The Nepali government has introduced a cash transaction limit of NPR 500,000 for buying or selling goods and services in a single transaction starting from January 15. This decision, published in the Nepal Gazette, aims to combat illegal financial activities like money laundering and terrorist financing as per the Asset (Money) Laundering Prevention Act, 2008. The move aligns with Nepal’s efforts to address concerns leading to its re-listing on the Financial Action Task Force’s “grey list.”
The restriction on cash transactions exempts certain activities like depositing cash at financial institutions, repaying loans (including principal and interest), and transactions between financial institutions. Additionally, individuals can possess or transport cash within the country without restrictions if the source and purpose are transparent. Financial institutions can also provide cash exceeding the limit to depositors under special circumstances upon application submission.
Nepal’s central bank has mandated licensed banks and financial institutions to make payments of NPR 500,000 or more through account-payee cheques or direct deposits into the recipient’s account. Previously set at NPR 1 million, this new directive also applies to cheque payments made to firms, companies, institutions, or offices. However, depositors can request cash payments exceeding the limit by providing valid reasons, subject to approval based on the application’s credibility.
