FATF Retains Nepal on Grey List

The Financial Action Task Force (FATF) has decided to retain Nepal on its grey list.

FATF, the intergovernmental body overseeing global compliance on anti-money laundering (AML) and countering the financing of terrorism (CFT), grey-listed Nepal in February 2025.

Officially termed “Jurisdictions under Increased Monitoring,” the grey list includes countries working with FATF to address deficiencies in their AML/CFT frameworks. Nepal has been given a two-year window to strengthen its anti-money laundering efforts.

With the latest update, the list now includes 20 countries, with Burkina Faso, Mozambique, Nigeria, and South Africa exiting the list.

Since February 2025, when Nepal made a high-level political commitment to work with the FATF and APG to strengthen the effectiveness of its AML/CFT regime, Nepal has taken some steps towards improving its AML/CFT regime, FATF said in a statement issued after its plenary session on Friday, October 24.

The statement added: “Nepal should continue to work on implementing its FATF action plan to address the strategic deficiencies, including : (1) improving its understanding of key ML/TF risks; (2) improving risk-based supervision of commercial banks, higher-risk cooperatives, casinos, DPMS, and the real estate sector; (3) demonstrating the identification and sanctioning of materially significant illegal MVTS/hundi providers, without hindering financial inclusion; (4) increasing capacity and co-ordination of competent authorities to conduct ML investigations; (5) demonstrating an increase in ML investigations and prosecutions; (6) demonstrating measures to identify, trace, restrain, seize, and, where applicable, confiscate proceeds and instrumentalities of crime in line with the risk profile; (7) addressing technical compliance deficiencies in its targeted financial sanctions regime for TF and PF. ”

Nepal has made a high-level political commitment to work with the FATF and APG to strengthen the effectiveness of its AML/CFT regime.

The FATF also maintains a black list, officially known as “High-Risk Jurisdictions Subject to a Call for Action.” This list includes countries with serious strategic deficiencies in combating money laundering, terrorist financing, and proliferation financing. Currently, North Korea, Iran, and Myanmar remain on the black list.