The Securities Board of Nepal (Sebon) has planned to keep tabs on individual stock investors who make cumulative transactions of more than Rs1 million daily in a bid to boost money laundering controls.

Brokers presently do not have to report share transactions of less than Rs1 million at a time to the authorities. This allows an investor to make multiple transactions without attracting official attention.

After the government enforced the Anti-Money Laundering Act, individual investors have to report transactions of more than Rs1 million to the Financial Information Unit (FIU) of Nepal Rastra Bank. They are also required to reveal the source of income.

According to Sebon officials, many investors have been splitting their share transactions to stay under the Rs1 million limit and get around the requirement.

“We are formulating a new directive making it mandatory for brokers to report to the FIU if the cumulative transactions of an individual crosses Rs1 million daily,” they said.  

Spokesperson for Sebon Niraj Giri said they had planned to enforce the directive in accordance with the Anti-Money Laundering

Act and related regulation which the government is formulating to control money laundering.

“It is expected to help keep track of investors suspected of escaping the government rule by splitting their transactions into smaller amounts,” he said.

After the new directive is enforced, brokering companies will be required to report even small deals that total over Rs1 million to the FIU.

Giri said brokers would also have to send a copy of the transaction to Sebon on a daily basis. “Sebon has moved to introduce the directive amid rising suspicious transactions and black money in the capital market,” he said.

The Nepal Stock Exchange index (Nepse) has jumped sharply in a change from the lacklustre performance of the last few days. Similarly, the daily turnover has reached almost Rs2 billion.

Earlier, Deputy Prime Minister and Finance Minister Krishna Bahadur Mahara had dissolved a probe committee that Sebon had formed to study the possible inflow of black money into the secondary market.

The newly formed government ordered Sebon to abandon its investigation after the Nepse went into free-fall.