Nestled between two giants China and India, Nepal, during most of its modern history, has been less exposed to the sort of crimes and threats that countries around the world have been facing. However, with its exposed position in the international arena, coupled with weak political stability and rule of law, especially in the last two decades, it seems to be no longer a forlorn land for crimes that transcend national frontiers, particularly terrorism, money laundering and drug trafficking.

Security threats

The recent US Country Reports on Terrorism 2015 has expressed concern that terrorists might use informal money transfer systems such as hundi and hawala which are rampant in Nepal, for money laundering and terror financing. The report has cited corruption, open border with India, weak enforcement mechanism and a large informal economy as responsible factors for such crimes. The US report has also pointed to lack of state-of-the-art technology at Tribhuvan International Airport (TIA), the only international airport in the country, for checking travellers’ baggage and weak security measures which has heightened the risk of unscrupulous elements using TIA as their conduit for such crimes. The report, indeed, has brought to the fore the issue of international terror financing which the government of Nepal needs to address rather seriously.

At first sight, drug trafficking and terrorism are totally different forms of crime. However, the two often exist in combination, somewhat like a horse and carriage. The relationship is very obvious because terrorism requires huge amounts of cash, and it can only be provided by clandestine means like drug trafficking which has a huge potential for lucrative underground trading. So far, no case of terror financing has been revealed, but drug trafficking, counterfeiting and arrest of alleged terrorists are what the Nepal Police usually comes across. 

According to the Department of Prison’s statistics, most of the 850 foreigners in Nepali jails in 2015 were serving time for drug trafficking. Some alleged terrorists like Afjal Bhatkal were reportedly caught in Nepal and handed over to the Indian authorities for criminal proceedings in India. On the other hand, research by Nirmal Raut and others shows that there has been a phenomenal growth of the underground economy in recent decades with an unexpected ‘upsurge’ in the last few years. The growth rates were recorded at 19.21 percent between 1991 and 2000, 16.68 percent between 2001 and 2010 and 31.7 percent between 2011 and 2012. These figures and facts clearly suggest that the country will have to pay a heavy price if the government shows complacency in taking timely action on this front.

Beyond borders

The fear that Nepali territory could be used for terrorist activities has always been an issue of ‘security concern’ for India. The southern neighbour has long been asking the government to allow it to station its security personnel at TIA. Revelations of cases relating to drug trafficking, foreign currency and gold smuggling and counterfeiting of foreign currency and the extraterritorial connection of these cases point to the possibility of Nepali territory being used for terror financing. To counter such crimes, the government of Nepal has passed Money Laundering Prevention Act, 2008. One of its main objectives is to act against terror financing. The Department of Money Laundering Investigation (DMLI) has been established to implement this law. However, only a few cases have been prosecuted.

Recently, the names of a number of Nepalis appeared in the much publicised Panama Papers leaked from a law firm which contained a list of companies and individuals who have opened offshore companies of various sorts with the aim of enjoying tax haven facilities. The leak raised public eyebrows in various countries, and there are apprehensions that some of these companies may be linked to money laundering for the purpose of terror financing. The DMLI is said to have started an investigation into the case, but it seems very unlikely that it will be able to unearth anything worth prosecuting in a court of law.

Not overstated

The vulnerability of Nepali territory is heightened because the 1,868-km-long border with India is not protected and regulated. Anybody wishing to go from one jurisdiction to another can easily cross the border. The population of Nepal is 28 million while India has 1.32 billion people. In this situation, it would be difficult to trace anyone who crosses the border into India and mingles with the vast ocean of people there. There are cases where security officers of either country have arrested fugitives and handed them over to the respective authorities. However, this is simply informal cooperation between the functionaries of the two governments. As long as the border is unregulated and not managed properly, the situation of cross-border crime is not going to be checked. It will rise unabated.

The interesting thing is that both the countries are signatories to the Saarc Regional Convention on Suppression of Terrorism. There exists an extradition treaty between the two countries, but it is not being followed. A new extradition treaty and a Mutual Legal Assistance Treaty have been negotiated and authenticated but not formally

signed by the two countries. Hence, everything in this connection is simply being run on the basis of convenience. A matter of such serious implication should not be left alone. Hence, whatever has been said in the US Country Reports on Terrorism is something very serious. Both India and Nepal should pay proper attention and not brush it aside in the manner of a Nepali foreign office official who called the report “overstated”.