Kathmandu — Following Nepal’s placement on the Financial Action Task Force (FATF) grey list, the government has intensified oversight of cooperatives nationwide. All cooperative organizations are now required to submit mandatory reports detailing their anti-money laundering (AML) measures.
The Department of Cooperatives, under the Ministry of Federal Affairs and General Administration, has directed local governments to ensure timely submission of these reports. The official notice to cooperatives highlights the global rise in financial crimes, stating:
“In response to the growing complexity and volume of economic crimes worldwide, Nepal remains committed to combating financial offenses. However, recent assessments by the FATF and Asia/Pacific Group on Money Laundering (APG) identified 16 strategic deficiencies in law enforcement, resulting in Nepal’s grey-listing.”
To exit the grey list, the government has adopted the National Strategy and Action Plan on Anti-Money Laundering and Combating the Financing of Terrorism (2081–82 BS and 2085–86 BS). A key focus of this plan is strengthening regulation and supervision of the cooperative sector.
Under Section 7 of the Anti-Money Laundering Act, 2064 (2007), cooperatives must undergo risk-based monitoring. All cooperative organizations are required to submit financial details for the fiscal year 2081/82 by the end of Shrawan (mid-August 2025) using prescribed forms. Local governments are tasked with overseeing data collection and ensuring compliance within their jurisdictions.
This enhanced supervision aims to prevent opaque financial transactions in cooperatives and establish a robust risk-based monitoring framework. Experts have warned that Nepal’s grey-listing could raise concerns about financial activities involving cooperatives, prompting the government to bolster regulatory measures.
Over two dozen cooperatives currently face operational challenges, with police estimating that approximately NPR 3 billion in public deposits are at risk. As of Falgun 2081 (February/March 2025), Nepal has 32,965 registered cooperatives with 10.9 million members and a share capital of NPR 143.29 billion. The sector manages savings of NPR 1.125 trillion and has extended loans worth NPR 923.47 billion.
Employment in the cooperative sector was 94,002 in Asar 2081 (June/July 2024), decreasing slightly to 90,265 by Falgun 2081. The Cooperative and Poverty Information Management System reported 17,696 affiliated cooperatives as of Asar 2081, rising to 18,899 by Falgun 2081.
The government’s strengthened oversight and reporting requirements reflect its commitment to enhancing financial transparency and protecting the cooperative sector amid increased international scrutiny.