Government Initiatives to Remove Nepal from the FATF Grey List: To improve financial transparency and combat illicit activities, the Nepalese government is implementing a range of policy measures. These include revising existing legislation, reinforcing regulatory frameworks, and boosting collaboration with international watchdogs. Key reforms focus on tightening anti-money laundering (AML) and counter-terrorism financing (CFT) regulations, ensuring rigorous financial oversight, and closing loopholes that enable financial misconduct.
Nepal Rastra Bank’s Efforts to Address FATF’s Concerns: Nepal Rastra Bank (NRB), the nation’s central financial authority, has taken decisive steps to align with FATF recommendations. It has introduced stricter compliance policies, enhanced financial supervision, and enforced stringent due diligence protocols for banking and financial institutions. Additionally, NRB has implemented robust Know Your Customer (KYC) practices and risk-based monitoring systems to mitigate vulnerabilities and curb illicit financial flows.
Political Uncertainty and Governance Challenges (A Key Weakness in Nepal’s Financial System): Nepal’s chronic political instability and weak governance have exacerbated its financial risks. Frequent shifts in leadership, institutional inefficiencies, and a lack of political commitment have obstructed meaningful financial reforms. Widespread corruption, bureaucratic inertia, and poor enforcement of AML and CFT regulations have left gaps that facilitate financial crimes. Strengthening governance, fostering political stability, and prioritising financial integrity are essential steps for Nepal to fortify its economic framework.
