Nepal Country Summary

FATF Status

Nepal is on the FATF List of Countries that have been identified as having strategic AML deficiencies

Compliance with FATF Recommendations

The latest follow-up Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Nepal was undertaken in 2026. There were no changes in the Recommendation assessments. According to original Mutual Evaluation, Nepal was deemed Compliant for 5 and Largely Compliant for 23 of the FATF 40 Recommendations. It was deemed Highly Effective for 0 and Substantially Effective for 0 with regard to the 11 areas of Effectiveness of its AML/CFT Regime.

Nepal is grappling with significant challenges related to crime and corruption, with reports indicating that corruption is deeply entrenched and institutionalized within the government. The judicial system suffers from pervasive corruption and executive influence, while various criminal activities, including human trafficking, extortion, and drug trafficking, are prevalent, often exacerbated by weak enforcement of laws and inadequate resources for law enforcement agencies.

Nepal's economy, with an annual GDP of approximately $54.81 billion and trade totaling $17.5 billion, holds significant potential in sectors such as energy, tourism, ICT, infrastructure, and agriculture. However, the investment climate is hampered by challenges including political instability, corruption, bureaucratic inefficiencies, and inconsistent legal frameworks, which deter foreign investment despite the government's efforts to attract it. Notably, the U.S. is among the top foreign investors, and initiatives like the Millennium Challenge Corporation's $500 million Compact aim to enhance economic growth and infrastructure, yet the practical implementation of reforms remains a concern, highlighting the need for a more conducive environment for resilient investors.