KATHMANDU: Finance Minister Rameshore Prasad Khanal has called on all sectors and state agencies to act responsibly and in coordination to remove Nepal from the Financial Action Task Force (FATF) grey list at the earliest.
Speaking at the Asset Laundering Prevention National Day 2082 program held on Thursday under the theme “Asset Laundering Prevention: Transparency and Financial Good Governance”, Minister Khanal stressed the need to complete all required reforms ahead of the stipulated timeline and ensure Nepal’s exit from the grey list within the next year.
He clarified that the ongoing reforms were not imposed on Nepal by international pressure, but were initiated to strengthen domestic institutions, curb corruption, enhance transparency, and reinforce the national economy. Khanal also said that asset laundering reforms would not create unnecessary financial burdens or additional costs.
Noting that weak confidence in Nepal’s financial system is one reason foreign investment has not met expectations, the finance minister emphasized that reforms are essential to improving the investment climate. He added that FATF and the Asia Pacific Group (APG) have outlined reform measures to be completed by January 2027, stating that while some progress has been made over the past year, the remaining reforms must be completed within the next year, with expectations to conclude by the end of 2026.
Khanal underlined the need to strengthen investigation, prosecution, and enforcement mechanisms related to asset laundering, calling for evidence-based cases and immediate confiscation of illicit assets. Expressing concerns over transparency issues not only in the financial market but also in the capital market, he said that the provision requiring commercial transactions above Rs 500,000 to be conducted through the banking system—implemented from Magh 1—would not be relaxed despite concerns raised by the private sector.
Calls for effective implementation
Law, Justice and Parliamentary Affairs Minister Anil Kumar Sinha said Nepal must more effectively address global legal, policy, and institutional challenges to ensure financial integrity and good governance. He described the current situation not only as a challenge but also as an opportunity for self-assessment and further reform.
Sinha said legal and institutional reforms are underway, but the focus must now shift toward effective implementation. He added that an action plan has been finalized to exit the grey list by Magh 2083 and stressed that all concerned agencies must fulfill their responsibilities.
Attorney General Sabita Bhandari said Nepal has made a clear international policy commitment to prevent asset laundering and is giving special attention to drafting and implementing relevant laws. She emphasized the need to adopt risk-based monitoring and regulatory systems in line with FATF standards, noting that traditional investigation methods alone are no longer sufficient.
Economic risks of remaining on grey list
Nepal Rastra Bank Deputy Governor Bam Bahadur Mishra warned that remaining on the grey list could lead international financial institutions to tighten transactions with Nepal, potentially causing serious social and economic consequences. He said this could result in stricter international travel scrutiny for Nepali citizens, higher remittance costs, and increased expenses in international transactions.
Mishra added that grey listing reflects weaknesses in Nepal’s control over financial crimes, making comprehensive reforms unavoidable.
Asset Laundering Investigation Department Director General Gajendra Kumar Thakur said asset laundering prevention is not the responsibility of a single agency but requires collective efforts from all institutions connected to the economy. He said more than 50 government bodies and over 80,000 reporting institutions are involved in the process.
Thakur warned that three to five percent of Nepal’s GDP could be linked to terrorist financing and illicit transactions. He cited challenges such as a cash-based economy, a large informal sector, weak regulatory enforcement, lack of skilled human resources and technology, and poor implementation despite existing laws.
He identified real estate and gold trading as high-risk sectors for asset laundering and stressed the need for risk-based systems, legal reforms, stronger inter-agency coordination, expanded international cooperation, control of technology-based crimes, integrated information-sharing systems, regulation of the digital economy, and stricter control over cybercrime.
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