Nepal Issues Alert on Growing Crypto Fraud Cases

Nepal’s Financial Intelligence Unit (FIU), a branch of the Nepal Rastra Bank, has raised alarms over the growing use of cryptocurrencies in cyber-related frauds despite the country’s ban on digital asset trading.

In its “Strategic Analysis Report”, issued on November 18, the FIU highlighted that criminals are increasingly using crypto to launder illicit funds. Fraudsters reportedly convert illegal earnings into crypto, making it challenging for authorities to trace and recover the money. The ability to transfer cryptocurrencies to offshore accounts further complicates investigations.  

The FIU also noted a surge in fraudulent crypto investment schemes targeting Nepali citizens through social media and online ads. These schemes often promise high returns, drawing unsuspecting victims. However, the illegality of crypto trading in Nepal deters many from reporting such crimes due to fear of repercussions or embarrassment.

This underreporting is a major hurdle for authorities. As of May 2024, around 64% of all fraud cases reported in Nepal were cyber-enabled, reflecting the scale of the challenge.  

To tackle the growing threat, the FIU has proposed stricter monitoring of crypto transactions and better training for financial institutions to detect suspicious activities. 

Enhanced inter-agency cooperation and updated regulations to address digital payment fraud were also recommended.

Nepal’s concerns echo global challenges. At a recent G20 meeting, South Korea announced plans to mandate reporting for cross-border crypto transactions. Businesses will be required to pre-register with authorities and submit monthly reports to the Bank of Korea.