Nepal’s placement on the Financial Action Task Force (FATF) grey list has sparked political turmoil, with the opposition party, CPN-Maoist Centre, demanding Prime Minister KP Sharma Oli’s resignation. This marks Nepal’s second time on the grey list, which identifies countries with deficiencies in their anti-money laundering and counter-terrorism financing systems.

Previously, Nepal was on the grey list from 2008 to 2014. During a House of Representatives session on Sunday, opposition MP Madhav Sapkota criticized the government’s failure to prevent this designation and called for Oli’s resignation.

The FATF made its decision during its plenary meeting in Paris from February 17–21, citing Nepal’s inability to fully implement necessary structural, legal, and policy reforms to combat financial crimes. If Nepal fails to address these issues within two years, it could face stricter international transaction barriers and sanctions.

Additionally, Nepali Congress lawmaker Arjun Narshingh KC proposed demonetizing NPR 500 and 1000 banknotes as a measure to tackle illicit financial activities. He emphasized the need for parliamentary discussions and corruption investigations to safeguard Nepal’s global standing.

Other countries impacted!

Philippines has been removed from the FATF ‘grey list’, while both Laos and Nepal have been added, in the latest update from the organization.

The result will also likely come as a disappointment for South Africa, which was pushing to have the designation removed.

The organization also said its suspension of Russia’s membership, following the country’s invasion of Ukraine, continues to stand.