KATHMANDU, JUNE 22

Nepal has remained on the Financial Action Task Force's (FATF) list of jurisdictions under increased monitoring, commonly known as the "grey list", with the global anti-money laundering watchdog urging the country to expedite reforms to address strategic deficiencies in its anti-money laundering and counter-terrorism financing regime.

In its latest update released from Paris on Friday, the FATF said Nepal has taken steps to improve its anti-money laundering and counter-terrorism financing (AML/CFT) framework since making a high-level political commitment in February 2025 to work with the FATF and the Asia/Pacific Group on Money Laundering (APG).

The FATF acknowledged Nepal's progress in addressing remaining technical compliance deficiencies in its targeted financial sanctions regime related to terrorism financing and proliferation financing.

However, it said Nepal still needs to implement its action plan by improving its understanding of money laundering and terrorist financing risks, strengthening risk-based supervision of commercial banks, higher-risk cooperatives, casinos, dealers in precious metals and stones, and the real estate sector.

The global watchdog also called on Nepal to demonstrate effective action against illegal money transfer operators and hundi networks, enhance the capacity and coordination of competent authorities to conduct money laundering investigations, increase investigations and prosecutions, and strengthen measures to identify, freeze, seize and confiscate proceeds of crime.

The FATF clarified that countries on the grey list are under increased monitoring and have committed to address identified deficiencies within agreed timelines. It does not call for enhanced due diligence measures or the disruption of remittances and legitimate financial flows to such jurisdictions.

Nepal was previously placed on the FATF grey list in 2008 and was removed from it in 2014 after implementing policy and regulatory reforms. The country had also come close to being blacklisted in 2012 but avoided the move after committing to reforms with support from the International Monetary Fund (IMF).

Headquartered in Paris, the FATF is a 40-member intergovernmental body that sets international standards to combat money laundering, terrorist financing and proliferation financing. More than 200 countries and jurisdictions have committed to implementing its standards.