FIU Nepal Suggests Measures to Tackle Cryptocurrency Fraud
2024-11-18

The adoption of cryptocurrencies has surged significantly in the past few years, especially in developing nations like India, Bangladesh, Pakistan, and Nepal. The growth in adoption in these nations has been regarded as one of the primary reasons behind surging illicit and anti-money laundering activities. 
In a recent development, the Financial Intelligence Unit of Nepal has noted that the usage of crypto for illicit activities has surged prominently, despite an official ban on trading of digital assets. 
The FIU is an intelligence arm of Nepal Rastra Bank, which oversees activities related to financial fraud, terror funding, and money laundering. In a report by FIU titled “ Strategic Analysis Report,” the intelligence unit noted a major spike in the usage of digital assets by bad actors for laundering illicit funds and other suspected activities. 
It is worth noting the usage of cryptocurrencies for such activities has been troubling the national authorities to track the designation of funds. In some cases, the usage of a crypto mixer was allegedly reported, which helps to erase the designation and origin of any digital assets. 
As per experts, the people of Nepal are becoming one of the top victims of crypto scams due to a lack of information and proper education. Usage of social media and other platforms that cater to huge masses is one of the most used to lure or victimize innocent people. Nepal’s take over surging usage of Crypto illicit activities!
According to available data, the number of cryptocurrency users in Nepal has surged at a greater pace and is expected to reach a new milestone by the end of 2025. Yet one of the severe problems of surging its usage for illicit activities has raised concern over the security of users. Source: Rastra Bank of Nepal 
The FIU has suggested two primary recommendations to avoid these activities and place a brake on the pace of growing such activities. The primary recommendation emphasizes strengthening the monitoring of crypto transactions and equipping financial institutions with the training needed to spot warning signs and report suspicious activities promptly. 
The authority also emphasized the need to raise public awareness to reduce vulnerability to fraud, enhance inter-agency collaboration, and update regulatory frameworks to tackle digital payment fraud effectively.
The use of cryptocurrencies, including Bitcoin, is illegal in Nepal. In Pakistan, cryptocurrencies are not officially regulated but are neither illegal nor banned. Most recently, its neighbor Pakistan reportedly suggested a few amendments in the finance law to legalize crypto all across the nation. 
The Express Tribune reported that the federal government has proposed amendments to the State Bank of Pakistan Act. These changes would allow dual nationals to serve as governor and deputy governors of the central bank and pave the way for legalizing digital currency use in Pakistan.
If approved by the parliament and federal cabinet, the amendments could potentially legalize cryptocurrencies such as Bitcoin and Ethereum in the country. 
With the growing global adoption of cryptocurrencies, their perception has evolved significantly, and experts anticipate the number of cryptocurrency users worldwide will reach unprecedented levels in the coming years.