Nepalese Embassies Urge Against Sending Money to Nepal via Hundi and Informal Channels from Israel and Cyprus
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The Nepalese Embassy, overwhelmed by the growing use of hundi from Israel and Cyprus, issued a request on Wednesday urging Nepalese workers not to send remittances back home through this illegal channel, bringing renewed attention to the illicit trade.
Despite its illegality, many Nepalese migrant workers abroad still send money to Nepal via hundi.
Om Kumar Bhandari, Acting Nepalese Ambassador to Israel, stated that those sending money through hundi may face difficulties, prompting the embassy to issue fresh warnings. According to him, especially those residing illegally are likely still using hundi services to remit money home.
Some Nepalese working in Israel observed that the tendency to use hundi has decreased as formal remittance channels have become more accessible.
An economist emphasized the need for Nepal’s central bank to strengthen monitoring of money inflows through hundi.
‘Difficult to Gather Evidence’
Image source, Getty Images
The Nepalese Embassy issued a notification on Wednesday alerting the community about transactions conducted through informal channels.
Embassy officials stated they have repeatedly warned about this issue in the past as well.
“The Government of Nepal (Council of Ministers) approved on Chaitra 13, 2082 a list of 100 governance reforms. Point 45 includes establishing an ‘Integrated Digital Asset Registry,’ implementing risk-based red flag systems, and identifying suspicious transactions to initiate investigations through concerned authorities,” the notification said.
“Therefore, all Nepalese in Israel and Cyprus are urged not to participate in informal remittance transactions. Those who are aware of any such activity are requested to report complete details to assist in stopping these informal money transfers.”
Acting Ambassador Bhandari estimates that officially registered Nepalese in Israel number around 6,500. “An estimated 2,000 Nepalese live illegally without registration,” he said.
“Those individuals might be sending funds via hundi or informal channels, but lacking concrete evidence makes this difficult to verify,” Bhandari added.
He noted that currently there is no definitive way to confirm how much money is being remitted to Nepal through hundi.
“Many people working as house caregivers, especially those lacking legal permits, have been reported to be using hundi. Banks and formal channels require presenting a passport when sending money,” Bhandari explained.
A similar notification was also issued in Cyprus, home to an estimated 20,000 Nepalese,” he added.
Views from Nepalese Workers in Israel
Nepalese living in Israel shared mixed opinions about the hundi trade.
Some stated hundi use has declined substantially, while others claimed it still persists at a notable level.
“We used to send most of our money through hundi to save costs, but now people have become more aware and avoid it,” said a Nepalese woman working as a house caregiver.
“For example, when sending money to support children studying abroad, you need to prove the source of income. How can those sending money through hundi show proof of income?” she questioned, outlining the drawbacks of the practice.
Another Nepalese woman recounted reporting such concerns to the embassy.
“Sending money informally creates problems and the remittances through unofficial means do not benefit the country. This is why awareness campaigns have been organized,” she said.
A man who has worked in Israel for eight years noted, “During my first year, I sent money through hundi, but for the past seven years, I have used banking channels.”
“It has become easier and safer, which gives confidence and peace of mind,” he added.
‘Money Invested on Interest’
However, a long-term Nepalese resident in Israel claims that significant amounts of money are still sent through hundi.
“In my opinion, half of the people continue to use hundi. In Israel, hundi operators receive funds from places like Hong Kong and send the money to Nepal even before the salary arrives; once salaries come, workers pay them back,” he explained.
He added that senders must pay additional fees including ‘film charges’ and higher-than-official exchange rates, which perpetuates the practice.
“Once trust is established, helpers in hundi trade vanish at a critical point, causing many to incur losses,” he said.
He also revealed another problem among Nepali workers: “Many lend money on interest, and some face issues with non-repayment.”
Economist’s Perspective
According to Nepal Rastra Bank, Nepalese abroad frequently send money through informal hundi channels.
Officials explain that agents abroad collect funds and disburse cash via various local intermediaries across Nepal, depositing amounts into multiple accounts.
Economist Poshraj Pandey highlighted the urgent need for stricter monitoring of money transfer services within Nepal.
“There must be oversight on these operations and those involved should face penalties,” he asserted.
Pandey explained that migrants opt for informal routes because formal channels are more expensive and time-consuming.
“Informal transfers deliver money faster to households and offer exchange rates above official levels, benefiting the sender,” he stated.
He suggested that the government encourage formal remittances by, for example, allowing tax exemptions on goods up to 10 percent when bringing back items for amounts remitted above NPR 500,000.
He added that embassy alerts alone are insufficient to benefit workers effectively; special measures must be implemented.
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