting Chairman of the Nepal Insurance Authority, Madan Dahal, revealed that the department has been deliberately segregated from the Regulatory Department to sharpen its focus on combating financial crimes.

The newly established department will focus on implementing directives targeting money laundering and terrorist financing, emphasizing the importance of customer identification, tracking suspicious transactions, and risk assessment. Insurance companies have been instructed to appoint compliance officers who will be responsible for preparing detailed risk assessment reports and ensuring continuous monitoring of high-value and suspicious transactions.

Furthermore, Chairman Dahal disclosed that discussions have been held with compliance officers of insurance companies to emphasize the adoption of additional safeguards. These include enhanced customer verification processes, identification of politically exposed persons and wealthy clients, and rigorous scrutiny of significant transactions.

Failure to comply with the regulations could result in hefty fines and, in severe cases, the liquidation of the institution. The Authority has made it clear that these measures are non-negotiable and vital for maintaining transparency and trust within the industry.