Nepal government pushes ministries to meet FATF reform targets

Nepal's government is intensifying efforts to exit the Financial Action Task Force's "grey list," a global watchlist for countries with anti-money laundering and terrorist financing weaknesses. The Office of the Prime Minister and Council of Ministers has issued directives to government secretaries, demanding adherence to a fixed timeline for implementing an action plan.

Chief secretary Govinda Bahadur Karki chaired a meeting where secretaries reviewed progress and decided that all ministries and agencies must effectively implement the FATF's prescribed measures. The Prime Minister's Office will closely monitor these efforts, requiring regular updates from ministries and agencies to assess their commitment to the action plan.

Nepal was placed on the grey list in February 2025 and has a two-year window to address identified shortcomings. Failure to make substantial progress could lead to its inclusion on the FATF's blacklist, significantly complicating international financial transactions and increasing financial and reputational risks. The government has set a target for completing these reforms by mid-February 2027.

An Asia-Pacific Group delegation previously visited Nepal in May, expressing concerns over insufficient progress and slow implementation of the action plan. Key areas requiring further work include the regulation of financial institutions, oversight of cooperatives, banking offenses, real estate and precious-metal trading, and combating corruption, tax evasion, human trafficking, smuggling, environmental crimes, and money laundering through shell companies.

The meeting also prioritized reforms needing immediate action and tangible citizen benefits. Ministries are instructed to submit regular progress reports. Separately, the secretaries agreed to observe Civil Service Day on September 7, with the Ministry of Land Management, Cooperatives, Federal Affairs and General Administration tasked with program preparation. They also committed to reviewing the implementation of governance reform procedures.