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By Our Reporter

Nepal has been placed again in the grey list of the Financial Action Task Force (FATF) for failing to cleanse the financial sector.

With increasing incidents of money laundering, thriving corruption and corrupt leadership, Nepal’s attempt to avoid its placement from the grey list failed, and the FATF plenary meeting held in Paris on February 17-21 decided to keep Nepal in the grey list. Earlier, Nepal was on the grey list from 2008 to 2014.

If Nepal fails to cleanse its financial sector within two years by controlling crimes related to finance, the country may fall in the blacklist and face more international transactions.

The Paris meeting of this month, however, removed the Philippines from the list and added Laos and Nepal to the grey list.

The bad governance, rising corrupt activities, money laundering and the holding of the key posts by the leaders involved in financial crimes are blamed for Nepal falling into the FATF grey list.

Now with the inclusion of the country in the grey list, Nepal has to increase monitoring of the activities associated with financial crimes.

Intriguingly, Nepal fell on the grey list for the rising financial crimes committed during the tenure of Maoist Chairman Pushpa Kamal Dahal as prime minister. Dahal has been claiming that his government was pulled down for launching the anti-corruption drive while sitting Prime Minister KP Oli has been making claims that no one during his premiership will be allowed to be involved in corrupt activities. But the reality is otherwise, the country is on the grey list for its strategic deficiencies in its anti-money laundering and counter-terrorist financing regimes.

Nepal’s placement on the grey list obviously stems from its failure to fully implement necessary legal, policy, and structural reforms to combat money laundering and terrorist financing, despite some legislative progress.

The Asia/Pacific Group on Money Laundering (APG), which conducted Nepal’s mutual evaluation, highlighted weaknesses in the enforcement, investigation, and prosecution of financial crimes, as well as inadequate regulation of high-risk sectors like cooperatives and real estate.

Nepal was given until October 2024 to meet FATF standards following an extension in July 2023. However, the international body found the country had not sufficiently addressed these deficiencies by the deadline.