People

Human trafficking is a large and profitable market in Nepal, a country serving primarily as a source and transit point. Nepali men are often trafficked for forced labour in construction, agriculture and hospitality, whereas women and children are trafficked for similar forced labour roles, forced marriages and prostitution. The victims are usually moved into India, the Middle East, Asia and Europe. As many people live in remote and economically deprived areas in Nepal, they are particularly vulnerable to recruitment methods of traffickers. Domestically, victims are often subjected to bonded labour through the haliya and kamaiya systems, in which debts are created that victims cannot escape from. Government officials are known to systematically facilitate the practice of human trafficking and accept bribes.

Although not quite as large as the trafficking market, human smuggling is still widespread in Nepal due to push factors such as poverty, high unemployment rates and political instability. Nepali human smugglers are part of well-connected and sophisticated criminal networks that spread across countries and continents to manage the movement of people. Government officials are also implicated in this practice by accepting bribes to create false identity documents. Increasing environmental insecurity and natural disasters are also leading to more Nepali people seeking to be smuggled abroad.

Trade

There is a market for illicit arms in Nepal, particularly for small arms, which are trafficked across the border with India, and to a lesser extent from China. Criminal gangs on both sides of the border work together to smuggle arms into Nepal. Small arms are a problem and circulate throughout Nepal, often seized from local gangs or are found to have been used in various forms of criminal activity, including theft, extortion and homicide.

Environment

Around 25% of Nepal is covered by forest, which creates plenty of opportunity for flora crimes, the most common of which are illegal timber and fuelwood harvesting, infrastructure development and overgrazing. Timber smugglers are often Nepali nationals living near forests close to the border with India, while some flora products are also smuggled into China. Furthermore, Nepal is a transit and source country for illicit fauna products, predominantly rare and endangered species, usually feeding into the large Chinese market. Nepal nationals generally arrive in Kathmandu with poached wildlife to sell to racketeers, who eventually smuggle the contraband into foreign countries. Wildlife crime is driven by poverty, lack of conservation awareness and poor law enforcement of wildlife crimes.

Nepal is a major transit route for gold, due to its proximity to China and India, both of which have large gold markets. As India in particular generates a high demand for gold (where it sells for high prices), smugglers look to bring gold in from China and smuggle it through Nepal into India. Migrant workers returning to Nepal are increasingly being lured into the illicit activity due to its higher wages. The market features notable levels of violence as rival criminal groups fight for profits.

Drugs

Cannabis is the largest drug market in Nepal, where locals receive seeds, money and fertilizers from India for its cultivation. The drug is then shipped back to India where the market for cannabis is large. Nepal is a source and transit country for opiates, with neighbours in China and India that have large markets for heroin. Nepal has developed a small and primitive production line generating quantities of low-grade heroin. Despite not being a significant producer or transit route for narcotics, Nepal’s production and shipments of opiates have been growing.

Nepal is a transit country for synthetic drugs, particularly methamphetamines produced in South and East Asia. The trafficking and abuse of psychotropic substances is rising in Nepal, with large seizures of drugs such as diazepam being made every year. Nepal also remains a transit country for cocaine, and while it is not used or sold locally, trafficking to China, India, Thailand and other East Asian countries is increasing.

Cyber Crimes

*This indicator was first included in the 2023 iteration of the tool

Financial Crimes

*This indicator was first included in the 2023 iteration of the tool

Criminal Actors

Mafia-style groups in Nepal are mostly small organizations, as opposed to the sophisticated and widely networked groups operating in neighbouring countries such as India or Pakistan. Nepal’s drug trafficking market is characterized by many small groups vying for a greater market share but with no group holding any sort of monopoly. Gangs are often active in development initiatives, including national and district-level infrastructure construction contracts. Nepali human smugglers have been apprehended in Malaysia and routinely run extortion campaigns. While such groups have not entirely penetrated law enforcement, they do receive cooperation and protection from certain members of the authorities to conduct their smuggling operations.

