NRB report warns of growing link between virtual assets, organised financial crime

KATHMANDU: Nepal Rastra Bank (NRB) today released a strategic analysis report that warns of a growing link between virtual assets and organised financial crime in Nepal.

Prepared by the Financial Intelligence Unit (FIU‑Nepal), the report finds that despite a nationwide prohibition, virtual assets such as cryptocurrencies and stablecoins are increasingly being used for illicit activities, including hundi, online fraud and money laundering.

The FIU-Nepal says commercial banks flagged 252 suspicious cases in 2024 alone, a sharp rise from previous years. Many of these cases involve complex 'layering' techniques in which illicit funds from online gambling or phishing scams are converted into digital tokens to try to evade detection.

The report highlights a worrying demographic trend. Young adults — especially students and young professionals aged 21 to 35 — account for about three‑quarters of those flagged for suspicious activity. The FIU says many are drawn in by 'get‑rich‑quick' schemes or are unknowingly used as money mules to move funds across borders.

In response, the central bank recommends that financial institutions strengthen monitoring systems and strictly follow international 'travel rule' standards to trace the origins of digital transfers. The FIU emphasised that a total ban on virtual assets may not be enough and called for a multi‑pronged approach.

The FIU-Nepal has urged better coordination between the Nepal Police and revenue authorities, and nationwide financial‑literacy campaigns aimed at young people to reduce their vulnerability to scams.

The report also warns that the technical complexity and cross‑border nature of virtual assets pose special challenges for traditional law enforcement, and it calls for a shift towards technology‑driven investigation tools as Nepal continues its digital transformation.