Cooperatives Ordered Not to Conduct Business Transactions Through Personal Bank Accounts

The Department of Cooperatives has issued a strict directive instructing cooperatives across the country not to conduct or allow any business transactions through personal bank accounts. The department stated that this measure aims to enhance financial transparency and curb money laundering and tax evasion within the cooperative sector.

In the circular issued on Tuesday, the department clarified that cooperatives are defined as financial institutions under the Asset (Money) Laundering Prevention Act, 2064. Therefore, in accordance with Rule 10 of the Asset Laundering Prevention Regulations, 2081, and Section 81(Kha) of the Income Tax Act, 2058, cooperatives must ensure that no commercial transactions are carried out using personal accounts. If such transactions are detected, cooperatives are required to report them to the Financial Information Unit (FIU) without delay.

Rule 10 of the Money Laundering Prevention Regulations states that if any legal entity or institution is found paying or receiving business-related funds through someone’s personal account, or if a personal savings account is used as a medium for business transactions (except where allowed by law), the concerned financial institution must report the incident to both the Financial Information Unit and the Internal Revenue Department. This provision is intended to bring cooperative-related financial activities fully under regulatory oversight.

Similarly, Section 81(Kha) of the Income Tax Act, 2058 clearly prohibits individuals from depositing any business-related income—whether received through cash, cheque, QR code, or any digital payment method—into personal bank accounts. Such income must be deposited only into bank accounts registered in the name of the business or institution, the department reiterated.

Amid growing concerns over misuse of cooperative funds, irregular transactions, and the rising risk of personal accounts being used for money laundering, the department’s directive is seen as a significant step toward strengthening regulatory compliance. The department also cautioned cooperatives to ensure that no business-related payments or receipts pass through personal accounts, emphasizing strict enforcement of the law.