Nepal Caps Cash Transactions at NPR 500,000 to Curb AML Risks

The Nepali government has imposed a cash transaction limit of NPR 500,000 (Rs 3,13,287.52) for the purchase or sale of goods and services in a single transaction, effective January 15.

Under the new rule, any individual, firm, company, or institution conducting a transaction of NPR 500,000 or more must use banking instruments or financial institutions, as notified in the Nepal Gazette.

The decision has been taken in accordance with the Asset (Money) Laundering Prevention Act, 2008, which empowers the government to restrict cash usage. Authorities cited concerns that excessive cash transactions enable money laundering, terrorist financing, and other illicit financial activities.

Key Highlights

• Nepal caps cash transactions at NPR 500,000 from January 15
• Rule introduced under AML law amid FATF grey-list pressure
• Central bank tightens cheque and account-based payment norms

The move comes as Nepal has been re-listed on the Financial Action Task Force (FATF) grey list, increasing pressure to tighten anti-money laundering (AML) controls.

The restriction includes several exemptions. It does not apply to cash deposits at financial institutions, repayment of loans (principal and interest), or transactions between banks and financial institutions. Additionally, the possession or transportation of cash within Nepal is allowed, provided the source and purpose are clearly disclosed. Banks may also release cash above the limit to depositors under special circumstances, subject to a written application and justification.

In parallel, Nepal Rastra Bank (NRB) has reduced its mandatory non-cash payment threshold. Licensed banks and financial institutions must now process payments of NPR 500,000 or more only via account-payee cheques or direct account deposits, down from the earlier NPR 1 million limit. Cheques issued in the name of firms, companies, or institutions must also be strictly account-payee.

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Together, these measures aim to strengthen financial transparency, improve regulatory compliance, and restore international confidence in Nepal’s financial system.