Bank

Source

2024

United

Nepal’s Financial Intelligence Unit (FIU) has found that cryptocurrencies are widely used to orchestrate cyber-related frauds despite an official ban on trading digital assets.&nbsp;
The FIU is a dedicated department of Nepal Rastra Bank, the central bank, which monitors and counters financial fraud, including money laundering and terrorist financing.&nbsp;
In its “Strategic Analysis Report,” <a data-ct-non-breakable="null" href="https://www.nrb.org.np/contents/uploads/2024/11/FIU-Nepal-Strategic-Analysis-Report-2024-2.pdf" rel="nofollow noopener" target="_blank" text="null" title="https://www.nrb.org.np/contents/uploads/2024/11/FIU-Nepal-Strategic-Analysis-Report-2024-2.pdf">issued</a> on Nov. 18, the FIU noted an increase in the use of crypto by bad actors to launder illicit funds. The report said fraudsters often convert illicit funds into crypto, making it challenging for authorities to trace and recover.
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 <img alt="Asia, Central Bank, AML, Nepal, Terrorism, Counter Terrorism Financing" src="https://s3.cointelegraph.com/uploads/2024-11/01933eae-118a-7271-b64e-09d659bc3187" title="">
 <figcaption style="text-align: center;">
 Source: <a data-ct-non-breakable="null" href="https://x.com/NepalRastraBank/status/1858079200860938598" rel="null" target="null" text="null" title="https://x.com/NepalRastraBank/status/1858079200860938598">Nepal Rastra Bank</a>
 </figcaption>
</figure>
The ease of transferring cryptocurrencies to off-shore accounts adds to the complexity of tracking down fraudsters.
<h2 id="legal-status-of-crypto-hinders-fraud-reporting">Legal status of crypto hinders fraud reporting</h2>
Additionally, citizens of Nepal are increasingly falling victim to fraudulent crypto investment schemes. Fraudsters contact potential victims through social media or online advertisements, often promising unrealistic and lucrative returns.
In many cases, the illegality associated with crypto trading discourages victims of crypto fraud from informing authorities. As a result, underreporting remains a challenge amid factors like embarrassment or fear of repercussions.
<figure>
 <img alt="Asia, Central Bank, AML, Nepal, Terrorism, Counter Terrorism Financing" src="https://s3.cointelegraph.com/uploads/2024-11/01933eae-5505-7189-938b-31aad7fa761f" title="">
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 Fraud-related complaints received in 2024. Nepal Rastra Bank
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About 64% of all fraud reported to Nepal authorities until May 2024 was cyber-enabled.
<h2 id="preventing-crypto-fraud-through-education-and-transaction-monitoring">Preventing crypto fraud through education and transaction monitoring</h2>
In response to growing cyber threats, the FIU made two key recommendations — enhancing scrutiny of crypto transactions and training financial institutions to identify red flags and conduct timely reporting.
<figure>
 <img alt="Asia, Central Bank, AML, Nepal, Terrorism, Counter Terrorism Financing" src="https://s3.cointelegraph.com/uploads/2024-11/01933eaf-4f94-7e25-9eac-526d4bb760b7" title="">
 <figcaption style="text-align: center;">
 Various avenues of financial fraud. Source Nepal Rastra Bank
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The authority further recommended increased public awareness to reduce susceptibility to fraud, strengthening inter-agency cooperation and updating regulatory frameworks to address digital payment fraud.
Related: <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/binance-india-penalty-fine-aml-violations" rel="null" target="null" text="null" title="null">Binance fined $2.25M by India’s Financial Intelligence Unit</a>
In a similar effort to curb financial fraud using cryptocurrencies, South Korea’s Finance Minister, Choi Sang-Mok, said the country <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/south-korea-regulate-cross-border-trade-virtual-assets" rel="null" target="null" text="null" title="null">would introduce reporting mandates on cross-border crypto transactions</a> at a recent G20 meeting in the United States.
<figure>
 <img alt="Asia, Central Bank, AML, Nepal, Terrorism, Counter Terrorism Financing" src="https://s3.cointelegraph.com/uploads/2024-11/01933eaf-e4b0-7376-addf-971ea3ba39c3" title="">
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 South Korean Finance Minister Choi Sang-Mok at a G20 meeting in Washington, DC. Source: South Korea Ministry of Strategy and Finance
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Under the new rules, any business handling cross-border crypto transfers must pre-register with the relevant authorities and report all details to the Bank of Korea monthly.
Magazine: <a data-ct-non-breakable="null" href="https://cointelegraph.com/magazine/fbi-tokens-ai-crypto-wash-trades-is-it-legal/" rel="null" target="null" text="null" title="null">Legal issues surround the FBI’s creation of fake crypto tokens</a>

Nepal to fight crypto fraud with public awareness, transaction monitoring

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