Government Tightens Real Estate Transactions: Bank Statements & KYC Now Mandatory

In a major step to curb money laundering and increase financial transparency, the Government of Nepal has enforced stricter regulations for buying and selling land and property. From now on, both the buyer and seller must submit their bank statements and KYC forms before the property transaction is approved.

The Ministry of Land Management, Cooperatives, and Poverty Alleviation implemented this rule under Section 7(n), Sub-section (2) of the Money Laundering Prevention Act, 2008 (2064 BS). Instructions have already been sent to land revenue and land reform offices nationwide to enforce the rule.

Mandatory Banking for Transactions Above NPR 1 Million

All land/property transactions over NPR 10 lakh (1 million) must be carried out through formal banking or digital payment systems:

• Transactions between NPR 1 million to NPR 5 million: must go through banking or digital payment channels.

• Transactions above NPR 5 million: must be processed directly via digital banking or a "Good for Payment" cheque in the seller’s name.

Registration and Tax Payments Through Bank Accounts

• The registration fees and documentation charges must be paid from the buyer’s bank account.

• The capital gains tax (laphkar) must be deposited from the seller’s bank account into the government's designated revenue account.

Even if a buyer submits a notarized sale agreement (bainapatra) certified by the local government, it will not be accepted unless a bank statement showing the transfer of funds from the buyer’s account to the seller’s account is also attached.

If a person (natural or legal entity) buys or sells land/property worth NPR 30 million or more in a single day, whether in one or multiple transactions, it must be reported to Nepal Rastra Bank’s Financial Information Unit (FIU).

If a real estate transaction seems suspicious, the responsible office or institution must report it to the Financial Information Unit (FIU). The directive applies to both individuals and legal entities.

Nepal was placed on the FATF Grey List due to weak enforcement of anti-money laundering laws. The FATF has given Nepal two years to make reforms. Finance Minister Bishnu Poudel has committed to getting Nepal off the list before the deadline. This move is part of that commitment.