Nepal: Effective January 15, the Nepali government has set a cap of NPR 500,000 on cash transactions for the acquisition or sale of goods and services in a single transaction.

The government stated in a notice published in the Nepal Gazette on Thursday that “any individual, firm, company, or institution must carry out the purchase or sale of any service or goods, or any other transaction amounting to NPR 500,000 or more in a single transaction through a financial institution or banking instrument, given the capping of cash transactions.”

According to the government, the decision was made in accordance with the Asset (Money) Laundering Prevention Act, 2008, which gives it the authority to limit cash transactions.

Because cash transactions enable illicit financial activities, such as money laundering and funding terrorism, the government has implemented a cap on cash transactions. The Financial Action Task Force (FATF), a worldwide anti-money laundering organization, has re-listed Nepal on its “grey list,” coinciding with the decision.

There are certain exceptions to the cash transaction limit. Cash deposits at financial institutions, principle and interest payments on loans obtained from financial institutions, and cash transactions between financial institutions are exempt from the limitation.

Additionally, the new limitation does not apply to the holding or transit of cash inside the nation, so long as the source and purpose of the money are made known. Additionally, financial institutions are not prohibited from giving depositors more money than they are allowed to, as long as the depositor applies and cites exceptional circumstances.

In the meanwhile, the central bank of Nepal ordered licensed banks and financial institutions to either deposit the money directly into the account of the individual in question or issue an account-payee check for payments of NPR 500,000 or more. This cap used to be NPR 1 million.

According to Nepal Rastra Bank’s order, checks written in the name of a business, organization, office, or institution shall only be paid out to account-payees.

The central bank noted in its instruction that “cash payments exceeding the specified limit may be made to such depositors if they submit an application requesting cash payment by stating a specific reason, and the details and reasons stated in the application are found to be reasonable.”