Criminal networks are especially involved in fauna crimes and work with individual Nepali hunters and poachers; middlemen who arrange the transport of the wildlife; and high-level Chinese and Indian brokers who manage operations, often out of Kathmandu. All levels of the state are heavily involved in corruption and are entwined with criminal groups. The political instability within Nepal has led to a severe lack of accountability and provided ideal conditions for all manner of corrupt practices, including financial crime and bribery from gold smugglers. The youth wings of political parties are also increasingly involving themselves in extortion activities and are key players in the country’s organized crime landscape.

There is a highlevel of involvement from foreign criminal actors in Nepal’s criminal markets, with Chinese and Indian brokers essentially running wildlife trafficking within the country. There are also high levels of involvement from foreign actors in drug smuggling and moving contraband into and out of Nepal’s borders into larger and more profitable countries and markets.

Leadership and governance

The government’s efforts to tackle criminal markets are very weak and often the political parties, and importantly their youth wings, are actively involved in these illicit economies and criminal networks. Levels of public trust in the political and financial systems are very low and the politicization of public bodies is widespread. The only area where the government has shown leadership is in tackling wildlife crime, being the first country to have brought down poaching to all its flagship species – elephants, rhinos and tigers, to zero. Corruption is rife, and Nepali political institutions are still mired in historical patronage networks that function through bribery, embezzlements and payments of baksheesh. Although Nepal boast an inclusive anti-corruption legal framework, its implementation is poor. While there are transparency measures in place, such as the right to access information, the mechanisms are poorly defined and inconsistently enforced.

Overall, Nepal’s international cooperation is adequate. The country is particularly involved in fighting illegal wildlife trade, especially with China and India. As an important source country for human trafficking and smuggling, Nepal relies heavily on, and is engaged substantially in, international cooperation in these matters. However, Nepal has failed to ratify treaties around the arms trade, and while it is often a participant in international cooperation, its enforcement measures are frequently lacking. Additionally, because of the lack of transparency and rife corruption, foreign aid is often diverted from its perceived destination. Although Nepal has national laws and policies in place pertaining to most forms of organized crime, they are usually insufficient and ineffective. Nepal’s legislation focuses largely on human trafficking, but even in this regard the legislation is not comprehensive. The Nepali government has made amendments to its legislation to try to bring it in line with international standards in recent years, but there is still much improvement to be made. The illegal wildlife trade stands as the only area of successful government action in combating organized crime.

Criminal justice and security

The Nepali judiciary is independent on paper; however, corruption permeates many of the country's courts, where the payment of bribes persists. Furthermore, many Nepalis have only limited access to justice. Courts are under-resourced and face serious backlogs and a slow appeals process. Nevertheless, in 2015, the Supreme Court of Nepal did impeach a numberof political leaders on allegations of corruption and there has been a significant number of prosecutions for wildlife crimes.

After the civil war, the authorities struggled to maintain law and order, notably in rural areas. The state apparatus was controlled by privileged groups prone to political manipulation and corruption. Corruption is rife among the lower levels of the police, especially near border areas, and public trust in the police is very low. Furthermore, police effectiveness is limited by a lack of resources and training. Although the Ministry of Home Affairs has created some bodies to combat certain types of organized crime, they have limited effectiveness and do not stretch to all forms of organized crime. However, Nepal’s response to wildlife crime has been highly effective, in large part due to an effective law enforcement response, namely by the wildlife crime control bureau. Nevertheless, this success is an exception, rather than the rule, in regard to effective policing. The long and porous border separating Nepal from India and China is difficult to police, has weak controls and is vulnerable to cross-border criminality, especially arms and drug trafficking. The Terai region which borders India is ideal for many criminal activities and is often used as a buffer province of India.

Economic and financial environment

Nepal is one of the poorest and most underdeveloped states globally, whose economic growth has been adversely affected by political uncertainty, conflict and natural disasters. Furthermore, Nepal has a large shadow economy, with over half of businesses operating solely in the informal economy. While improvements have been made in regard to financial inclusion and access to credit, contract enforcement is still very poor, and despite the regulatory efforts that have been made in recent years, business confidence remains very low in Nepal.

