Overview: Nepal experienced no significant acts of international terrorism in 2013, 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.

2013 Terrorist Incidents: On March 13, a group of attackers ambushed a motorcade including Unified Communist Party of Nepal (Maoist) (UCPN(M)) Chairman Pushpa Kamal Dahal (aka "Prachanda") en route to a campaign event in Kanchanpur. Media reported that a landmine exploded near the lead car, but nobody was injured. In the run-up to the November 19 Constituent Assembly Elections, one individual was killed and several injured in sporadic violence. During this period, police and army bomb squads discovered what appeared to be more than 100 improvised explosive devices (IEDs), of which about one-third were in the Kathmandu Valley. While the vast majority of IED scares were hoaxes, at least five actual IEDs exploded. There were no fatalities from any of these relatively unsophisticated IEDs, although on election day, a young child was seriously injured when he handled an IED that he believed was a toy. Also on election day, an IED injured three individuals when it exploded near a polling station in Kathmandu. In addition, there were at least six petrol-bomb attacks on long-distance buses and vans. A bus driver was killed in one of the attacks, and several individuals were injured.

The police arrested more than 200 individuals for involvement in the attacks, including dozens of members of the Communist Party of Nepal-Maoist (CPN-M) – a splinter party that broke from the UCPN(M) in June 2012 and opposed the elections. CPN-M leaders denied responsibility for the attacks, although CPN-M Chairman Mohan Baidya acknowledged at a December press conference that some party members, frustrated that demands to call off the elections were ignored, may have been involved in the petrol-bomb attacks.

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 2013, the ATA program funded six 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 terrorist transit and preventing terrorists from establishing safe havens within Nepal. Additionally, the U.S. Department of Justice International Criminal Investigative Training Assistance Program (ICITAP) began training the Nepal Police in Polygraph Examination to improve criminal investigations, including investigations of potential terrorist activities. The United States also sponsored four joint training exercises with the Nepal Army to develop its counter-terrorism force, the Mahabir Rangers.

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 June, President Yadav signed an additional ordinance to satisfy FATF requirements for criminalizing terrorist finance. The President also approved amendments to the Money-Laundering Prevention Act (MLPA) that give the government broad powers to confiscate assets of terrorist organizations and financiers. In September, Nepal froze the assets of 224 entities and 64 individuals with suspected connections to al-Qa'ida.

In October, the FATF noted that Nepal had largely addressed its action plan and is planning on conducting an onsite review to ensure that the process of implementing the required reforms and actions is underway, including addressing deficiencies previously identified by the FATF.

Nepali law allows the government to freeze and confiscate terrorist assets; however, coordination among different institutions remained slow. The Nepali authorities were in the process of installing computer systems to trace suspected terrorist assets and freeze them.

The Nepal Rastra Bank (the Central Bank of Nepal, NRB), licenses and monitors business services that receive remittances. Transactions by unauthorized banks and financial institutions to transfer or receive money (such as hundi and hawala) are considered criminal money laundering offenses, but it is difficult for the Nepali government to investigate these informal money transfer systems.

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's Financial Information Unit (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.


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