The indicators, being developed as of the council’s five-year strategic plan, will be applied during the project appraisal, monitoring and evaluation processes, said a paper on the new measures.

“Although the focus is on foreign non-governmental organisations, domestic institutions will also be monitored based on the new indicators,” Bhattarai said. The idea is to prevent the availability of illegal financial resources generated through tax evasion and other criminal activities, he added.

The proposed indicators are being rolled out to comply with anti-money laundering and anti-terrorism financing standards set by by the Financial Action Task Force (FATF), said Durga Prasad Bhattarai, information officer at the council.

As per Recommendation 8 of the global anti-money laundering body, countries should review the adequacy of laws and regulations that relate to non-profit organisations identified as being vulnerable to terrorist financing abuse.

According to the FATF, there is a risk that terrorist organisations may pose as legitimate entities or exploit legitimate entities as conduits for terrorist financing. Nonprofits may also face risks associated with corruption or criminality, the agency says.

The council’s decision comes as Nepal prepares for its mutual evaluation of compliance with anti-money laundering and terrorist financing standards scheduled for this year.

The FATF suggests that risk and terrorist abuse indicators be developed to monitor terror financing. It also recommends that authorities increase interaction with nonprofits organizations, take proportionate, risk-based supervision, conduct effective investigation and develop effective mechanisms for international cooperation.

Bhattarai, however, added that the council has not yet identified any domestic or foreign non-government organisations with questionable sources of funds.

Meanwhile, Jitram Lama, president of NGO Federation, an association of domestic non-government organisations, said that the federation was in favour of transparency.

“The government should be aware about how non-government organisations are being funded, irrespective of the way funds are being chanalised,” said Lama.