The annual report of the National Bank's 'FIU Nepal' says that last year, there was an increase in the reporting of suspicious transactions, mainly in areas such as fraud/forged documents, terrorist activities and sabotage, corruption and bribery, money laundering through trade, and digital currencies.
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A government report has indicated that reports (complaints) of activities related to financial crimes, including money laundering, have increased by more than 30 percent in Nepal. The annual report for the fiscal year 2081/82, released by the National Bank's 'Financial Intelligence Unit-FIU Nepal' on Tuesday, showed a 30.34 percent increase in suspicious transaction complaints in Nepal.
The report has revealed that the number of suspicious transaction complaints has increased due to the efforts made to get out of the ‘grey list’ after being placed on the Financial Action Task Force (FATF), an international organization that monitors money laundering and terrorist activities.
According to the report, 9,565 suspicious transaction (Suspicious Transaction Reporting – STR and Suspicious Activity Reporting – SAR) complaints were received in the fiscal year 2081/82. This is an increase of 30.34 percent compared to the previous fiscal year. The number of suspicious transaction complaints in the fiscal year 2080/81 was 7,338 and in 2079/80 was 5,335.
Of the suspicious transaction complaints received by the FIU last year, the highest number of 7,333 (76 percent) were received from commercial banks and 708 (8 percent) from development banks. Of the remaining suspicious transaction complaints, 355 were from finance companies, 491 from securities brokers, 252 from payment system operators, 244 from insurance companies, 100 from remittance companies, 36 from cooperatives, 2 from casinos, and one each from microfinance and other government agencies.
Financial Information Unit Chief Vasudev Bhattarai said that the number of suspicious transaction complaints increased last year compared to the previous fiscal year due to three main reasons. In the first one year, the number of reporting institutions (institutions reporting suspicious transactions) has doubled. Second, there has been an increase in targeted orientation and awareness for reporting institutions, regulatory agencies, law enforcement agencies and other stakeholders. Third, the capacity of reporting institutions has been enhanced.
‘The Financial Information Unit has worked on preparing guidelines on information security, confidentiality and use in the fiscal year 2081/82, issuing and updating the GOAML system operating guidelines, updating the guidelines on suspicious transactions and border transactions,’ Bhattarai said, ‘Complaints of suspicious transactions have gradually started coming from sectors such as casinos, cooperatives, microfinance, real estate entrepreneurs, and securities brokers.’
Although the unit has also received complaints of suspicious transactions from insurance companies, securities trading companies and others, the report shows that very few complaints have been received from the cooperatives, microfinance and other sectors. In 2081/82, 36 complaints were received from the troubled cooperative sector. Only 8 complaints were received from cooperatives last year.
The number of Threshold Transaction Reports (TTRs) that the concerned bodies are required to report to the FIU has also increased last year. Accordingly, 2,236,067 TTRs were received in the last fiscal year. The previous year, this number was 1,697,712.
The FIU report states that complaints related to suspicious transactions have increased in recent years due to the increase in overall economic activity, improvements in the complaint mechanism, increase in regulatory capacity and scope, and the implementation of the GoAML, a system that allows complaints to be filed online.
Of the complaints received in the last fiscal year, 3,482 were related to money laundering, 2,426 were related to crimes including tax evasion, 2,64 were related to currency banking and finance, 1,355 were related to fraud, 935 were related to farm and partnership businesses, 573 were related to casinos and gambling, 66 were related to corruption, and the rest were related to various other sectors, the report states.
Compared to the previous year, there has been a significant increase in suspicious transaction complaints in the last fiscal year from areas such as fraud/forged documents, terrorist activities and sabotage, corruption and bribery, money laundering through trade, and digital currency.
Although financial crime activities will naturally increase with the increase in economic transactions, the FIU says that it cannot be said that financial transactions have increased based on the increase in the number of complaints received. An official of the National Bank said that as economic activities increase, crimes or suspicions about them will also naturally increase.
‘Incidents of financial crimes in society have not only increased recently, they have been happening since the past, and now, due to increased literacy in the concerned bodies, complaints of such crimes may have increased,’ the official said. The law stipulates that the source of all transactions exceeding 1 million should be shown. Therefore, if there is suspicion of financial crime in such transactions, a complaint should be filed with the Financial Intelligence Unit. Such a complaint is called a TTR.
The FIU studies and evaluates the complaints received and sends them to the Nepal Police, the Money Laundering Investigation Department, the Revenue Investigation Department and other agencies for further action if necessary, and further action is taken by those agencies.
‘The number of suspicious transactions and activities received has increased by 39.57 percent from the previous year, reaching 2,282 in the fiscal year 2081/82. Out of which, 945 reports have been forwarded to law enforcement/investigative agencies for further investigation and to regulatory agencies for regulatory action,’ the report said.
Nepal has been on the ‘grey list’ for the last 10 months due to the political leadership’s neglect of money laundering prevention investigations and law enforcement. The FATF decided to place Nepal on the ‘grey list’ on 9 Falgun 2081. Nepal has been given a two-year deadline to come out of the list. Countries included in this list will be monitored more closely and those countries should make an action plan with a commitment to improve within the specified time.
Nepal had made a high-level political commitment to strengthen the effectiveness of its anti-money laundering regime with the FATF and the Asia Pacific Group (APG) in February 2025. However, in subsequent monitoring, the FATF has pointed out that although the path taken by Nepal to exit the ‘grey list’ is correct, the efforts are not sufficient and it needs to be accelerated.
The fourth plenary meeting of the FATF was held in Paris, France from October 20 to 24. The Nepali team also participated in the meeting. The FATF says that although the action plan set by Nepal to exit the ‘grey list’ within the stipulated time frame is correct, the implementation has not been speeded up. For this, the FATF has suggested seven points. FIU Chief Bhattarai claims that there are signs that Nepal will exit the ‘grey list’ within the stipulated time frame as work is progressing according to the 7 points suggested by the FATF.
