Financial Crime World

Afghanistan Banking Regulations: A Comprehensive Guide

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The banking sector in Afghanistan is governed by a complex set of regulations aimed at promoting stability, transparency, and consumer protection. In this article, we will explore the key regulations that govern commercial banks in Afghanistan.

Licensing and Governance

  • Bank Licensing and Permitting Framework: The Da Afghanistan Bank (DAB) has implemented guidelines for obtaining a banking license and necessary permits.
  • Capital Adequacy Regulation: Banks are required to maintain adequate capital levels as outlined in this regulation.
  • Corporate Governance Regulation: This regulation sets out the principles for sound corporate governance practices, including board composition, risk management, and internal controls.

Risk Management and Compliance

  • Fit and Proper Regulation: Key personnel must meet certain standards of integrity and competence.
  • Prohibited and Authorized Activities Regulation: Outlines the types of activities that are permissible or prohibited for commercial banks.
  • Enforcement Regulation: Sets out the procedures for dealing with non-compliance.

Asset Management and Liquidity

  • Asset Classification and Provisioning Regulation: Outlines asset classification and provisioning requirements.
  • Liquidity Regulation: Governs liquidity requirements.
  • Open FX Regulation: Sets out rules for foreign exchange transactions.

Branchless Banking and Customer Due Diligence

  • Branchless Banking Regulation: Regulates branchless banking operations.
  • Know Your Customer (KYC) Regulations: Require banks to verify the identity of their customers.

Payment Systems

  • AIPSSS Policy for RTGS-ACH: Sets out rules for real-time gross settlement and automated clearing house systems.
  • Regulation on Electronic Fund Transfers: Regulates electronic fund transfers.
  • Controlling Regulation: Sets out procedures for controlling payment systems.

Anti-Money Laundering and Combating the Financing of Terrorism

  • AML/CFT Responsibilities and Preventative Measures Regulation: Requires banks to implement anti-money laundering and combating the financing of terrorism measures.

Capital Notes and Standing Facilities

  • Capital Notes Issuance and Auction Regulation: Sets out procedures for issuing and auctioning capital notes.
  • Standing Facilities Regulation: Governs the use of standing facilities.

Credit Reporting and Registration of Securing Charges

  • Credit Reporting Regulation: Outlines requirements for credit reporting agencies.
  • Regulation on Registration of Securing Charges: Requires banks to register securities with the DAB.

Deposit Money Financial Institutions (DMFIs)

  • DMFI Regulation: Sets out rules for deposit money financial institutions (DMFIs), which include commercial banks and other financial institutions that accept deposits.

In conclusion, these regulations are designed to promote a stable and efficient banking sector in Afghanistan, and are essential for maintaining public confidence in the country’s financial system.