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Kathmandu, Dec 29: Nepal’s push to get off the global “grey list” for money laundering and terror financing is moving slowly, prompting authorities to step up monitoring of casinos and gold and precious metal traders.

A recent steering committee meeting at the Ministry of Finance decided to increase oversight of businesses dealing in gold, silver, precious metals, and casinos, according to officials. The move follows concerns raised by the Financial Action Task Force (FATF), which reviewed Nepal’s progress in Paris on October 20–24 and found it insufficient.

Nepal was placed on the grey list in February after FATF concluded that steps taken to fix gaps in money laundering and terror financing controls fell short. In its country statement, FATF said Nepal must keep working on its action plan to address strategic weaknesses.

FATF has asked Nepal to improve its understanding of major risks linked to money laundering and terror financing. It has also called for stronger ris- based supervision of commercial banks, high risk cooperatives, casinos, dealers in precious metals and stones, and the real estate sector. Nepal must also act against illegal payment service providers and hundi operators without hurting financial access.

The watchdog has stressed the need to boost the capacity and coordination of agencies that investigate money laundering cases, raise the number of investigations and prosecutions, and improve systems to trace, freeze, seize, and confiscate assets linked to crime. It has also flagged gaps in targeted financial sanctions tied to terror financing and the spread of weapons of mass destruction.

All these points are part of the action plan Nepal submitted to FATF in February. Even so, FATF reports show little progress on most items since Nepal was grey listed.

Officials say casinos and precious metal trading are among the highest risk sectors for money laundering in Nepal, yet regulation remains weak. To address this, a meeting chaired by Finance Minister Rameshwar Khanal decided to inspect five precious metal businesses and five casinos each month. The meeting included central bank governor Dr Bishwanath Poudel and Revenue Secretary Bhupal Baral. Inspections also cover checks on casino permits for foreign currency transactions.

Real estate remains another high-risk area. Nepal has recently made it mandatory to obtain approval for property deals above Rs 30 million carried out through companies or institutions. The steering committee also decided to waive fees for identity checks based on the national ID card for institutions that report suspicious transactions.

Banks, financial institutions, cooperatives, precious metal traders, casinos, auditors, and others must report suspicious deals to the Financial Information Unit. There are over 100,000 such reporting entities nationwide.

FATF placed Nepal on the grey list after an Asia Pacific Group mutual evaluation report in 2023 found weak implementation of laws, limited investigations, and poor enforcement. A follow up review in June 2024 showed Nepal had not reached high or substantial effectiveness on any of the 11 effectiveness measures. It scored moderate on four and low on the rest.

On technical compliance, Nepal met or largely met standards on 28 of 40 indicators by mid-2024. Still, the follow up did not reassess effectiveness, which remains the key hurdle.

Nepal had faced similar trouble before. It was grey listed in 2008 and removed in 2014. In 2012, it narrowly avoided the black list after pledging reforms under international support.

After last year’s listing, Nepal gave FATF a high-level political commitment to strengthen controls. With progress still slow, tighter monitoring of risky sectors now stands at the center of its effort to clean up and move off the grey list.

 People’s News Monitoring Service