Although complaints related to money laundering are increasing, the number of cases registered remains very low. Government officials have warned that Nepal can once again be placed on the grey list of the Financial Action Task Force (FATF), an international body that sets standards for combating money laundering, due to lax implementation, despite recent improvements in lawmaking. 

In 2023, the Asia-Pacific Group on Money Laundering (APG), a regional organization focused on preventing money laundering, also reported that Nepal was lagging behind in law enforcement. The Department of Money Laundering Investigation, responsible for investigating and filing money laundering cases, stated in its annual report that it has been unable to complete investigations and file cases for most complaints. 

Of the 4,083 complaints received by the department till date, only 101 cases are registered, which is just 2.47% of the total number. 

Department spokesperson Atmaram Satyal explained that the low number of registered cases is due to the lengthy investigation process required before a complaint reaches the prosecution stage. However, stakeholders argue that frequent leadership changes in the department have further hindered its effectiveness. 

Since its establishment in 2011, the department has had 17 directors general, with tenure ranging from a minimum of 2 months to a maximum of 2.5 years. Most directors general served for only a few months. Given the department’s significant authority, there are allegations that the ruling party appoints leadership favorable to its interests. 

Recognizing the department’s limitations in tackling money laundering alone, the government amended the Prevention of Money Laundering Act, 2008, in April last year. The amendment expanded powers for investigation and prosecution to 13 agencies, including the Nepal Police, the Commission for the Investigation of Abuse of Authority (CIAA), the Forest Office, the Revenue Investigation Department, and the Department of National Parks. Previously, only the Department of Money Laundering Investigation had the authority to investigate such crimes. 

The department's workload has declined due to these new legal provisions. According to its report, money laundering complaints typically take 2-3 years to resolve, contributing to a weak prosecution rate compared to the number of complaints. The department registered its lowest number of money laundering cases in FY 2009/10 and FY 2014/15, with just one case each, while the highest number of cases were registered in FY 2020/21, with 14 cases. 

As of FY 2023/24, preliminary investigation officers have been assigned to 3,368 complaints. The highest number of complaints investigated in a single fiscal year was 596, in FY 2023/24. 

The department receives most money laundering complaints from individual sources, as well as financial intelligence from various agencies and units. Government officials warn that Nepal remains at risk of being placed on the FATF grey list due to weaknesses in legal reforms, investigations, and prosecutions.  Nepal was given one year to address deficiencies identified in APG’s money laundering mutual evaluation. While the country has made legislative improvements, follow-up evaluations continue to highlight weaknesses in enforcement and prosecution.