Financial Crime World

Nepal Unveils Five-Year Strategy to Prevent Financial Crimes

Strengthening Anti-Money Laundering Compliance in Nepal

Kathmandu: The Nepalese government has prepared a comprehensive five-year strategy to combat financial crimes, aimed at improving anti-money laundering compliance, controlling corruption, revenue evasion, and criminal activities such as organized crime and terrorist financing.

National Strategy and Action Plan

The National Strategy and Action Plan on the Prevention of Financial Investments in Money Laundering and Terrorist Activities was approved by the Money Laundering Steering Committee last week. The plan addresses transactions through the Hundi system, cryptocurrency, and other fraudulent activities.

Key Objectives

  • Improve anti-money laundering compliance
  • Control corruption and revenue evasion
  • Combat criminal activities such as organized crime and terrorist financing

Implementation Timeline

The strategy is set to be implemented from mid-July, marking the beginning of the new fiscal year. Nepal has been on the watch list of countries under scrutiny by the Financial Action Task Force (FATF) since its removal from the gray list in 2014.

Background

Nepal was previously listed on the gray list for failing to implement FATF’s recommendations. Following a recent mutual evaluation conducted by the Asia Pacific Group on Money Laundering (APG), Nepal has undertaken significant technical reforms, including legal, policy, and structural changes aimed at improving its anti-money laundering efforts.

Challenges Ahead

Failure to improve its current situation could result in Nepal being placed on the gray list, which would significantly damage its international credit reputation. This could lead to:

  • Reduction in foreign aid, loans, and investments
  • Increased difficulty with international banking transactions
  • Decrease in remittance flows
  • Proliferation of the informal Hundi money transfer system
  • Severe economic crisis

Next Steps


The APG delegation is scheduled to visit Nepal again in October for the next phase of their assessment. Both FATF and APG have advised Nepal to more effectively implement its existing legal framework and make necessary adjustments to enhance its anti-money laundering measures.

Conclusion

The new strategy aims to strengthen Nepal’s anti-money laundering compliance and prevent financial crimes. The government must now ensure effective implementation to avoid being placed on the gray list and maintain a positive international reputation.