Citizens’ Money Must Be Safe in a Digital Nepal

Mobile banking, digital wallets, QR payments and online transactions are expanding rapidly across Nepal. The need to carry cash has declined, services have become faster and access to banking has improved. But this growth has also brought a serious rise in online fraud, fake phone calls, OTP scams, phishing links, social media-based financial crimes and the misuse of accounts opened in other people’s names.

Expanding the digital economy alone does not amount to modernization. Protecting citizens’ money is the first condition of a credible digital system.

The nature of fraud has changed. Criminals pose as bank employees. They send links claiming that a prize has been won. They imitate the social media accounts of acquaintances. They claim that money has arrived from abroad, that a parcel has been held, that tax must be paid or that an account is about to be blocked. In some cases, victims are persuaded to install applications that give fraudsters access to their devices and financial accounts. Once money is transferred, it can be moved through multiple accounts within minutes, making investigation and recovery far more difficult.

The entire responsibility cannot be placed on citizens.

Banks and financial institutions are right to warn customers never to share an OTP. But that warning does not end their institutional responsibility. How effective are their systems for identifying unusual transactions? Why are alerts not triggered when a newly active account suddenly receives and transfers abnormal amounts of money? Why is stronger verification not required for high-risk transactions from unfamiliar devices or locations? How quickly can suspicious funds be frozen once fraud is reported? These questions must be taken seriously by the financial sector.

Time is the most critical factor in digital fraud. Even when a victim reports a fraudulent transfer within minutes, delays in communication among banks, wallet companies, police and regulators can allow the money to pass through several accounts before action is taken. Nepal therefore needs an integrated, round-the-clock rapid response mechanism involving banks, digital wallets, Nepal Rastra Bank, Nepal Police and telecommunications service providers.

There should be a clear legal and technical framework allowing suspicious funds to be temporarily frozen immediately after a credible fraud complaint. Such a system must protect the rights of innocent account holders while enabling rapid intervention, source verification and referral to investigators when necessary. Paper-based bureaucracy cannot compete with crimes that move at digital speed.

Another serious problem is the use of bank accounts and digital wallets opened in the names of third parties or rented out for commission. Fraudsters rarely keep stolen money in their own accounts. They often use accounts belonging to economically vulnerable people, the unemployed or individuals with limited understanding of digital finance. Some account holders may not even realize that their accounts are being used in criminal activity. Banks and financial institutions therefore cannot treat customer identification as a one-time formality. Continuous monitoring of abnormal transaction patterns is essential.

Senior citizens, new digital users in rural areas and people with limited technological familiarity are especially vulnerable. Institutions that promote digital services must not only teach people how to use them. They must also teach them how to recognize fraud. Banks, local governments, schools, civil society organizations and the media should conduct regular digital security awareness campaigns.

Telecommunications companies also carry an important responsibility. SIM cards obtained under false identities, numbers repeatedly used for fraud and suspicious communication patterns must be investigated quickly and lawfully in coordination with security agencies. A system in which phone numbers are easy to acquire but difficult to trace when abused creates a favorable environment for digital crime.

The cybercrime investigation capacity of Nepal Police must also grow at the same pace as digital transactions. Financial crime is no longer confined within a district or even within national borders. A call may originate in one place, the digital infrastructure may be located in another country and the money may pass through several accounts before reaching a different destination. Investigating such crimes requires specialized technical personnel, digital forensic capacity and strong inter-agency coordination.

The most important issue, however, is accountability. A citizen who loses money through fraud should not be sent from the bank to the police and then back from the police to the bank. There must be a clear system explaining where a complaint should be filed, how quickly it will be registered, who will attempt to freeze the funds and how the victim can track the progress of the investigation.

A digital economy depends on trust. Citizens cannot be encouraged to adopt mobile banking and then be left alone when fraud occurs.

Nepal is rightly presenting the expansion of digital payments as a sign of progress. The next stage, however, is more demanding. The country must now measure not only the number of transactions but also the level of security behind them. Citizens should experience not only convenience when transferring money digitally, but also institutional protection.

Expanding technology is progress. Expanding secure technology is good governance.

In a Digital Nepal, it should never be acceptable for a citizen’s money to disappear within minutes and for the victim to spend days searching for the institution willing to take responsibility.