KATHMANDU, Sept 9: Nepal’s vulnerability to money laundering has been assessed at a ‘medium-high’ level, with weak enforcement of laws and policy frameworks undermining progress despite the existence of adequate legal provisions.
A government report published on Wednesday revealed that systemic weaknesses and high criminal threats continue to place the country at significant risk.
According to the report titled Nepal’s National Risk Assessment on Money Laundering, Terrorist Financing and Proliferation Financing-2026, the risk of terrorist financing remains at a medium-low level, while the risk of financing the proliferation of weapons of mass destruction is considered low.
The report prepared by the Department of Money Laundering Investigation (DoMLI) further noted that Nepal has made notable improvements in its legal framework in recent years, but the inability to effectively implement these provisions in practice has emerged as a major challenge.
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While Nepal has strengthened laws and achieved progress in technical compliance during international evaluations, the report highlights that enforcement—particularly in investigation, prosecution, asset seizure, and institutional coordination—remains weaker than legislation itself.
The national risk assessment has identified policy and systemic corruption, bribery, tax evasion, customs fraud, trade-based money laundering, cooperative fraud, cyber-enabled financial crimes, illegal hundi transactions, and misuse of virtual assets as the primary predicate offences fueling money laundering in Nepal.
The misuse of legal persons and company structures, along with organized financial crimes, is also flagged as a growing concern. The report notes a shift in criminal activity from small, low-value offences to complex, organized financial crimes committed through companies and other legal structures.
Nepal’s banking system has been identified as the main medium for laundering illicit funds, with most investigations linked to banking transactions. The sector has been placed at medium-high risk, particularly in the stages of depositing funds and layering transactions.
The cooperative sector has also been categorized as medium-high risk, with large sums lost to financial fraud. Other sensitive sectors include the stock market, fintech, remittances and hundi, casinos, real estate, and transactions involving precious metals and stones.
Real estate is highlighted as a preferred channel for converting illicit proceeds into legitimate assets, while transactions in precious metals and stones face challenges in verifying sources of funds and authenticity.
Virtual assets and related service providers have been placed at high risk, despite trading in such assets being prohibited in Nepal. The report warns of risks arising from their misuse, underscoring the evolving nature of financial crime in the country.
