Kathmandu: The Nepal government has announced a new restriction capping cash transactions at NPR 500,000 in a single purchase or sale of goods and services, effective from January 15, as part of measures to tackle money laundering and illegal financial activities.

According to a notice published in the Nepal Gazette on Thursday, individuals, firms, companies and institutions must conduct any transaction of NPR 500,000 or above exclusively through banking channels or financial institutions.

The decision has been implemented under the Asset (Money) Laundering Prevention Act, 2008, which empowers the government to regulate large cash transactions. Authorities said the move was necessary as cash dealings could facilitate financial crimes, including money laundering and terrorist financing. The policy also comes after Nepal was re-listed on the Financial Action Task Force (FATF) grey list.

Exceptions to Nepal cash limit rule

The restriction will not apply to:

• Deposits made at financial institutions

• Loan repayments, including principal and interest

• Cash transactions between financial institutions

If the source and purpose of the cash are clearly documented, carrying or transporting cash within Nepal is also permitted. Banks may provide cash above the limit to customers under special circumstances upon written application and verification.

Meanwhile, Nepal Rastra Bank has directed banks and financial institutions to ensure payments of NPR 500,000 or above are made only through account-payee cheques or direct bank deposits. Previously, the limit stood at NPR 1 million.

For institutional payments, cheques must also be issued strictly as account-payee cheques, the central bank directive stated.

IANS