Nepal recorded 64% of its scams as of May 2024 as cyber-related, despite the cryptocurrency ban. The Financial Intelligence Unit (FIU) calls for increased transaction monitoring and public awareness.
On November 18, the Financial Intelligence Unit (FIU) Nepal, under the Central Bank of Nepal (Nepal Rastra Bank), released a Strategic Analysis report showing that cryptocurrencies are being widely used in cyber fraud activities, despite the ban on digital asset trading in the country.
According to the FIU, cybercriminals are converting illicit funds into cryptocurrencies for money laundering, making it difficult to trace and recover assets. The ease with which cryptocurrencies can be transferred across borders, especially to overseas accounts, further complicates the investigation and prosecution of criminals.
The report also pointed to a significant increase in the number of Nepalese falling victim to fraudulent cryptocurrency investment schemes. Fraudsters often use social media and online advertising to reach out to victims, promising unrealistic returns.
Source: Nepal Rastra Bank The challenge of victims' silence
A major challenge in dealing with this situation is the silence of the victims. Because cryptocurrency trading is banned in Nepal, many people are afraid, embarrassed or fear legal consequences and do not report the incident to the authorities. This makes it difficult to fully assess the scale of the problem and allows fraudulent activities to continue to thrive.
Statistics show that by May 2024, about 64% of reported frauds in Nepal were cyber-related, indicating the severity of the problem.
Fraud related complaints recorded in 2024. Source: Nepal Rastra Bank
Faced with this situation, the FIU has proposed a number of key solutions. First, strengthen the monitoring of cryptocurrency transactions and train financial institutions to identify suspicious signs and promptly report them to the authorities. Second, raise public awareness of the risks of fraudulent cryptocurrency investment programs, helping people equip themselves with the necessary knowledge and skills to protect themselves.
Finally, the FIU stressed the importance of strengthening cooperation between agencies and updating the legal framework to effectively deal with fraudulent activities in the digital payment sector.
The move by FIU Nepal comes amid increased scrutiny of cryptocurrencies by countries around the world. At the recent G20 summit in the US, South Korean Finance Minister Choi Sang-Mok announced new regulations requiring organizations conducting cross-border cryptocurrency transactions to register with authorities and report transaction details to the Bank of Korea on a monthly basis.