Nepal has once again failed to exit the Financial Action Task Force (FATF) grey list, as the international watchdog decided to keep the country under increased monitoring.

At its recent plenary meeting held in Paris, FATF reviewed Nepal’s progress and concluded that while some improvements have been made in the financial system, significant strategic deficiencies still remain unresolved.

According to the FATF report, Nepal must urgently strengthen its anti-money laundering and counter-terrorist financing framework. Key concerns include the control of hundi transactions, stricter supervision of high-risk cooperatives, casinos, precious metals traders, and the real estate sector.

FATF has also recommended that Nepal improve risk-based supervision of financial institutions, enhance investigative capacity of enforcement agencies, and ensure effective prosecution and confiscation of illegally acquired assets.

Despite some progress, FATF stated that Nepal has not fully met the required action plan, and therefore remains in the “grey list” or high-risk monitoring category.

Nepal was placed in the grey list in February 2081 BS for a two-year period, and now faces increased pressure to complete the remaining reforms within the stipulated timeframe.