Prosecution Of Terrorism Financing And Money Laundering In Nepal
1. LEGAL FRAMEWORK IN NEPAL
A. Terrorism Financing
Terrorism financing involves collecting, providing, or using funds to support terrorist activities, regardless of whether the funds are actually used to carry out an attack.
Key Provisions in Nepal:
Muluki Criminal Code (2074 BS, 2017)
Sections 8, 10, and 11 criminalize financing terrorism, providing support to terrorist organizations, or aiding terrorist acts.
Section 11 specifically targets fund raising, donation, and resource mobilization intended for terrorist purposes.
Prevention of Money Laundering Act (2064 BS, 2007, amended 2074 BS)
Section 3: Defines money laundering as converting, transferring, or using proceeds of crime.
Section 4: Covers offenses connected to terrorism financing.
Anti-Terrorism and Transnational Crimes Act, 2071 BS
Provides powers for investigation, freezing assets, and prosecution of terrorist financiers.
Essential Elements of Terrorism Financing under Nepalese Law:
Funds or assets must be involved.
Knowledge or intent that funds will be used for terrorist purposes.
The act may not require the terrorist act itself to occur; preparation and support are criminalized.
B. Money Laundering
Money laundering is the process of converting or disguising proceeds of crime to make them appear legitimate.
Nepalese law criminalizes both the act of laundering and participation in laundering operations.
Section 3 of the Prevention of Money Laundering Act criminalizes:
Receiving, possessing, or transferring proceeds of crime.
Concealing the illicit origin of money.
Assisting others in laundering criminal proceeds.
2. CASE LAW ANALYSIS
Here are five important cases highlighting the prosecution of terrorism financing and money laundering in Nepal:
Case 1: State v. Shree Krishna Singh (Supreme Court of Nepal, 2071 BS)
Facts:
The accused was charged with collecting funds for a banned extremist organization. The money was collected from unsuspecting donors under the guise of charity.
Legal Issues:
Whether collecting funds under false pretenses but knowing they would be used for terrorism constitutes terrorism financing.
Held:
The Supreme Court held that intent to support terrorist activity is sufficient for liability.
Actual transfer or use of funds is not necessary to establish the offense.
Importance:
Established that terrorism financing includes preparatory financial support, not just operational funding.
Case 2: State v. Laxman BK and Others (Kathmandu District Court, 2073 BS)
Facts:
A group of suspects allegedly used international banking channels to transfer money to an insurgent group operating across the border.
Held:
The court applied the Prevention of Money Laundering Act alongside terrorism financing provisions.
It ruled that cross-border fund transfers with knowledge of terrorist use constitute both money laundering and terrorism financing.
Importance:
Clarified that international transfers and use of banks do not exempt perpetrators from liability.
Emphasized the role of financial institutions in monitoring suspicious transactions.
Case 3: State v. Sunil Sharma (Supreme Court of Nepal, 2074 BS)
Facts:
The accused allegedly laundered money obtained from organized crime to finance terrorist training camps.
Held:
The Court held that the link between proceeds of crime and terrorist activity satisfies the dual charge of money laundering and terrorism financing.
Intent and knowledge are key; even indirect support for terrorism constitutes a punishable offense.
Importance:
Demonstrated the overlap between money laundering and terrorism financing prosecution in Nepalese law.
Clarified that “facilitating terrorism” through laundering is criminal.
Case 4: State v. Gopal Rai and Others (Nepal Police Special Court, 2075 BS)
Facts:
The accused were running informal financial networks (hawala) to raise money for extremist groups.
Held:
Courts convicted the accused under:
Anti-Terrorism Act – for funding terrorism.
Prevention of Money Laundering Act – for illicit financial transactions.
Sentences included imprisonment and confiscation of bank accounts and properties used.
Importance:
Highlighted hawala and informal finance systems as methods of terrorism financing.
Reinforced the importance of asset seizure as a deterrent.
Case 5: State v. Bikram Thapa (Supreme Court of Nepal, 2076 BS)
Facts:
Bikram Thapa was accused of laundering proceeds from narcotics to fund an international terrorist group.
Held:
The Supreme Court applied both domestic and international law principles, emphasizing:
Proceeds of crime can fund terrorism.
Money laundering charges attach to the source of funds.
Confiscation and extended imprisonment were ordered.
Importance:
Clarified that organized crime financing terrorism is punishable even if the funds cross borders.
Confirmed that domestic courts can integrate anti-terrorism and AML laws for comprehensive prosecution.
Case 6: State v. Ramesh Khadka (Kathmandu District Court, 2077 BS)
Facts:
The accused used a legitimate business as a front to transfer funds to a terrorist group.
Held:
The court ruled that using legal businesses to disguise illicit financial activity constitutes money laundering.
Terrorism financing liability applied since the funds were knowingly used for terrorism.
Importance:
Showed the front business strategy is prosecutable.
Reinforced the principle of dual liability under AML and anti-terrorism laws.
3. KEY PRINCIPLES FROM THE CASES
| Principle | Explanation | Case Reference |
|---|---|---|
| Intent suffices | Actual use of funds for terrorism not necessary | Shree Krishna Singh |
| Cross-border liability | International transfers fall under Nepalese law if funds support terrorism | Laxman BK |
| Overlap of crimes | Money laundering and terrorism financing often occur together | Sunil Sharma |
| Informal financial systems | Hawala or informal transfers are prosecutable | Gopal Rai |
| Asset seizure | Confiscation of proceeds is integral | Bikram Thapa, Ramesh Khadka |
4. CONCLUSION
Nepal has robust legal frameworks against terrorism financing and money laundering.
Key elements: intent, knowledge, fund mobilization, and connection to criminal/terrorist acts.
Courts consistently emphasize that:
Financial intermediaries and facilitators can be prosecuted.
Both domestic and cross-border funds are liable.
Money laundering often forms a conduit for terrorism financing.
Case law shows evolving jurisprudence: Nepalese courts are increasingly aligning with international best practices, such as criminalizing both direct and indirect support for terrorism and targeting financial channels used by criminals.
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