Section 7Q: Liability of Branch Office or Subsidiary Company

1) Under the same group, the indicator institution operating in Nepal or abroad, or the indicator institution establishing an institution with a branch office or majority ownership in a foreign country will have to comply with the provisions regarding the purification of assets and the prevention of financial investment in terrorist activities in accordance with this Act or the rules made under this Act or the guidelines issued or the instructions given.

Explanation: For this clause, “majority ownership” means ownership of fifty percent or more.

2) The indicting agency, pursuant to sub-section (1), shall formulate and implement a group policy and procedure, including the following matters, with respect to the prevention of the laundering of assets and the financing of terrorist acts;

(a) to exchange information on the identification and enrichment of clients and the management of risks related to the laundering of assets and the financing of terrorist activities,

(b) to exchange information in a group manner, including information on clients, transactions, accounts, audits, group management and programs related to the purification of assets and the prevention of financial investment in terrorist activities, as prescribed by the regulatory body, and

(c) adequate arrangements to protect the confidentiality and use of information exchanged pursuant to clauses (a) or (b).

3) If there is a difficulty in complying with the provisions of sub-sections (1) and (2) due to the laws of the country concerned, the indicting institution operating under the same group or establishing an institution with a branch office or majority ownership in a foreign country shall inform the regulatory body and such institution shall take additional measures to manage the risks related to asset laundering and financial investment in terrorist activities.

4) If it is found that the additional measures adopted pursuant to subsection (3) are not sufficient to manage the risks related to the laundering of assets and the financing of terrorist acts, the regulatory body may take action pursuant to section 7U against an institution that has opened a branch office or majority ownership abroad or cause such branch or institution to be closed.