Exercising powers granted under Clause 45 of the Payment and Settlement Act, 2075, the central bank issued a circular on June 2 introducing tight compliance checks aimed at eliminating illicit financial activities and criminal involvement in the fintech sector.
The new provisions target ultimate beneficial owners (UBOs)—the real owners who directly or indirectly own, control, or participate in the management and operations of payment service providers (PSPs) and payment system operators (PSOs).
The New Reporting Thresholds
Under the amended directive, individuals or institutions must submit highly comprehensive background disclosures to the NRB when crossing any of the following triggers:
- Equity/Capital Investment: Purchasing shares or capital exceeding 5% of the paid-up capital OR an absolute value of Rs. 5,00,000.
- Leadership Appointments: Being appointed or nominated as a Director or to a Senior Management position.
- Ultimate Beneficial Ownership (UBO): Holding a real or beneficial ownership stake exceeding 5% OR Rs. 25,000,000 in shares or capital.
Mandatory Self-Declaration & Disclosure Checklist
To satisfy the new regulatory framework, the concerned individual or institution must provide a written, signed self-declaration detailing the following parameters:
- Legal & Criminal Background
- A declaration stating whether they have ever been involved in any criminal activities inside Nepal or abroad.
- Disclosures of any active, pending lawsuits, or ongoing regulatory investigations.
- Declaration of any outstanding revenue defaults or government dues.
- Current credit status, specifically confirming whether they are listed on any loan blacklist.
- Financial Conduct & Conflict of Interest
- Identification of potential conflicts of interest within the financial sector.
- For Nepali citizens, a strict declaration of whether they hold any assets or beneficial ownership interests outside of Nepal.
- Professional Profile & Affiliations
- Complete details of immediate family members and other associated beneficiaries.
- A comprehensive track record of past work experience, professional responsibilities, historical rewards, or institutional punishments.
Retrospective Enforcement
The central bank has left no loopholes for existing players. The NRB explicitly clarified that these background checks will be applied retrospectively. Payment institutions are required to collect these exact disclosures from individuals who are already holding these positions or shareholding thresholds and submit them directly to the Payments System Department for vetting.
