Nepal making intensive and coordinated efforts to exit FATF grey list: FM Paudel

KATHMANDU: Deputy Prime Minister and Finance Minister Bishnu Prasad Paudel stated in Parliament on Tuesday that the Government of Nepal is making coordinated and concentrated efforts to ensure the country’s removal from the Financial Action Task Force (FATF) grey list at the earliest possible time.

Responding to questions raised in the House of Representatives, Minister Paudel emphasized that Nepal is working with both domestic legal reforms and international compliance standards to exit the grey list, which signals concerns regarding a country’s anti-money laundering (AML) and counter-terrorism financing (CTF) framework.

“To accelerate our removal from the grey list, Nepal has initiated amendments to multiple existing laws and implemented recommendations from international organizations,” said Minister Paudel.

Reforms Across 19 Laws and New National Strategy in Effect

As part of the reform process, the government has introduced a comprehensive bill to amend 19 existing acts related to money laundering and business environment improvement. The Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) policies have also been strengthened through the issuance and implementation of new regulations.

Nepal has already begun implementing the National Strategy and Action Plan on AML/CTF for the period 2081/82 to 2085/86 BS (2024–2029 AD). The plan aims to enhance oversight, inter-agency cooperation, and enforcement mechanisms to ensure transparency in financial activities and prevent illicit fund flows.

Grey List Exit Plan Underway

To support this effort, the Steering Committee formed under the Money Laundering Prevention Act has launched the “2082 Reform Expansion Plan”, which outlines short-term corrective actions and institutional coordination to meet FATF benchmarks.

Finance Minister Paudel said:

“The 2082 reform plan is being implemented to ensure that Nepal does not remain on the grey list and also to prevent future relisting.”

International Reporting and Compliance Measures

Nepal’s Financial Intelligence Unit (FIU) has been tasked with compiling and submitting reports in the re-rating format prescribed by the Asia/Pacific Group on Money Laundering (APG)—the regional FATF-style body monitoring compliance in Asia and the Pacific.

Real Estate Sector Also Brought Under Regulatory Net

One of the major risk areas identified globally is money laundering through real estate transactions. Minister Paudel informed that real estate agencies in Nepal have now been brought under direct compliance obligations, with formal directives issued for mandatory reporting and due diligence procedures.

Institutional Mechanisms Strengthened

In addition to the Steering Committee, four separate implementation mechanisms have been established to oversee policy coordination, monitoring, and enforcement throughout the five-year national strategy period.

These mechanisms will:

Monitor compliance across financial and non-financial sectors

Ensure effective implementation of AML/CTF rules

Provide feedback and support to agencies

Coordinate reporting to the APG and FATF

Nepal Aims for Early Exit Ahead of Deadline

While no official deadline has been made public, Minister Paudel expressed confidence that Nepal will exit the grey list ahead of schedule through its strong and unified approach.

“We believe Nepal’s committed and structured efforts will help us come off the grey list sooner than expected,” he said.

Background: Why Nepal Was Listed

Nepal was placed on the FATF grey list due to deficiencies in its framework to prevent money laundering, terrorist financing, and financial crimes. Grey list classification can lead to increased scrutiny of cross-border transactions and reputational risks, discouraging foreign investment, international banking, and development assistance.

Global Context

Countries like Pakistan, Myanmar, and Philippines have also been listed in the past and had to implement rigorous reforms to exit the FATF grey list. The FATF closely monitors progress and regularly publishes updates on compliance levels.

Failure to improve can result in movement to the FATF black list, which entails severe economic sanctions and banking restrictions.

Nepal’s Current Commitments Include:

Strengthening financial intelligence and investigation capabilities

Enhancing transparency in beneficial ownership

Regulating high-risk sectors such as real estate and casinos

Improving inter-agency coordination

Aligning laws with international FATF standards