KATHMANDU: Nepal has once again failed to secure removal from the Financial Action Task Force (FATF) grey list, with the global anti-money laundering watchdog deciding to keep the country under enhanced monitoring.
The decision was made during the FATF Plenary and Working Group meetings held in Paris, France, where member states reviewed progress made by countries identified as having strategic deficiencies in combating money laundering and terrorist financing.
The FATF, an intergovernmental body established to combat money laundering and the financing of terrorism, classifies countries with serious deficiencies under either a “grey list” or a “black list” based on their compliance with international standards.
Countries are assessed against 11 effectiveness indicators and 40 technical recommendations that measure the strength of their anti-money laundering and counter-terrorist financing frameworks.
Nepal was previously placed on the FATF grey list in 2008 and was removed in 2014 after implementing a series of legal and policy reforms.
The country had also come close to being blacklisted in 2012. At the time, the International Monetary Fund supported Nepal’s reform efforts and pledged assistance to strengthen its regulatory framework, helping the country avoid blacklisting.
Following recommendations from the IMF and international partners, Nepal introduced several policy and legal reforms that eventually led to its removal from the grey list in 2014.
However, efforts to fully address the remaining concerns have not yielded the desired results, and Nepal continues to face scrutiny from the global watchdog.
The FATF has advised Nepal to strengthen law enforcement measures, improve financial monitoring systems, and enhance oversight of high-risk sectors to meet international standards and qualify for removal from the grey list in future assessments.
Remaining on the grey list could affect investor confidence and increase compliance requirements for international financial transactions involving Nepal.
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