NIA Instructs Insurers to Freeze Sanctioned Individuals’ Assets

The government has directed insurance companies and cooperatives not to engage in transactions with individuals or entities listed on the sanctions lists of the United Nations or the Ministry of Home Affairs. The Nepal Insurance Authority (NIA), which regulates insurance companies, and the Department of Cooperative, which oversees cooperatives, have issued separate guidelines to implement targeted financial sanctions.

Under the NIA’s instructions, insurance companies must obtain the UN’s sanctions list via email and register on the Ministry of Home Affairs’ website to receive notifications. Companies are required to verify daily whether existing clients, new clients, beneficiaries, or any parties involved in insurance contracts appear on the sanctions lists. If a match is found, the relevant insurance policy must be frozen and reported to the NIA and the Financial Information Unit (FIU) within three days.

The authority also stipulates that the assets of any listed individual or entity must be immediately frozen. This includes financial resources directly or indirectly owned or controlled by the sanctioned party, any additional funds generated from these resources, and any assets controlled by persons or organizations acting on their behalf.

Interest, profits, bonuses, or other earnings on frozen accounts, as well as payments under contracts, agreements, or obligations established prior to the freezing order, must also be frozen. Any financial resource suspected to be under the direct or indirect control of a sanctioned person must be frozen immediately.

There is no fixed time limit for asset freezes. According to the directive, assets must remain frozen until the individual, group, or entity is removed from the domestic terrorist list or UN sanctions list, or the relevant authority or UN Security Council revokes the freezing order.

The NIA has warned that insurance companies failing to comply with these guidelines will face penalties under the Anti-Money Laundering Act, ranging from warnings to license revocation. Fines may range from Rs 1 million to Rs 50 million.

The guidelines follow recommendations by the Financial Action Task Force (FATF) after Nepal was placed on the grey list last year. FATF advised using the UN consolidated sanctions list and the national terrorist list to control investments in terrorism and proliferation of weapons of mass destruction. The government has strengthened the enforcement of targeted financial sanctions to exit the grey list.

Regulatory directives issued through the insurance and cooperative sectors instruct financial institutions to halt transactions with listed individuals or organizations.

Earlier, the Nepal Rastra Bank and the Securities Board of Nepal had issued similar guidelines, requiring financial institutions to regularly update and freeze assets of sanctioned parties.

Experts say that despite legal amendments to the Anti-Money Laundering Act and rules allowing freezing and confiscation of assets of sanctioned individuals, implementation has been slow.

Shyam Krishna Dahal, a former NRB director and anti-money laundering expert, said that while the legal framework exists, weaknesses remain in information sharing and dissemination of the sanctions lists.

“The government has reformed laws to allow freezing and confiscation of assets of sanctioned persons,” he said. “However, delays in publishing the lists and exchanging information could weaken enforcement.”

The guidelines also apply to cooperatives. If a member of a cooperative matches a sanctioned individual, all financial transactions must be immediately suspended, and the FIU must be informed within three days.