Kathmandu, Oct 25: The Financial Action Task Force (FATF) has decided to keep Nepal under its “increased monitoring list,” commonly known as the grey list, citing ongoing strategic deficiencies in combating money laundering and terrorism financing.
In a statement issued after its fourth plenary meeting concluded on Friday, the FATF said that although Nepal has made continued efforts to strengthen its systems, the progress has not been sufficient to secure liberation from the grey list. The task force emphasized the need for Nepal to undertake further reforms and demonstrate stronger implementation of its commitments.
Nepal had made a high-level political commitment to the FATF and the Asia Pacific Group (APG) in February 2025 to enhance its Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) framework. While some progress has been observed, the FATF has urged Nepal to initiate strategic reforms and enforce a clear action plan to meet its commitments effectively, the Statement reads.
The FATF advised Nepal to deepen its understanding of money laundering and terrorist financing (ML/TF) risks, strengthen risk-based supervision of commercial banks, high-risk cooperatives, casinos, dealers in precious metals and stones (DPMS), and the real estate sector, and ensure the identification and sanctioning of significant illegal money/value transfer service (MVTS) or hundi operators while maintaining financial inclusion.
Additionally, Nepal has been asked to enhance the capacity and coordination of relevant authorities to conduct money laundering investigations, increase the number of investigations and prosecutions, and demonstrate effective measures to identify, trace, restrain, seize, and confiscate criminal proceeds and assets in line with its risk profile.
The FATF further highlighted the need for Nepal to address technical compliance deficiencies in its targeted financial sanctions regime related to terrorism financing (TF) and proliferation financing (PF).
