The Asia Pacific Group (APG) of the Financial Action Task Force (FATF), an international organization that monitors money laundering, has issued a serious warning that Nepal will be blacklisted if it does not show sufficient progress. The APG has issued this warning saying that Nepal's progress in the reforms required to exit the 'grey list' is disappointing.

This warning is not a general diplomatic message. The APG has clearly mentioned this visit as the last high-level intervention before the decisive AP-JG review to be held in September 2026. That is, Nepal has less than four months left.

The APG's 'support meeting' on 4-6 Jestha is ongoing in Kathmandu. The high-level APG delegation, which arrived in Kathmandu on Sunday, had discussions with officials of government agencies related to money laundering at the Office of the Prime Minister and Council of Ministers on Monday.

Reflecting that seriousness, the APG has sent a high-level delegation led by its Deputy Executive Secretary David Shannon this time. Shannon, who has been working in the APG Secretariat since 2002, is currently leading his 24th mutual evaluation. And, he is considered one of the most experienced FATF evaluators in the world. The direct presence of a senior official is an indication of the seriousness of Nepal's situation.

In discussions with officials from the Office of the Prime Minister and Council of Ministers, Ministry of Finance, Ministry of Home Affairs, Ministry of Law, Attorney General's Office, Nepal Army, Nepal Police, Armed Police Force, Nepal Rastra Bank, and the Department of Money Laundering Investigation, APG officials expressed deep dissatisfaction with Nepal's progress, a participant informed Kantipur on condition of anonymity.

The team held discussions with government officials including Law Secretary Pushkar Sapkota, Finance Secretary Ghanashyam Upadhyay, Home Secretary Rajkumar Shrestha, and Revenue Secretary Bhupal Baral at the Prime Minister's Office on Monday.

A confidential briefing note prepared by the APG Secretariat, obtained by Kantipur, sets out six clear objectives for this visit. First, to restructure Nepal's FATF cooperation strategy under ministerial leadership. Second, to examine whether the preparation of the 15-point action plan by September 2026 is sufficient. Third, to directly convey to the political leadership the seriousness of Nepal's situation, including the risk of blacklisting. Fourth, to mobilize all relevant agencies together on what to do on all 15 action plan points. Fifth, to secure political commitment for technical assistance focused on practical results rather than theoretical training. And sixth, to improve the weaknesses seen in the reports, case studies and data to be submitted to the FATF.

The FATF had placed Nepal on the 'grey list' for two years on 9 Falgun 2081. Before that, the FATF had given Nepal 15 instructions. And, the deadline for completing those directives has been set by 2027. But current progress seems unlikely. The delegation led by APG Deputy Executive Secretary David Shannon has considered this visit as the last high-level intervention before the decisive AP-JG review in September 2026. According to

officials, one of the reasons for the delay in implementing the directives is the Gen-G movement of 23-24 Bhadra, which changed the political landscape of Nepal. After the movement, elections were announced for 21 Falgun. With the victory of the National Independent Party in the elections, a new government was formed on 13 Chaitra. Even as Nepal tried to get out of the ‘grey list’, many tasks on the 15-point agenda remained incomplete due to the political transition.

In a program last January, the then Finance Minister Rameshwor Khanal had emphasized the need to make the investigation, prosecution and action process effective in cases related to money laundering by preparing strong cases with evidence and making arrangements for immediate seizure of assets.

Officials say that some of the recent arrests, especially in money laundering cases, are an attempt by the government to remove Nepal from the FATF's 'grey list'. Finance Minister Swarnim Wagle has also been saying that removing Nepal from the 'grey list' is the government's first priority. In a discussion with the Society of Economic Journalists (SEJON) last Chaitra, Finance Minister Wagle had clarified that the government was working to remove Nepal from the 'grey list' as it was internationally disgraceful and had given priority to it.

He also said that this would have a negative impact on the investment environment and that the investigations into financial crimes including money laundering that have been going on for years would be based on cases that were based on irrefutable evidence.

After being placed on the ‘Grey List’, the APG has concluded that Nepal has not been able to do the expected work in terms of policy intervention, law enforcement, capacity building of investigative agencies, monitoring of risky areas, and taking action against those involved in the crime. So far, 121 cases have been filed by the department under the crime of money laundering, 21 by the police after the law amendment, 6 by the CIAA, and one each by the Forest and Revenue Investigation Department. APG officials have expressed dissatisfaction saying that this number is insufficient and there has been no significant progress in complex cases.

Although the APG delegation tried to meet Prime Minister Balendra Shah on Tuesday, it is not certain whether the meeting will take place. The main objective of this visit is to restructure Nepal’s FATF cooperation strategy under ministerial leadership, so the meeting with the Prime Minister is considered very important from a political point of view.