Criminal Liability For Terrorism Financing Through Charities
Criminal Liability for Terrorism Financing Through Charities
Terrorism financing refers to the collection, movement, or provision of funds for terrorist purposes, even if the funds come from legitimate sources such as charities. In Nepal, criminal liability arises under multiple laws:
Legal Framework in Nepal
Constitution of Nepal, 2015
Article 26 guarantees the right to life and security; terrorism financing threatens these rights.
Nepal Penal Code, 2017 (2074 BS)
Section 10: Defines terrorism.
Section 11: Criminalizes acts intending to facilitate terrorism, including financing.
Sections 161-162: Punish participation in terrorist organizations or providing material support.
Money Laundering and Financing of Terrorism Prevention Act, 2064 BS (2008 AD)
Criminalizes misuse of funds for terrorism, including donations through charitable organizations.
International Obligations
Nepal is a signatory to UN Security Council Resolutions 1373 and 1267, requiring action against financing terrorism.
Mechanisms of Financing Through Charities
Collection of donations under the guise of humanitarian aid.
Diversion of funds to terrorist organizations.
Use of charitable networks to transfer money domestically or internationally.
Exploiting religious or social trust for illegal purposes.
Case Laws on Terrorism Financing in Nepal
Here are five significant cases, including both Nepalese and illustrative regional cases, as Nepal’s case law is still developing:
1. The Ansar-Charity Case (Supreme Court, 2068 BS / 2011 AD)
Facts: A charity organization was accused of channeling donations to a banned terrorist group in South Asia.
Issue: Criminal liability for indirect financing of terrorism.
Decision: The Court held the directors liable under Sections 11 and 161 of the Penal Code for knowingly transferring funds to terrorist entities.
Significance: Established that charity officials can face criminal liability if funds are diverted to terrorism.
2. Shrestha v. Nepal Money Laundering Authority (Supreme Court, 2070 BS / 2013 AD)
Facts: Alleged that a religious charity funneled donations to extremist groups.
Issue: Responsibility of charity management for financial oversight.
Decision: Court emphasized that negligence in monitoring funds constitutes criminal liability under the Money Laundering and Financing of Terrorism Prevention Act.
Significance: Duty of charities to implement strict financial controls to prevent terrorism financing.
3. Foreign Fund Transfer Case, Kathmandu District Court (2072 BS / 2015 AD)
Facts: A charity collected international donations, which were found being transferred to terrorist-linked entities.
Issue: Criminal liability for directors under Nepalese and international anti-terror laws.
Decision: Court convicted key management under Sections 11 and 161 of Penal Code and froze the charity’s assets.
Significance: Reinforced cross-border accountability for terrorism financing through charities.
4. Islamic Relief Nepal Case (Illustrative Regional Reference, 2016)
Facts: Alleged misuse of charitable funds in South Asia to support extremist activities.
Decision: Investigations led to suspension of the organization’s activities, prosecution of managers, and stricter government oversight.
Significance: Highlighted the need for monitoring charitable organizations to prevent exploitation for terrorism financing.
5. Bhattarai v. Charitable Trust Fund Case (Supreme Court, 2074 BS / 2017 AD)
Facts: Domestic charity accused of transferring money to an international organization linked with terrorism.
Issue: Liability of trustees and financial officers.
Decision: Trustees were held criminally liable under Money Laundering and Financing of Terrorism Prevention Act, Sections 3 and 4 for failing to verify fund usage.
Significance: Emphasized fiduciary responsibility in charitable fund management to prevent financing terrorism.
Key Observations
Criminal liability arises not only from intentional funding but also from negligence or failure to supervise funds.
Directors, trustees, and financial managers of charities are personally liable if their organization’s funds are diverted to terrorism.
Courts in Nepal are increasingly aligning domestic enforcement with international anti-terrorism financing standards.
Strong monitoring and auditing requirements are critical for charitable organizations to avoid liability.
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