SEBON punishes Agrawal and Shree Hari securities

Kathmandu, Jan. 9: The Securities Board of Nepal (SEBON) has punished two brokerage firms – Agrawal Securities and Shree Hari Securities – for working against the anti-money laundering provisions.

The two companies were fined Rs. 1 million each for transacting fake share certificates of Chilime, National, and Sanima Mai Hydropower companies.

As per the Anti-Money Laundering Act 2008 and Anti-Money Laundering and Anti-Terrorism Financing Directives, 2012, share brokerage firms must maintain clear personal and financial details of the buyers and sellers of the securities.

“But Agrawal and Shree Hari did not follow the legal provisions and maintain the personal profile of the customers. They also had not developed and implemented internal policy and procedures on maintaining customer information and identification, checking the misuse of technology, and other areas as guided by the AML Act,” said SEBON.

According to SEBON spokesperson Niraj Giri, this is the first case in the Nepali capital market in which brokerage firms have been prosecuted as per the anti-money laundering laws and directives.

He said that the board had received complaints about the transaction of fake shares of the three hydropower companies some four years ago. An investigation officer of the SEBON carried out inquiry into the case and found Agrawal and Shree Hari guilty of the case.

The board had also filed a case against them in the District Court, Kathmandu in August 2017.

 The firms were also fined an additional Rs. 100,000 each for not failing to keep the customer records as per the Securities Businessperson (Stock Broker, Securities Dealer and Market Maker) Regulations 2008, and submitting fake reports and information to the SEBON.

Similarly, Siprabi Securities has also been punished with a fine of Rs. 50,000 for not keeping complete information of its customers. But the firm was excepted from other penalties as it had informed SEBON about such fake transactions in the beginning and saved the market from additional losses.