Nepal to fight crypto fraud through public awareness, transaction control
Nepal's Financial Intelligence Unit (FIU) has confirmed that cryptocurrencies are being widely used to orchestrate cyber-related scams, even as it officially bans trading in digital assets.
FIU is an autonomous unit of Nepal Rastra Bank, the Central Bank of Nepal, which oversees money laundering and anti-money laundering.
In a “Strategic Analysis Report” released on November 18, the FIU noted the increased use of cryptocurrencies by bad actors to launder illicit funds. The report says fraudsters are converting illicit funds into cryptocurrencies, making it challenging for authorities to trace and recover the funds.
Source: Nepal Rastra Bank
The ease of transferring cryptocurrencies to offshore accounts increases the complexity of tracking fraudsters.
The legal status of crypto prohibits fraud reporting
In addition, Nepali citizens are becoming victims of fraudulent crypto investment schemes. Scammers contact potential victims through social media or online advertisements, often with unrealistic expectations and lucrative returns.
In most cases, the illegality associated with crypto trading discourages victims of crypto fraud from reporting it to the authorities. As a result, non-reporting for reasons such as embarrassment or fear of consequences remains a challenge.
Complaints related to fraud were received in 2024. Nepal Rastra Bank
By May 2024, nearly 65% of fraud reported to Nepalese authorities was cyber-enabled.
Preventing crypto fraud through education and marketing controls
In response to growing cyber threats, the FIU issued two key recommendations to prevent the use of crypto in financial fraud. These include investigating cryptocurrency transactions and training financial institutions to identify red flags and provide timely reporting.
Different ways of money laundering. Source Nepal Rastra Bank
The authority recommended increasing public awareness to reduce fraud vulnerability, strengthen inter-agency collaboration and improve regulatory frameworks to address digital payment fraud.
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At the G20 meeting in Washington, DC, South Korea's Finance Minister Choi Sang-mok said that the country would also implement a reporting obligation on cross-border crypto transfers in an effort to curb financial fraud.
South Korean Finance Minister Choi Sang-mok at the G20 summit in Washington. Source: Ministry of Strategy and Finance of South Korea
Under the new law, any business making cross-border crypto transfers must register with relevant authorities in advance and report all details to the Bank of Korea on a monthly basis.
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