Nepal is regarded as an ideal place for money laundering due to its lack of economic stability, weak interrogative system and an open border with high levels of informal transactions with India. Despite being among the most vulnerable countries in Southern Asia for money laundering, Nepal has made significant improvements in recent years due to the financial intelligence unit formally entering the Egmont Group and working more closely with banks and government departments. However, the improved institutional and legal frameworks around anti-money laundering legislation are weakened by the lack of detailed and digitized data held by banks, as well as a large informal economy and money transfer market.

Civil society and social protection

While a number of measures have been implemented to support victims of organized crime, especially trafficking victims, significant gaps remain, such as inadequate funding for support centres for victims of human trafficking, and an overall lack of effectiveness. Nepal’s witness protection legislation is sorely missing, which creates an environment where criminal groups can act with impunity. While Nepal was one of the first Asian countries to engage in drug harm reduction programmes, the rehabilitation services are privately operated and unaffordable to most people who use drugs, making them highly ineffective.The Nepali government’s greatest achievement in the prevention of organized crime is in regard to the illegal wildlife trade, where the country boast great success. The importance placed on conservation, the creation of oversight bodies and the introduction of community-based anti-poaching units have been key to this success. However, while the country has been successful domestically, Nepal is still used as a transit point for the illegal wildlife trade and this has yet to be addressed. In so far as they exist, prevention measures with other forms of crime have been largely unsuccessful. Anti-trafficking committees lack the resources to be effective, and public awareness campaigns have not reached the most critical areas. The government has failed to ensure adequate labour inspections to root out exploitation, and has made minimal efforts to prevent child sex tourism. Drug use prevention methods have been limited to awareness campaigns in schools and have been ineffective.

NGOs play an active role in Nepal, from natural disaster response to pressuring the government to introduce measures to tackle human trafficking, and have been particularly successful in forcing the government to recognize organized crime-related issues and to widen the debate around them. While NGOs and civil society groups are strong, the persistence of government corruption and institutional cronyism obstructs their efforts. Since 2008, Nepal’s government has taken a decidedly more authoritarian approach to censorship and civil liberties. Independent radio and print outlets show a bias towards particular political parties and there are reports of intimidation. While the internet is not censored, the country criminalizes libel and defamation, which has caused many journalists to self-censor.

People

Human trafficking in Malaysia generally takes the form of both forced labour and sexual exploitation. Malaysia is primarily a destination country for labour trafficking because of its perceived stable economy and geographical position, being located in the vicinity of countries such as Thailand and Myanmar. Typical origin countries of victims of human trafficking in Malaysia include Bangladesh, Myanmar, Cambodia, India, Indonesia, Laos, Nepal, the Philippines, Thailand, and Vietnam. With regard to sex trafficking, however, Malaysia is primarily a source country and Malaysian women and children are trafficked to Singapore, Japan, Canada, US, Europe and Australia. Within Malaysia, sex trafficking victims often work in brothels. Children, especially girls from rural areas, are particularly vulnerable to internal trafficking for sex slavery. Actors involved in human trafficking are primarily large organized crime syndicates comprising foreign actors and criminal networks. State-embedded actors are also believed to be involved in some cases.

Malaysia is both a major transit and destination country for human smuggling, with the majority of irregular migrants arriving from Myanmar, Indonesia and Bangladesh. As with human trafficking, Malaysia’s strategic geographical position and labour shortages contribute to its position as a major destination country for human smuggling. It is also a transit point for nationals from Southeast Asia destined for the Middle East, Europe, North America and Australia, often through the combined use of air and overland travel. Actors involved in human smuggling are primarily foreign actors who deceive undocumented workers into believing that they are migrating via regular channels.

Trade

Although Malaysia’s gun legislation is restrictive, crimes involving small and light weapons have increased in recent years. The country’s strategic location near South Thailand and Mindanao has contributed to the cross-border smuggling of small arms and light weapons. Arms are generally trafficked along the Thai and Kalimantan borders, as well as in the south of Malaysia, via boats from Indonesia. Some of these small and light weapons are destined for use in Peninsular Malaysia, while others are shipped onwards. The rise in arms trafficking in recent years has increased in part because of demand driven by violent extremist actors in the country. Firearms remain easily accessible through purchasing and rental services. There have also been numerous sightings of illicit firearms at rallies throughout Malaysia, and there are issues related to corruption of law enforcement officers who claim to lose their firearms.

