The Nepal Insurance Authority (NIA) has instructed all insurance companies to fully digitise their payment systems as part of its efforts to strengthen controls against money laundering. Effective from January 15, all insurance-related payments must be made through the recipient’s bank account. Under the directive, all entities involved in the insurance business—from large reinsurance firms to microinsurance providers and insurance brokers—are required to comply with the new rules. This is not the first time the NIA has pushed the sector towards greater financial transparency. Previously, insurers were instructed to disburse salaries and other employee payments exclusively through banking channels. By mandating digital payments, the NIA aims to crack down on money laundering, particularly in high-value transactions. Insurance companies are required to report life insurance policies exceeding Rs 100,000 and non-life policies above Rs 300,000 to the goAML system. Similarly, large loan repayments and claim settlements exceeding Rs 10 million must also be processed digitally. These measures are part of Nepal’s efforts to align with the recommendations of the Financial Action Task Force (FATF). Nepal has remained on the FATF grey list since February 2025, placing the country under increased monitoring. Continued grey-listing could negatively affect Nepal’s international trade and financial activities.
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The insurance sector in Nepal has long relied heavily on cash transactions, making it vulnerable to money laundering. The NIA’s new guidelines represent a sincere attempt to address this long-standing weakness. A fully digital system will not only strengthen governance and transparency but also help protect insurers from risks associated with illegal financial practices. Compliance with the new rules will enable authorities to track and curb illicit transactions more efficiently, thereby enhancing public trust in Nepal’s insurance services—an essential factor for the sector’s long-term stability and growth. At the same time, Nepal’s continued presence on the FATF grey list indicates that existing anti–money laundering measures remain insufficient. This underscores the need for swift and coordinated action to ensure financial institutions comply with regulations, expand the use of digital platforms, raise public awareness of digital payment systems, and closely scrutinise cash transactions.
In a country where financial crimes remain a serious concern, a broader and more coordinated strategy is required. The NIA must ensure strict enforcement of compliance measures and impose penalties where necessary. Public and corporate awareness campaigns should be launched to reduce reliance on cash in the insurance sector, while stronger coordination between banks and insurers can help detect and deter suspicious transactions. Nepal’s insurance and financial sectors must act decisively and in unison to avoid further difficulties in the global financial system. While removing Nepal from the FATF grey list will require concerted efforts from the government, regulators and financial institutions alike, the NIA’s latest move to curb money laundering in the insurance sector is a commendable and timely step.
