The recent arrest of a man carrying US$57,000 of undisclosed origin in Sindhuli has pointed to a deeper and more troubling problem. Police intercepted his vehicle while he was travelling from Kathmandu to Ilam, and the seizure of the cash suggested the quiet operation of an informal money network in the country. It appears the arrested individual may have acted as a mule for a larger syndicate.
Such incidents are no longer rare. Law enforcement agencies have repeatedly uncovered foreign currency, gold, and cash being moved through unofficial channels. In Nepal, weak law enforcement, open borders, and a slow, inaccessible, and costly financial system have created fertile ground for such activities. At the core of the problem is the informal money system, which has persisted in the country for a long time.
One such system, the hundi network, has flourished because it allows money to be moved quickly and anonymously, relying on personal trust rather than formal documentation. Migrant workers, traders, and even ordinary citizens sometimes use hundi to bypass taxes, transfer money rapidly, or avoid banking regulations. Once cash enters this shadow system, tracing its source becomes extremely difficult. Gold smuggling and currency trafficking follow similar patterns. Open borders with India, weak inspections at transit points, and, in some cases, corruption or political protection make these operations low-risk and highly profitable.
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Nepal’s open borders with India and China pose a serious challenge, and border management must not be neglected. Check posts require trained personnel and modern scanning equipment. As random inspections alone are insufficient to stop seasoned smugglers, intelligence-based operations and effective coordination among the police, customs, and revenue offices are essential.
Public awareness is equally important. Many people view carrying foreign currency or using hundi as harmless practices, failing to recognise their long-term impact on the economy and the country’s reputation. Raising awareness and holding offenders accountable can gradually change such attitudes.
Nepal cannot afford to allow illegal money movement to continue unchecked. Each case, such as the Sindhuli seizure, serves as a warning to the authorities. If these practices are allowed to persist, they will weaken institutions and fuel financial crimes. The state must respond firmly to protect the economy, strengthen institutions, and uphold national dignity.
The consequences of smuggling foreign currencies and valuables, and transferring cash through informal channels, go beyond violations of law. Unregulated movement of such assets can reduce state revenue, distort trade figures, and undermine public trust in financial institutions. It also raises serious concerns about tax evasion, corruption, organised crime, and drug trafficking.
To curb these problems, stronger laws and stricter enforcement are urgently needed. Nepal’s money laundering regulations must also be tightened. As the country faces the risk of FATF greylisting, it must ensure consistent and practical implementation of anti–money laundering rules, extending their scope to digital channels, informal transfer systems, and opaque trading practices.
Government agencies responsible for law enforcement must be given clear authority, while banks and financial institutions must do more to detect and report suspicious transactions. Such cases must be investigated thoroughly and without interference. At the same time, formal banking services must be made accessible and affordable. When legal financial systems are slow or expensive, people will continue to rely on informal channels.
