Financial Crime World

Afghanistan Struggles to Combat Financial Crimes Amid Corruption and Lack of Resources

Kabul, Afghanistan - Despite concerted efforts to establish a robust law enforcement system in the war-torn country, Afghanistan continues to grapple with money laundering and terrorist financing.

Challenges in Combating Financial Crimes

  • The lack of adequate resources, expertise, and coordination among relevant agencies has hindered effective action against financial crimes.
  • Investigations into financial crime cases have been launched but none have been prosecuted or forwarded to courts, indicating a systemic failure to hold perpetrators accountable.
  • Corruption is another significant obstacle to effective action against financial crimes, with officials and institutions compromised by corrupt practices that hinder progress.

Deficiencies in Specialized Agencies

  • A recent assessment highlights the glaring deficiencies in specialized agencies tasked with investigating money laundering and terrorist financing cases.
  • These agencies have been granted investigative powers but fail to utilize them fully due to poor coordination between law enforcement agencies, resulting in duplication of efforts and waste of scarce resources.

Limitations in Anti-Money Laundering (AML) and Counter-Terrorism Financing (CFT) Measures

  • Financial institutions in Afghanistan are required to implement AML/CFT measures but these requirements fall short of international standards.
  • Basic customer due diligence and record-keeping measures are imposed, but there is no requirement to determine whether a customer is acting on behalf of another person or to understand the ownership and control of legal persons.
  • Correspondent relationships between financial institutions are not sufficiently regulated, and wire transfer rules lack clarity.

Challenges in Implementing Declaration System

  • A declaration system for cross-border transportation of currency and bearer instruments has been implemented only partially, with limited implementation at crossings along Afghanistan’s porous border.
  • The proliferation of government agencies at Kabul International Airport further hampers its effectiveness.

Recommendations

  • Improvement is needed in market entry conditions, AML/CFT supervision, and internal policies and procedures to prevent money laundering.
  • Until these issues are addressed, Afghanistan will continue to struggle with financial crimes and related security risks.