Nepal remains on the grey list of property laundering, more pressure to implement reform action plan

Kathmandu. Nepal has been placed on the ‘grey list’ of the Financial Action Task Force (FATF) for failing to complete necessary reforms in the anti-money laundering and terrorism financing control system. The plenary meeting of the FATF held in Paris, France from 17 to 19 June 2026 decided to remove Nepal from the grey list.

The FATF acknowledged that Nepal had taken initial steps to correct some technical weaknesses related to targeted financial sanctions, but noted that significant reform remains to be done.

Nepal was placed on the grey list in February 2025, after which it made high-level political commitments to strengthen its system in collaboration with the FATF and the Asia-Pacific Group on Money Laundering. However, according to the FATF, Nepal has not been able to fully implement the action plan prepared to remove its strategic weaknesses.

Nepal needs to strengthen its understanding of risks related to money laundering and terrorism financing, and make risk-based supervision effective in commercial banks, high-risk cooperatives, casinos, jewellery, and real estate.

Similarly, illegal hundi and money value transfer service providers should be identified and taken to book, but work should be done in a way that does not affect financial inclusion.

Likewise, the FATF has also pointed out the need to increase the capacity and coordination of the bodies concerned in the investigation of money laundering, increase the number of investigations and case registration, as well as implement effective measures for identification, prevention, confiscation and control of the property acquired through crime.

Although Nepal has made some technical improvements, long-term and result-oriented implementation is still needed, according to the FATF. With this decision, Nepal is now under more pressure to effectively implement its action plan, only after which there is a possibility of getting out of the grey list.