Suspicious Transaction Reporting Jumps Sixfold in Five Years

Reporting and investigation of suspicious transactions, activities, and cross-border dealings have risen sharply in Nepal, according to a government report.

The annual report published by the Financial Information Unit (FIU) shows that reporting of suspicious transactions and activities increased by 30 percent in the last fiscal year (FY 2024/25), compared to FY 2023/24. Reporting entities submitted 9,565 reports in 2024/25, up from 7,338 in the previous fiscal year.

Over the past five years, reporting of suspicious activities has increased more than sixfold. In fiscal year 2020/21, the number of such reports stood at just 1,533.

The rise in reporting comes amid strict enforcement of rules after the Financial Action Task Force (FATF)—the global anti-money laundering and counter-terrorism financing watchdog—placed Nepal on its list of jurisdictions under increased monitoring, commonly known as the grey list, citing weaknesses in law enforcement and implementation.

Surge in Large-Value Transaction Reports

The report also shows a significant increase in reports of transactions exceeding prescribed thresholds. Reporting of high-value transactions rose by 31.71 percent in 2024/25. Reporting entities submitted 2.236 million such reports during the year, up from 1.697 million in 2023/24.

Under existing rules, banks, financial institutions, cooperatives, and other reporting entities must notify the FIU if an individual conducts cash transactions exceeding Rs 1 million in a single day. Transactions that require reporting also include life insurance policies with annual premiums above Rs 100,000, non-life insurance policies with premiums exceeding Rs 300,000, real estate transactions above Rs 10 million, share transactions above Rs 1 million, casino transactions above Rs 1 million, and transactions above Rs 1 million involving accountants, auditors, notary publics, and the purchase of gold and silver.

Even transactions below these thresholds must be reported if they appear suspicious. Institutions are required to submit reports on threshold transactions within 30 days and suspicious transactions within three days.

Wider Use of goAML Platform

The report attributes the growth in reporting to stricter enforcement by regulatory bodies and improved compliance with anti-money laundering laws and directives. As a result, more reporting entities have joined the goAML system—the software platform used for submitting reports to the FIU.

By the end of 2024/25, 3,997 reporting entities had been integrated into goAML, up from 1,639 a year earlier.

More Analysis and Referrals for Investigation

With the rise in reporting, the FIU has also expanded its analytical work. It analyzed 2,228 suspicious transaction reports in 2024/25, a 40 percent increase from 1,635 analyses conducted in the previous fiscal year.

The number of cases referred to other agencies for investigation rose by 6.29 percent to 945. Following preliminary assessments, the FIU forwarded most cases to Nepal Police, which received 845 reports. Other recipients included the Inland Revenue Department (30), the Revenue Investigation Department (17), the Department of Money Laundering Investigation (3), various departments of Nepal Rastra Bank (38), the Commission for the Investigation of Abuse of Authority (6), the Department of Cooperatives (3), the Social Welfare Council (1), and the Nepal Insurance Authority (2).

The FIU also exchanged information related to 64 suspicious transactions with foreign financial intelligence units during the review year, strengthening international cooperation to counter risks from cross-border financial transactions, transnational crime networks, cyber fraud, and emerging criminal trends.

Seven-Point Action Plan to Exit Grey List

FATF placed Nepal on the grey list in mid-March 2025, following a re-evaluation conducted a year after the Asia/Pacific Group on Money Laundering (APG) completed its mutual evaluation in 2022.

FATF has approved a seven-point action plan for Nepal to secure removal from the grey list. FIU Chief Basudev Bhattarai said the unit has been fulfilling its responsibilities in line with the action plan.

According to the report, the FIU has introduced a risk-based supervision system, published a strategic analysis on cyber-enabled fraud, approved guidelines on Suspicious Transaction Reports (STRs) and Threshold Transaction Reports (TTRs), and strengthened rules on data security, reliability, and the use of financial intelligence in investigations. The report also notes technical upgrades to the goAML system and expanded coverage of high-risk sectors.