Nepal recorded 64% of cyber-related fraud cases as of May 2024, despite the cryptocurrency ban. The Financial Intelligence Unit (FIU) calls for enhanced transaction monitoring and increased community awareness.
On November 18, the Nepal Financial Intelligence Unit (FIU), under the Nepal Rastra Bank, released a Strategic Analysis report showing that cryptocurrencies are being widely misused in online fraud activities, despite the ban on digital asset transactions in the country.
According to the FIU, cybercriminals are converting illicit funds into cryptocurrencies to launder money, making it difficult to trace and recover the assets. The ease of transferring cryptocurrencies across borders, especially to overseas accounts, further complicates the investigation and apprehension of criminals.
The report also highlights a significant increase in the number of Nepali citizens becoming victims of fraudulent cryptocurrency investment schemes. The scammers often use social media and online advertising to approach victims, making unrealistic promises of extraordinary profits.
The Challenge of Victim Silence
A major challenge in addressing the situation is the silence of the victims. Due to the ban on cryptocurrency transactions in Nepal, many are hesitant, embarrassed, or fear legal consequences, and therefore do not report the incidents to the authorities. This makes it difficult to accurately quantify the scale of the problem, and also enables the fraudulent activities to continue unabated.
Statistics show that by May 2024, around 64% of the reported fraud cases in Nepal were related to cyberspace, indicating the severity of the issue.
In response to this situation, the FIU has proposed several key solutions. First, to enhance the monitoring of cryptocurrency transactions and train financial institutions to identify suspicious signs, and promptly report them to the authorities. Second, to raise public awareness about the risks of fraudulent cryptocurrency investment schemes, equipping people with the necessary knowledge and skills to protect themselves.
Finally, the FIU emphasizes the importance of strengthening inter-agency cooperation and updating the legal framework to effectively address the fraudulent activities in the digital payment sector.
The actions of the Nepal FIU come amid the global trend of increased cryptocurrency regulation. At the recent G20 meeting in the US, the South Korean Finance Minister, Choi Sang-Mok, announced new regulations requiring cryptocurrency cross-border transaction entities to register with the authorities and report their transactions in detail to the Bank of Korea on a monthly basis.
