The volume of Nepali-linked funds held in Swiss banks has declined for the second consecutive year after peaking in 2022, but still remains significantly above pre-pandemic levels, according to data released by the Swiss National Bank (SNB). As per the Annual Banking Statistics 2024 published by the Swiss central bank, deposits held by Nepali individuals and entities in Swiss banks stood at 387.04 million Swiss francs (approximately Rs 65.69 billion). This marks a drop from 450.30 million francs (Rs 76.42 billion) in 2023 and the all-time high of 482.54 million francs (Rs 81.92 billion) in 2022.
Between 2015 and 2017, Swiss bank deposits linked to Nepal regularly exceeded Rs 50 billion annually (at current exchange rates), before falling to Rs 42.2 billion in 2018 and further to Rs 29.83 billion (175.87 million francs) in 2019.

Nepal continues to rank among the top three South Asian nations in terms of deposits held in Swiss banks. As of 2024, Nepal’s 387.04 million Swiss francs surpass holdings from Sri Lanka (307.1 million), Pakistan (271.67 million), Afghanistan (3.14 million), the Maldives (2.51 million) and Bhutan (just 0.72 million). Only India and Bangladesh reported higher figures.

India remains the regional leader with 3.5 billion francs parked in Swiss accounts.

Bangladesh recorded a sharp rebound to 589.54 million francs in 2024, following several years of decline. According to Bangladesh newspaper The Daily Star, the surge in Bangladeshi deposits coincided with the political upheaval in 2024, during which former Prime Minister Sheikh Hasina fled to India amid a student-led uprising. Citing United Nations sources, AFP news agency reported that up to 1,400 people were killed during a government crackdown between July and August 2024. Analysts quoted by The Daily Star suggest the spike in Bangladeshi funds in Swiss banks may reflect capital flight by politically connected elites attempting to secure assets offshore.

The Secrecy Dilemma

Nepal’s former royal regime has long been suspected of stashing funds in Swiss banks. However, Switzerland’s banking secrecy laws make it nearly impossible to verify the identities of account holders or sources of deposited funds. This opacity has drawn criticism. Swiss banks are accused of enabling illicit financial flows, ranging from tax evasion and corruption to arms deals and other criminal activities. Critics argue that the country’s strict privacy protections allow dirty money to escape scrutiny under the pretext of confidentiality.

Election Years See Spikes in Deposits

SNB data shows a pattern. Major election years in Nepal often coincide with spikes in Swiss bank deposits. The record high in 2022 came amid local, provincial and federal elections. A similar surge occurred in 2017, another election year.

Trade Misinvoicing Suspected

Financial analysts suspect a significant portion of Nepal-linked funds held in Swiss banks may originate from trade-related crimes, particularly over-invoicing of imports via letters of credit (LCs). This method, commonly used in trade-based money laundering, allows excess funds to be transferred abroad under the guise of legitimate transactions.

As Nepali commercial banks typically do not maintain foreign currency accounts in Switzerland, experts believe the deposits are most likely by wealthy individuals and politically connected figures. Some suspect the funds include kickbacks from large procurement or infrastructure contracts. Bankers and government officials broadly agree that trade mispricing is a leading cause of illicit capital outflows from Nepal. Over-invoicing enables importers to send inflated payments overseas, effectively transferring illicit money. A former government secretary says a large share of these deposits likely stem from political kickbacks tied to major deals.

Bankers say international private banks have long courted high-net-worth individuals (HNWIs) in Nepal. In recent years, jurisdictions like Singapore and Dubai have also emerged as preferred destinations for offshore wealth.

Not All Funds May Be Illicit

However, not all deposits may be unlawful. An analyst, speaking to New Business Age on condition of anonymity, said that some accounts might belong to Non-Resident Nepalis (NRNs) who have legally earned and transferred funds abroad. “But it is hard to verify,” the analyst said. “Swiss banks do not disclose client identities. While the government attempted investigations in the past, these require considerable diplomatic effort and resources.” Prakash Kumar Shrestha, a member of the National Planning Commission (NPC) and a former executive director of the Nepal Rastra Bank (NRB), echoed this view. “We cannot assume all the funds are illicit. Some could belong to Nepalis living and working abroad,” he added.

Shift to Other Havens?

The recent decline in Swiss-held deposits may also suggest that Nepali account holders are moving funds to alternative jurisdictions such as Singapore, Ireland and Dubai, which reportedly offer even tighter secrecy and fewer disclosure requirements. “At least Switzerland publishes annual data by country,” said one official. “But jurisdictions like Dubai are far more opaque.”

Weak Enforcement and Political Apathy

Despite global efforts to crack down on illicit financial flows, Nepal has yet to treat capital flight as a serious issue. Analysts and watchdogs say regulatory enforcement is weak, and political will is lacking. While many countries have taken serious steps to curb illicit outflows, Nepal has yet to treat capital flight as a priority. In January 2019, a NepaLeaks investigation by the Centre for Investigative Journalism (CIJ) Nepal exposed the involvement of 55 Nepalis and non-resident Nepalis in offshore money transfers. In response, then-Finance Minister Dr Yuba Raj Khatiwada formed a committee to investigate. However, little has been heard about the committee’s progress since its formation.

(This article was originally publihsed in   July 2025 issue   of New Business Age Magazine.)