Environment

Criminal markets in flora, fauna and natural resources are pervasive across Malaysia. Although the country has tough laws against the practice, hundreds of cases of illicit logging have been recorded in recent years. Illicit activity in the forestry sector may have contributed to rapid deforestation and has resulted in significant revenue losses. Sarawak and Sabah on the island of Borneo appear to be key sources of illicitly logged wood, with data suggesting that China and Vietnam, and to a lesser extent Thailand and India, are importing it. State-embedded actors dominate this activity, including corrupt government officials and government-supported groups. Reported issues include illegal practices in the issuance of licences for plantations and the violation of native customary rights.

Being one of the most biodiverse countries in the world, Malaysia has become a target for criminal networks engaged in wildlife poaching and trafficking. The country is both a source and transit hub for a wide variety of internationally trafficked wildlife products, including pangolin, tigers, birds and reptiles. Persistent poaching has reduced the Malayan tiger population to fewer than 200 animals, a situation exacerbated by the threat of habitat loss and encroachment. Malaysia has also emerged as a key transit hub for the global ivory trade. Typically, the ivory originates in Africa, then is exported to Malaysia, where paperwork is falsified, and the shipment continues to destination countries. In addition to domestically poached animals and ivory, Malaysia has become a transit country for Testudines originating in India, Sri Lanka, Bangladesh and Madagascar.

A criminal market exists in Malaysia for illegal gold and bauxite. The annual output of bauxite ore has increased significantly in the past few decades and Malaysia is now among the world’s top producers. It is believed that a large proportion of this bauxite ore is illegally mined. This results in considerable environmental damage and lost revenue.

Drugs

Malaysia is a transit hub for drugs and a destination country for heroin, in addition to various types of synthetic drugs. The synthetic drug trade is the largest criminal drug market in Malaysia and the country is both a transit and destination country. MDMA, ketamine and methamphetamine, in particular, appear to be the most widely consumed hard drugs in Malaysia and authorities have witnessed a sharp increase in the consumption and seizure of these drugs in recent years. While local demand is strong, drugs with higher purity are often moved to richer markets such as those in South Korea, Australia, Japan and New Zealand.

Malaysia is also a major transit country for heroin destined for Indonesia, Singapore, China, Japan, Korea, New Zealand and Australia. While the heroin consumer base in Malaysia remains at moderate levels, evidence suggests that consumption rates are on the decline. Actors involved in the illicit heroin trade in Malaysia are both transnational criminal networks and foreign trafficking organizations, particularly Pakistani syndicates.

As with the heroin trade, Malaysia is primarily a transit country for cocaine, which is smuggled via shipping containers. Cocaine is less popular in Malaysia than other drugs and the domestic market for it is relatively small. Actors involved in the illicit cocaine trade are predominantly foreign actors, primarily Nigerian syndicates. The market for cannabis in Malaysia is also relatively smaller than other drug markets and, while cannabis usage does occur, consumption rates appear to be lower compared to most other countries. In 2018, the Malaysian government discussed the possibility of legalizing cannabis for medical purposes in the future, though it is unclear what impact this may have on the criminal market.

Cyber Crimes

*This indicator was first included in the 2023 iteration of the tool

Financial Crimes

*This indicator was first included in the 2023 iteration of the tool

Criminal Actors

Foreigners are among the most prominent criminal actors in Malaysia, particularly in the drug trade. The market for cocaine trade is dominated by Nigerian syndicates, while drug trafficking groups from Pakistan, Myanmar, China and Thailand are involved in heroin trafficking. Taiwanese criminal organizations and Australian outlaw motorcycle gangs are known to be involved in the trafficking of methamphetamines. Malaysia is home toa number of gangs that exhibit mafia-style behaviour and are also involved in criminal markets, including the drug trade. One of the largest of these is Gang 04, more commonly known as Hua Kee. Though many of them have been crippled by high-profile arrests or killings, other prominent gangs in Malaysia include Mamak, Gang 07, and Gang 08.

