Overview: Nepal’s open border with India and weak security controls at Kathmandu’s Tribhuvan International Airport continued to underpin concerns that international terrorist groups could use Nepal as a transit and possible staging point.
Legislation, Law Enforcement, and Border Security: Nepal lacks a law specifically criminalizing terrorism or material support to terrorist networks. In response to an act of terrorism, Nepali courts would prosecute the perpetrators on the basis of laws pertaining to murder or arson, for example. Most Nepali officials view Nepal as being at no or low risk for an international terrorist incident on Nepali soil. Accordingly, there is little impetus to introduce new laws.
While Nepal has specialized units to respond to terrorist incidents in the Nepal Police Special Bureau, law enforcement units have limited capacity to effectively detect, deter, and identify terrorist suspects. An open border with India and relatively weak airport security increased the risk that international terrorists could use Nepal as a transit or staging point.
Nepal had limited ability to process modern forms of evidence (e.g., cyber, DNA, explosives); however, law enforcement in Nepal has demonstrated interest in receiving outside technical assistance and training. Nepal cooperated with other South Asian countries in their requests to investigate terrorists, mainly through identification and tracking.
Kathmandu’s Tribhuvan International Airport lacked state of the art baggage screening technology and relies on physical pat-downs alone for passengers. There were weak controls for restricting access of airport employees throughout the facility, and initial and recurrent background checks on employees were not sufficiently rigorous.
Nepali police officers participated in the Department of State’s Antiterrorism Assistance (ATA) program; ATA assistance included courses focused on building the capacity of civilian security forces to secure the country’s borders – including both land and air points of entry – from terrorist transit into and out of Nepal.
Countering the Financing of Terrorism: Nepal belongs to the Asia Pacific Group (APG) on Money Laundering, a Financial Action Task Force (FATF)-style regional body. While the Government of Nepal made progress in 2015 in constructing an anti-money laundering/ countering the financing of terrorism (AML/CFT) regime, additional work is required to develop expertise in financial crimes investigations, case management, interagency and departmental coordination, and border control. Government corruption, a large and open border with weak border enforcement, limited financial sector regulations, and a large informal economy continued to make the country vulnerable to money laundering and terrorism financing.
Nepal hosted the APG Typologies Meeting in November 2015, and Nepali judges, prosecutors, and officials from Nepal’s financial intelligence unit (FIU-Nepal), which is a member of the Egmont Group, participated in regional counterterrorism conferences. FIU-Nepal and the Department of Money Laundering Investigations lacked access to relevant data that would detect nefarious activity in informal money transfer systems such as hundi and hawala, which are illegal in Nepal.
Government and banking industry officials reported that the majority of remittances flow through formal banking channels, but a significant portion – 40 percent, according to one official estimate – moved through informal channels such as hundi and hawala. Additionally, the government has limited ability to determine whether the source of money ostensibly sent as remittances from abroad is licit or illicit. The open border with India and inadequate security screening made it difficult to detect smuggling of currency, gold, and counterfeit notes.
Nepali authorities announced plans to install computer systems to help law enforcement agencies share financial data, trace suspected terrorist assets, and freeze them. As of late 2015, however, the computer system was not functional and government agencies involved in countering financial crimes lacked the ability to electronically share information.
Nepal’s Central Bank’s FIU directives do not cover non-profit organizations, unless there is specific information that they are involved in money laundering and terrorism financing. The Parliament passed a statute that obligates banks and financial institutions to check the websites of the Ministry of Home Affairs and Ministry of Foreign Affairs to obtain such information.
For further information on money laundering and financial crimes, see the 2016 International Narcotics Control Strategy Report (INCSR), Volume II, Money Laundering and Financial Crimes: http://www.state.gov/j/inl/rls/nrcrpt/index.htm.
International and Regional Cooperation: Nepal is a signatory of the South Asian Association for Regional Cooperation Regional Convention on Suppression of Terrorism.