Nepal's Financial Intelligence Unit has raised alarms over the growing use of cryptocurrencies in fraudulent schemes despite the country's ban on crypto trading.
Increase in Crypto Usage in Frauds
In its recent report issued on November 18, the Financial Intelligence Unit highlighted the rise in the use of cryptocurrencies to launder illicit funds. Fraudsters convert illegal earnings into digital assets, complicating efforts to trace and recover funds. The ability to transfer cryptocurrencies to offshore accounts further complicates investigations.
Investigation Challenges and Crime Underreporting
The FIU also noted a surge in fraudulent investment schemes targeting Nepali citizens through social media and online ads. Many victims fear reporting due to the illegal status of cryptocurrency trading in the country. This underreporting is a major hurdle for authorities. As of May 2024, cyber-enabled fraud accounted for about 64% of all reported fraud cases in Nepal.
Measures to Combat the Threat
To tackle the growing threat, the FIU has proposed stricter monitoring of crypto transactions and higher training for financial institutions to detect suspicious activities. Enhanced inter-agency cooperation and updated regulations to address digital payment fraud were also recommended.
Nepal's concerns mirror global challenges regarding the use of cryptocurrencies in fraudulent schemes. At a recent G20 meeting, South Korea announced plans to mandate reporting for cross-border crypto transactions.
