Kathmandu, June 26: The Department of Money Laundering Investigation (DoMLI) and the Central Investigation Bureau (CIB) of Nepal Police have intensified investigations into stock brokerage firms handling average daily transactions exceeding Rs 300 million, as Nepal steps up efforts to strengthen its anti-money laundering framework.
According to an official at the Securities Board of Nepal (SEBON), the two investigative agencies have requested detailed information from the market regulator regarding major investors trading through the identified brokerage firms.
The move comes after the Financial Action Task Force (FATF) decided to keep Nepal on its grey list for an additional six months, citing the need for stronger action against money laundering and terrorist financing. In response, the government has directed enforcement agencies to enhance investigations into suspicious financial transactions.
FATF has identified six priority areas for reform and urged Nepal to significantly improve both the number and effectiveness of money laundering investigations and prosecutions. It has also called for stronger mechanisms to identify, trace, freeze, seize, and confiscate proceeds of crime and assets linked to criminal activities.
The renewed scrutiny follows the country’s largest alleged financial fraud case involving Deepak Bhatta, who, along with 39 individuals and several companies, is accused of misappropriating funds through a stockbroker. Investigators allege the case involved complex share-price manipulation, misuse of insurance funds, routing of illicit money through brokerage firms, concealment of beneficial ownership using corporate structures, and layered financial transactions designed to disguise illegally acquired assets.
Despite the government’s crackdown, market participants have expressed concerns that increased investigations could further weaken investor confidence at a time when Nepal’s stock market is already facing a prolonged downturn.
The Nepal Stock Exchange (NEPSE) extended its losing streak for a fourth consecutive trading session on Thursday, while daily turnover declined sharply to Rs 2.83 billion.
Over the past month, the benchmark NEPSE Index has fallen by 135 points to 2,786 points. Compared to its peak five years ago, the index has declined by 17 percent, while daily trading volume has contracted by nearly 80 percent, reflecting subdued investor sentiment amid continued economic uncertainty.
