Nepal Remains Stuck on FATF Grey List: What It Means and Why Exit Looks Elusive
Summary
Nepal remains on the FATF grey list due to weak enforcement in anti-money laundering and counter-terrorist financing, affecting foreign investment and increasing costs for international transactions.
Key Points
- Nepal has been retained on the FATF grey list due to weak enforcement of anti-money laundering and counter-terrorist financing laws despite political commitment and legal amendments.
- The grey list status increases costs and scrutiny on Nepal's banking sector, potentially slowing remittances, imports, and foreign investment.
- Persistent compliance gaps include weak supervision of high-risk sectors, unchecked illegal hundi operations, and limited capacity to trace and confiscate illicit assets.
- The Nepali government has taken legal and diplomatic steps to address FATF requirements, but practical enforcement and asset recovery remain insufficient.
