Nepal’s real estate industry has always been a major driver of investment and economic growth. But with high-value land and property deals often happening in cash or informal channels, the sector has also been vulnerable to money laundering and other financial crimes. To address this, the Government of Nepal has introduced the Money Laundering Prevention and Combating Terrorism Financing Directive 2082, issued by the Ministry of Land Management, Cooperatives, and Poverty Alleviation through the Department of Land Management and Archive in Kathmandu.
This new directive aims to tighten how money moves through the real estate market, ensuring that every large transaction is traceable, transparent, and legitimate. It’s part of Nepal’s broader effort to strengthen financial integrity and align with international standards
Understanding AML and CFT in Real Estate
Before diving into the details of the directive, let’s clarify two key terms: AML (Anti-Money Laundering) and CFT (Combating the Financing of Terrorism).
Money laundering is the process of turning illegally obtained money into “clean” assets, often by investing in high-value property. Terrorism financing, on the other hand, involves using legal or illegal funds to support terrorist activities. Both issues are global concerns, and real estate is often an easy gateway for such illicit flows due to the large sums involved and historically low oversight.
AML and CFT regulations are designed to close these loopholes. In the real estate context, they ensure that property deals are done through formal banking channels, with proof of payment and clear documentation of where the money came from.
Why the New Directive Was Introduced
The government’s move to strengthen AML/CFT measures in real estate isn’t random. It comes at a time when Nepal has been under increasing pressure to enhance financial transparency and compliance with global anti-money laundering standards.
Nepal has been working to address the gaps identified by international watchdogs regarding financial security and monitoring systems. The real estate sector, in particular, has been identified as high-risk for unmonitored cash flow and hidden ownership. By bringing stricter rules, the government aims to prevent illegal money from entering the economy, discourage criminal networks from using property as a safe investment, and improve Nepal’s standing in the global financial community.
The directive is also an important step in Nepal’s plan to meet the standards set by the Financial Action Task Force (FATF). Meeting these benchmarks will help Nepal build investor confidence and potentially move off the FATF “grey list,” which affects how international institutions view the country’s financial security.
What the Directive Requires?
The new AML/CFT directive introduces several key requirements for anyone involved in land or property transactions from individual buyers and sellers to land offices and developers.
The first major change involves how payments are made and verified. For property transactions worth between NPR 1 million and NPR 5 million, payments must be made through a banking instrument, such as a cheque or bank transfer, with verifiable proof of the transaction. This eliminates the use of large cash payments that can’t be tracked.
For deals above NPR 5 million, the directive goes a step further. Buyers are now required to provide one of the following as proof of payment:
- A “Good for Payment” cheque issued in the seller’s name,
- A bank guarantee,
- An electronic payment record, or
- A certified deposit voucher.
These methods ensure that money changes hands only through legitimate banking channels, leaving a clear paper trail that regulators can follow if needed.
Another crucial provision involves mandatory reporting. Any land or building transaction that exceeds NPR 10 million per day must be reported to the Financial Intelligence Unit (FIU) under Nepal Rastra Bank. Additionally, any transaction that seems suspicious regardless of its size must also be reported to the FIU. This ensures that authorities are immediately alerted if something unusual or potentially illegal occurs.
The directive makes it clear that these rules apply to everyone: buyers, sellers, real estate agents, and government offices handling land registrations. It’s a shared responsibility system, designed to close every possible loophole in property transactions.
How It Affects Buyers and Sellers
For buyers, this means it’s no longer possible to purchase land or property in large cash sums. They’ll need to show proof that the funds used in the purchase came from a legal and traceable source. Banks, in turn, will have clearer documentation of where the money originated and where it went.
Sellers also benefit from this change. When payments are routed through banks, they’re safer, more secure, and automatically recorded. There’s no risk of forged notes or unrecorded cash exchanges. Sellers can also be confident that they’re not unknowingly involved in an illegal transaction.
This system protects both parties while giving the government and financial institutions the tools to identify irregularities. Transactions that don’t meet these requirements could be delayed, rejected, or even flagged for investigation.
The Role of Land Offices and Financial Institutions
The directive also places significant responsibility on land offices and banks. Land registration offices must verify that all property payments comply with the AML/CFT directive before approving ownership transfers. They’re required to collect copies of transaction proofs, confirm that the payment method is valid, and report any deal that crosses the NPR 10 million threshold.
Banks, on the other hand, play a crucial role in providing the verification trail. They issue certified payment instruments, record electronic transfers, and flag suspicious transactions. This collaboration between the land offices and financial institutions is essential for building a secure, transparent real estate ecosystem.
Bigger Picture: Why This Directive Matters
The broader goal behind Directive 2082 goes beyond just paperwork or stricter payments. It’s about changing behavior and building accountability in a sector that has long operated with limited oversight.
Real estate is one of the most attractive options for those looking to “clean” illegally earned money. Once laundered through land deals, such money becomes nearly impossible to trace. The new directive closes this loophole by forcing transparency at every level the buyer, the seller, and the registrar.
It also makes Nepal’s property market more credible in the eyes of international investors. When money entering the real estate sector is verifiable and clean, it boosts trust. This could attract more legitimate investment and reduce the risks associated with shadow money inflating land prices.
Another important outcome is how this helps Nepal’s efforts to exit the FATF grey list. Strong AML/CFT enforcement shows that the country is serious about combating financial crimes and safeguarding its economy. A cleaner financial image can lead to increased foreign confidence, better trade relations, and easier access to global financing.
Challenges in Implementation
While the directive is a major step forward, implementing it won’t be without challenges. A large part of Nepal’s economy still runs on cash. In rural areas, many property transactions take place informally, and not everyone has easy access to banking facilities. Changing these habits will take time and education.
Another challenge lies in awareness. Many buyers, sellers, and even some land office staff may not yet be familiar with the new requirements. Without proper training, compliance could become inconsistent. The government will need to ensure that local offices, agents, and the general public are informed about the new rules and how to follow them.
There’s also the risk of threshold evasion, where individuals split one large deal into multiple smaller payments to avoid the reporting requirement. The FIU and land offices will need to stay alert for such patterns to ensure the system isn’t abused.
Despite these challenges, the long-term benefits far outweigh the short-term difficulties. The directive creates a structure where transparency becomes the norm rather than the exception.
What This Means for the Future of Real Estate in Nepal
Over time, Directive 2082 is expected to reshape how real estate transactions happen in Nepal. Deals will become more professional, documentation will be standardized, and property values will better reflect real market demand rather than hidden cash flows.
Buyers and sellers who follow the new system will find the process safer and more predictable. Land offices will become better equipped to track and validate property deals. And as financial transparency increases, the overall integrity of Nepal’s economy will strengthen.
Most importantly, these changes lay the groundwork for a cleaner, more trusted property market, one that aligns with global standards and invites both local and international investors to participate with confidence.
Final Thoughts
The Money Laundering Prevention and Combating Terrorism Financing Directive 2082 isn’t just another government rule, it's a step toward modernizing Nepal’s financial and property sectors. By enforcing traceability, mandating formal banking instruments, and requiring transaction reporting, the directive promotes integrity and accountability in one of the country’s most vital industries.
For buyers and sellers, it means adjusting to new norms of transparency. For regulators, it means stronger tools to identify and prevent illegal money flows. And for Nepal as a nation, it represents a move toward financial credibility, stability, and long-term economic growth.
In the years ahead, as the directive becomes fully implemented, Nepal’s real estate sector could emerge as one of the cleanest and most trusted in the region setting a new standard for how property and transparency should go hand in hand.
