Himal Press 
KATHMANDU: The Financial Action Task Force (FATF) has kept Nepal on its gray list, or jurisdictions under increased monitoring.
The FATF Plenary that concluded in Paris on Friday evening included Nepal and Laos in the gray list after identifying deficiencies in their plans and policies to combat money laundering and terror financing.
When the FATF places a jurisdiction under increased monitoring, it means the country has committed to resolving swiftly the identified strategic deficiencies within the agreed timeframes and is subject to increased monitoring.
“In February 2023, Nepal made a high-level political commitment to work with the FATF and Asia Pacific Group (APG) to strengthen the effectiveness of its anti-money laundering and combating the financing of terrorism (AML/CFT) regime,” the FATF said. “Since the adoption of its mutual evaluation report in August 2023, Nepal has made progress on some of the actions recommended in the report, including streamlining MLA requests and increasing the capabilities of the FIU.”
The FATF has also listed policy reforms that Nepal must implement to escape from the gray list. These include improving its understanding of key money laundering and terror financing risks, improving risk-based supervision of commercial banks, higher-risk cooperatives, casinos, and dealers in precious metals and stones (DPMS), and the real estate sector. Likewise, it has also asked Nepal to demonstrate the identification and sanctioning of hundi providers without hindering financial inclusion; increase the capacity and coordination of competent authorities to conduct money laundering investigations; and demonstrate an increase in money laundering prosecutions.
Nepal will also have to demonstrate measures to identify, trace, restrain, seize, and, where applicable, confiscate proceeds and instrumentalities of crime in line with the risk profile; and address technical compliance deficiencies in its targeted financial sanctions regime for terror financing and proliferation financing.
Nepal was previously on the gray list from 2008 to 2014. The country was removed from the list after making necessary legal and institutional structural arrangements.
