Nepal enforces a strict Nepal cash transaction limit starting 15 January 2026, mandating banking channels for transactions over NPR 500000 to tackle money laundering risks amid its Nepal FATF grey list placement.
Nepal’s government has capped cash transactions at NPR 500000 for buying or selling goods and services in a single deal. The rule, effective from 15 January 2026, requires use of financial institutions or banking instruments for larger amounts. Officials announced this in a Nepal Gazette notice on 8 January 2026, followed by a Nepal Rastra Bank directive the next day. The move aims to reduce illegal financial flows, including money laundering and terrorist financing.
This Nepal cash transaction limit addresses vulnerabilities in Nepal’s financial system, especially relevant in South Asia where cross-border illicit funds pose regional threats. Neighbouring countries like India and Pakistan have similar controls, and Nepal’s step could enhance cooperation on anti-laundering efforts, potentially stabilising trade and investment flows.
Nepal Money Laundering Cap Details
The new regulation stems from the Asset (Money) Laundering Prevention Act 2008, which empowers the government to restrict cash dealings. Under the Nepal money laundering cap, any individual, firm, company, or institution must route transactions of NPR 500000 or more through banks. This replaces an earlier threshold of NPR 1000000 set by the central bank.
Exceptions apply to certain activities. Depositing cash in financial institutions remains unrestricted. Loan repayments to banks, including principal and interest, are exempt. Transactions between financial institutions face no cap. Possession or transport of cash is allowed if the source and purpose are disclosed. Banks can provide cash over the limit to depositors upon application with reasonable justification.
The Nepal Rastra Bank directive specifies that payments of NPR 500000 or above must use account-payee cheques or direct account deposits. Cheques for firms, companies, institutions, or offices must be account-payee only. “If a depositor submits an application requesting cash payment by stating a specific reason, and the details and reasons stated in the application are found to be reasonable, cash payments exceeding the specified limit may be made to such depositors,” the central bank stated.
This NPR 500000 cash limit tightens oversight on high-value deals. Previously, the higher threshold allowed more cash circulation, potentially enabling evasion. Now, enforcement shifts focus to digital trails, aiding investigations into suspicious activities.
Nepal FATF Grey List Context
Nepal’s placement on the Nepal FATF grey list in February 2025 prompted these measures. The Financial Action Task Force (FATF) listed Nepal under increased monitoring due to deficiencies in anti-money laundering and counter-terrorist financing regimes. Key issues include weak risk understanding, inadequate supervision of banks, cooperatives, casinos, precious metals dealers, and real estate.
FATF requires Nepal to implement an action plan covering seven areas: enhancing money laundering and terrorist financing risk assessments; bolstering risk-based supervision; sanctioning illegal money value transfer services like hundi without affecting inclusion; boosting authority coordination for investigations; increasing money laundering probes and prosecutions; improving asset tracing, seizure, and confiscation; and fixing targeted financial sanctions for terrorism and proliferation.
As of October 2025, Nepal remains on the list, with no removal despite progress reviews. The organisation noted steps taken but urged continued efforts. This Nepal FATF grey list status risks economic impacts, such as higher scrutiny on international transactions and potential investment deterrence.
In South Asia, similar listings have affected economies. Pakistan exited the grey list in 2022 after reforms, while Sri Lanka faced challenges during its 2017-2019 stint. Nepal’s Nepal cash transaction limit forms part of broader compliance, potentially aiding delisting by demonstrating effective controls.
Background on Financial Reforms
Nepal has pursued financial reforms since the 2008 Act, establishing the Financial Information Unit under Nepal Rastra Bank for transaction reporting. Threshold transaction reporting guidelines, updated in July 2025, require entities to flag deals above set limits, supporting data collection on clients.
The Nepal money laundering cap aligns with global standards. FATF recommendations emphasise reducing cash reliance to prevent abuse. In Nepal, cash dominates rural economies, but urban growth in real estate and trade heightens risks. Recent cases, including cooperative frauds involving billions in NPR, underscored needs for tighter rules.
Government data shows rising suspicious transaction reports: from 500 in 2023 to over 800 in 2024, per Nepal Rastra Bank annual reports. This Nepal cash transaction limit could further increase reporting, aiding prosecutions. However, small businesses worry about compliance costs, though exceptions aim to mitigate burdens.
Enforcement involves coordination among the Ministry of Finance, Nepal Rastra Bank, and law enforcement. Penalties for violations under the 2008 Act include fines up to twice the transaction value and imprisonment up to two years.
What’s Next
Nepal plans monitoring post-15 January 2026, with Nepal Rastra Bank issuing guidance for banks. FATF’s next review in February 2026 may assess the Nepal money laundering cap’s impact. Successful implementation could hasten exit from the Nepal FATF grey list, boosting foreign investment.
Stakeholders anticipate adjustments if challenges arise, such as in remote areas with limited banking access. As the Nepal cash transaction limit takes effect, it signals commitment to transparent finance, potentially influencing regional policies.
Published in SouthAsianDesk, January 10th, 2026
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