The European Union (EU) has officially placed Nepal on its updated list of high-risk third-country jurisdictions for money laundering and terrorist financing. This follows the Financial Action Task Force’s (FATF) decision earlier this year to add Nepal to its “grey list,” formally known as the list of “Jurisdictions under Increased Monitoring.”
In a statement released on Tuesday, the European Commission confirmed the inclusion of Nepal among ten new countries added to the high-risk list. Others include Algeria, Angola, Ivory Coast, Kenya, Laos, Lebanon, Monaco, Namibia, and Venezuela. Meanwhile, eight countries, including the United Arab Emirates (UAE), were removed from the list.
As a result, financial transactions involving Nepal will now be subject to enhanced due diligence and tighter scrutiny by EU-based financial institutions. These measures aim to shield the EU’s financial system from illicit financial flows and align its policies with global standards on anti-money laundering (AML) and counter-terrorist financing (CFT).
Maria Luís Albuquerque, EU Commissioner for Financial Services, stated, “Following a thorough technical assessment and after listening carefully to the concerns expressed around its last proposal, the Commission has now presented an update to the EU list which reiterates our strong commitment to aligning with international standards, particularly those set by the FATF.”
The updated list is pending approval by the European Parliament and Council. If no objections are raised, it will become effective within a month.
Nepal’s inclusion underscores persistent international concerns regarding gaps in its financial oversight and enforcement mechanisms. Although it does not entail formal sanctions, the designation could hinder Nepal’s international financial transactions and raise its risk profile among global investors and banks.
The FATF, a Paris-based intergovernmental body, monitors global compliance with AML/CFT obligations. It collaborates with regional bodies like the Asia/Pacific Group on Money Laundering (APG), of which Nepal is a member.
Despite adopting key laws such as the Anti-Money Laundering Act and establishing the Financial Information Unit (FIU) under Nepal Rastra Bank, Nepal has struggled with enforcement and timely implementation of FATF-recommended reforms.
The Government of Nepal has not yet issued an official response to the EU’s latest move.
