AI Laws in Nepal are becoming increasingly relevant as artificial intelligence technologies expand across government services, banking, healthcare, education, cybersecurity, and digital commerce. Businesses, developers, policymakers, and citizens often ask: Does Nepal have a specific AI law? Is AI regulated under existing legislation? What are the legal risks of deploying AI systems? Understanding AI Laws in Nepal is essential because misuse of AI may trigger liability under data protection, cybercrime, privacy, consumer protection, and constitutional law frameworks.
Although Nepal does not yet have a standalone Artificial Intelligence Act, AI-related activities are regulated through a combination of constitutional provisions, technology laws, privacy regulations, criminal statutes, and sector-specific directives. This article provides a comprehensive guide to the current legal landscape governing AI in Nepal.
What Are AI Laws in Nepal Under Current Framework?
AI Laws in Nepal refer to the collection of constitutional principles, statutory provisions, regulatory policies, and emerging guidelines that govern the development, deployment, and use of artificial intelligence systems.
Nepal has not enacted a dedicated AI statute comparable to the EU AI Act. However, AI systems fall within the scope of existing laws, particularly where issues arise involving:
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Data protection and privacy
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Cybersecurity and electronic transactions
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Online content regulation
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Consumer rights and product liability
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Intellectual property
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Criminal liability
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Administrative and constitutional accountability
Therefore, AI regulation in Nepal operates under a sectoral and principle-based approach, rather than a single comprehensive law.
Constitutional Foundations Relevant to AI Regulation
The Constitution of Nepal 2015 provides the fundamental legal framework affecting AI technologies.
Right to Privacy (Article 28)
The Constitution guarantees every citizen the right to privacy. AI systems that collect, process, or analyze personal data—such as facial recognition, predictive profiling, or surveillance tools—must respect this constitutional protection.
Unlawful surveillance, data harvesting, or intrusive profiling may violate constitutional rights and invite judicial intervention.
Freedom of Expression (Article 17)
AI-generated content, algorithmic moderation, and automated censorship mechanisms must balance regulatory compliance with freedom of expression protections.
Right to Information
Public sector AI systems used in governance, decision-making, or public service delivery may be subject to transparency obligations under right-to-information principles.
Key Statutory Laws Governing AI in Nepal
Although no standalone AI Act exists, several existing laws directly or indirectly regulate AI-related activities.
1. Electronic Transactions Act, 2008 (ETA)
The ETA is Nepal’s primary cyber law. It governs:
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Electronic records and digital signatures
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Cybercrime offenses
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Unauthorized access to systems
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Data interference and hacking
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Online fraud
AI systems involved in automated transactions, digital authentication, or cybersecurity operations fall under this framework. If AI is used to commit cybercrime (e.g., automated phishing, identity theft), liability arises under ETA provisions.
2. Privacy Act, 2018
The Privacy Act regulates:
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Collection of personal data
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Processing and disclosure of personal information
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Consent requirements
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Sensitive personal data protection
AI systems that process personal data—such as biometric AI, predictive analytics, HR screening tools, or healthcare AI—must comply with consent and confidentiality requirements.
Failure to protect personal data may lead to criminal penalties and compensation claims.
3. Criminal Code, 2017
AI misuse may trigger criminal liability under provisions relating to:
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Fraud and cheating
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Defamation
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Identity theft
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Forgery
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Unauthorized surveillance
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Cyber harassment
For example, deepfake technology used for reputational harm could amount to defamation or cybercrime under existing statutes.
4. Consumer Protection Act, 2018
AI-powered products and services—such as automated financial advice systems or AI-driven medical tools—must comply with consumer protection standards.
If an AI system causes harm due to negligence, misleading representation, or unsafe deployment, liability may arise under consumer protection law.
5. Intellectual Property Laws
AI-generated works raise complex copyright and authorship questions in Nepal. Current copyright law assumes human authorship. Therefore:
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Ownership of AI-generated content remains legally uncertain.
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Training AI models on copyrighted material may raise infringement concerns.
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Trademark and patent issues may arise in AI branding and innovation.
Nepal’s IP framework has not yet been updated to directly address AI-specific authorship or ownership questions.
