Nepal Readded to FATF Grey List Over AML/CFT Deficiencies
Nepal has been placed on the Financial Action Task Force (FATF) grey list for the second time, following a plenary meeting in Paris from February 17-21. The decision stems from Nepal’s failure to fully implement reforms to combat money laundering and terrorist financing, despite some legislative progress. The Asia/Pacific Group on Money Laundering (APG) highlighted weaknesses in enforcement, investigation, and regulation of high-risk sectors like cooperatives and real estate. Nepal, which was previously on the grey list from 2008-2014, now has two years to address these issues or risk being blacklisted, which could lead to international transaction hurdles and sanctions. Finance Minister Bishnu Paudel expressed confidence in exiting the list before the deadline, citing an approved action plan. However, stakeholders fear economic repercussions, including reduced foreign investment and higher transaction costs. Nepal must now implement reforms swiftly to avoid prolonged financial isolation.