Human trafficking networks in Malaysia, and South-eastern Asia more generally, often operate in independent or loosely related groups. Similarly, although migrant smuggling groups tend to be decentralized, loose associations of individuals who operate outside any hierarchical command and control structure, there are exceptions. For example, the smuggling of Indonesian migrants to Malaysia involves organized networks, led by prominent local figures, that operate unlicensed recruitment agencies in both countries to facilitate irregular entry and job placement. State-embedded actors play key roles in enabling the criminal markets for fauna and flora as well as human trafficking. In the case of ivory, paperwork is falsified by corrupt state-embedded actors to enable the illegal export of ivory to China.

Leadership and governance

The Malaysian government has not communicated clearly that combating organized crime is a high priority, and there is significant scope for better leadership in the fight against transnational organized crime. Levels of perceived corruption in Malaysia are moderate and lower than for most other countries in South-eastern Asia. Nevertheless, corruption, as the 1MDB political scandal involving the country’s then prime minister clearly showed, continues to be an issue. The country’s legal and institutional framework to combat and prevent corruption has not always proven to be fully effective in deterring graft.

Malaysia has signed and ratified the UN Convention against Transnational Organized Crime and its protocols relating to human trafficking and smuggling of migrants, as well as the UN Convention against Corruption. The country has shown a willingness for international cooperation to deal with these challenges, engaging with the ASEAN Regional Forum, for example. The nation has played an important role in South-eastern Asia’s attempts to enhance bilateral and multilateral mechanisms between law enforcement agencies to combat transnational crime. Malaysia’s national legislation criminalizes the trafficking of arms, humans and drugs, while the penal code contains provisions for punishing members of a group engaged in organized criminality.

Criminal justice and security

In Malaysia, the judiciary is headed by the Supreme Court, which is subdivided into the trial and appellate divisions. While the judiciary is independent in theory, it is often subject to interference or influence from other arms of the government. There are certain units specifically focused on organized crime-related matters in the country, though no overarching judicial authority exists in this regard. Malaysian prisons currently suffer from considerable overcrowding, largely because a significant proportion of the prison population is in pre-trial detention. Furthermore, there are reports of abuse and sometimes unsafe conditions in prisons. In general, law enforcement is well equipped, but its reputation has been tarnished by high levels of perceived corruption and low levels of public trust. Police reform is ongoing with efforts being made to create a complaints mechanism. Malaysia’s geography, which includes long coastlines and forested and hilly areas, makes border control a challenge. This exacerbates its vulnerability to criminal flows and makes the country an easy transit market for criminal activities.

Economic and financial environment

Malaysia is an open and dynamic economy. It is heavily reliant on trade and provides a good foundation for private sector development. The country has enjoyed solid growth rates for several years, but faces a medium-to-high risk of money laundering and terrorist financing. The country falls largely in line with internationally endorsed global standards against money laundering and terrorist financing. Among the freest economies, the country’s business climate is favourable to small and medium-sized enterprises.

Civil society and social protection

There are a number of laws in place to protect witnesses and whistleblowers and the country’s witness protection programme appears to provide effective protection, with no casualties having been recorded. Among the first countries in the region to build up and implement a national action plan for crime prevention, Malaysia has achieved several milestones in tackling crime. The Malaysian Crime Prevention Foundation (MCPF), originally founded in conjunction with Japan, has played a central role in efforts to reduce crime rates in several local communities. The MCPF, the first chapter of the organization to be established outside Japan, aims to promote awareness of crime prevention and to rehabilitate offenders. At the same time, however, the relationship between civil society and the government has become strained. In 2015, a coalition of NGOs sought reforms to the electoral system. The government responded by declaring their rallies illegal and threatening them with military action. Freedom of the press has been under pressure in the past few years, but for the most part, independent media can report freely.