AI in Government and Public Sector
The Government of Nepal has expressed interest in digital transformation and e-governance. AI tools may be used in:
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Public service delivery
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Biometric identification
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Border control and security
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Data analytics for policymaking
However, deployment of AI in public decision-making must comply with:
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Constitutional safeguards
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Administrative law principles
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Procedural fairness
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Non-discrimination standards
If an AI system affects employment, welfare benefits, or public rights, judicial review may be available to challenge arbitrary or biased decisions.
Emerging Policy Discussions on AI in Nepal
Nepal has initiated broader discussions around digital governance and ICT modernization. While no comprehensive AI Act has been enacted, policy trends indicate focus on:
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Digital economy regulation
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Cybersecurity strengthening
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Data governance reform
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Innovation promotion
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Ethical AI principles
Future legislation may address:
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Algorithmic transparency
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Risk-based AI classification
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Mandatory impact assessments
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AI liability standards
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Data localization requirements
Businesses should monitor regulatory developments closely.
Legal Risks of AI Deployment in Nepal
Organizations using AI technologies face several potential legal risks:
Data Protection Violations
Improper data collection, lack of consent, or data breaches can trigger penalties under privacy laws.
Algorithmic Bias and Discrimination
AI systems used in recruitment, lending, or public services may face legal challenge if outcomes are discriminatory.
Civil Liability
If AI causes financial loss or personal harm, affected individuals may file civil compensation claims.
Criminal Exposure
Use of AI for impersonation, fraud, or defamation may result in criminal prosecution.
Regulatory Sanctions
Sector-specific regulators (banking, telecommunications, health) may impose compliance requirements for AI systems.
Compliance Considerations for Businesses Using AI
Organizations deploying AI in Nepal should consider:
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Conducting data protection impact assessments
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Implementing strong cybersecurity safeguards
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Obtaining informed consent for data processing
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Establishing human oversight mechanisms
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Maintaining documentation of AI decision-making processes
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Reviewing contractual risk allocation with vendors
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Ensuring transparency in automated decisions
Proactive compliance reduces exposure to litigation and reputational harm.
Frequently Asked Questions About AI Laws in Nepal
Does Nepal have a dedicated AI law?
No. Nepal does not yet have a standalone Artificial Intelligence Act. AI is regulated under existing laws such as the Electronic Transactions Act and Privacy Act.
Is AI-generated content legal in Nepal?
AI-generated content is not prohibited, but its use must comply with defamation, intellectual property, and cybercrime laws.
Can AI systems be challenged in court?
Yes. If an AI system violates constitutional rights, privacy protections, or causes harm, affected parties may seek judicial remedies.
Who is liable if AI causes harm?
Liability may fall on developers, deployers, service providers, or organizations using AI, depending on negligence, contractual arrangements, and statutory obligations.
Are there restrictions on facial recognition technology?
While not specifically banned, facial recognition must comply with privacy and constitutional protections. Unauthorized surveillance may be unlawful.
Future Direction of AI Regulation in Nepal
As AI adoption increases, Nepal is likely to move toward more structured regulation, potentially including:
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Ethical AI guidelines
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Sector-specific AI compliance rules
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Stronger data governance laws
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Algorithmic accountability mechanisms
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Cross-border data transfer standards
Balancing innovation with human rights protection will be central to future legislative reform.
Conclusion: Navigating AI Laws in Nepal
AI Laws in Nepal currently operate within a fragmented but enforceable legal framework. Although no dedicated AI Act exists, constitutional rights, privacy laws, cybercrime statutes, and consumer protection laws already impose significant obligations on AI developers and users.
Businesses, startups, government agencies, and technology innovators must ensure legal compliance when deploying AI tools. Careful risk assessment, documentation, and regulatory consultation are essential to avoid civil liability, criminal exposure, or constitutional challenges.
For professional guidance on AI compliance, data protection, regulatory strategy, or technology law matters in Nepal, Nepal Lawyer provides comprehensive legal advisory services. Their team assists with AI risk assessment, privacy compliance, digital governance strategy, and litigation support to ensure responsible and legally sound AI deployment.
