Overview: Nepal experienced no significant acts of international terrorism in 2014, although its open border with India and weak controls at Kathmandu's Tribhuvan International Airport raised concerns that international terrorist groups could use Nepal as a transit point.

Legislation, Law Enforcement, and Border Security: Nepali law criminalizes activities related to terrorism, including the financing of terrorism. While Nepal has specialized units to respond to terrorist incidents, law enforcement units lack the capacity to effectively detect, deter, and identify terrorist suspects. An open border with India and relatively weak airport security hamper efforts to implement effective counterterrorism policing.

Nepali police officers continued to participate in the Department of State's Antiterrorism Assistance (ATA) program. In 2014, the ATA program funded nine training courses to improve counterterrorism capabilities within Nepali law enforcement agencies. ATA training focused on building Nepali law enforcement capacity to secure the country's borders from potential terrorist transiting and preventing terrorists from establishing safe havens within Nepal. Additionally, the U.S. Department of Justice International Criminal Investigative Training Assistance Program (ICITAP) trained the Nepal Police in Polygraph Examination to improve criminal investigations, including investigations of potential terrorist activities.

Countering the Financing of Terrorism: Nepal belongs to the Asia Pacific Group on Money Laundering, a Financial Action Task Force (FATF)-style regional body. In 2014, Nepal enacted the appropriate implementing regulations to address key anti-money laundering/countering the financing of terrorism (AML/CFT) deficiencies, including the seizing, freezing, and confiscation of terrorist assets to comply with UN Security Council Resolutions 1267 and 1373 and other provisions established by FATF. Nepal is no longer subject to FATF's monitoring process under its ongoing global AML/CFT compliance process.

Nepali law allows the government to freeze and confiscate terrorist assets; however, coordination among different institutions remained slow. There were no instances of assets being frozen in 2014. The Financial Intelligence Unit (FIU) is currently working to analyze a backlog of several hundred Suspicious Transaction Reports spanning several years, which delay investigations.

Transactions by unauthorized banks and financial institutions to transfer or receive money (such as hundi and hawala) are considered criminal money laundering offenses. However, it is difficult for the Nepali government to investigate informal money transfer systems.

Nepal's central bank, the Nepal Rastra Bank (NRB), licenses and monitors business services that receive remittances. Only banks can legally transfer money out of Nepal. Money transfer services in Nepal may receive inbound remittances, but funds must be distributed to recipients through banks, which are required to collect data on the originator.

The NRB issues directives to banks and financial institutions. In 2014, the Parliament passed a statute that obligates banks and financial institutions, as well as individuals, to view the website of the Ministry of Home Affairs and Ministry of Foreign Affairs. The websites of the Ministries and NRB are linked to the UN website and auto-updated.

The NRB's FIU directives do not cover non-profit organizations, unless there is specific information that they are involved in money laundering and terrorist financing.

For further information on money laundering and financial crimes, see the 2014 International Narcotics Control Strategy Report (INCSR), Volume 2, Money Laundering and Financial Crimes: http://www.state.gov/j/inl/rls/nrcrpt/index.htm.

Regional and International Cooperation: Nepal is a signatory of the South Asian Association for Regional Cooperation (SAARC) Regional Convention on Suppression of Terrorism. Nepal reaffirmed its commitment to the Convention during the 2014 SAARC summit held in Kathmandu.

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