Financial Crime World

Law Enforcement Efforts in Afghanistan Fall Short Despite Significant Progress

Inadequate Resources, Expertise, and Coordination Hinder Anti-Money Laundering and Counter-Terrorism Financing Efforts

Kabul - The Afghan government has established several specialized agencies to combat money laundering and terrorist financing, a significant step forward in the fight against crime. However, a recent assessment reveals that these agencies are not operating effectively due to inadequate resources, expertise, and coordination.

Challenges in Combating Financial Crimes

Despite efforts by the Afghan government and foreign donors to build the capacity of law enforcement agencies, Afghanistan continues to struggle with exposing and disrupting financial crimes. The lack of adequate resources, limited expertise, and corruption have hindered investigations into money laundering and terrorist financing cases, resulting in no prosecutions or convictions.

Areas for Improvement

  • Implementation of Declaration System: Only partial implementation at Kabul International Airport has hindered the effective declaration system for cross-border transportation of currency and bearer instruments.
  • Preventive Measures: Strengthening preventive measures imposed on financial institutions is essential to improve compliance with international standards.
  • Correspondent Banking Relationships: Regulating correspondent banking relationships is crucial in preventing money laundering and terrorist financing, but is currently insufficient.
  • Wire Transfer Rules: Clarifying wire transfer rules would enable financial institutions to verify originator information more effectively.

Improved Reporting Requirements and Supervision Needed

Few financial institutions have reported suspicious transactions to FinTRACA, the country’s financial intelligence unit. This highlights a need for improved reporting requirements and more effective supervision of financial institutions.

Market Entry Conditions and AML/CTF Supervision Fall Short

Market entry conditions and AML/CTF supervision fall short of international standards due to insufficient resources and expertise available to effectively implement the existing framework.

Efforts Being Made to Improve Situation

The Afghan government has established several initiatives aimed at strengthening the country’s anti-money laundering and counter-terrorism financing regime, including:

  • Development of a comprehensive strategy to combat money laundering and terrorist financing
  • Training programs for financial institution staff

Conclusion

Significant progress is needed in several areas if Afghanistan is to effectively combat money laundering and terrorist financing. Improved coordination between law enforcement agencies, strengthened preventive measures, and enhanced supervision of financial institutions are essential steps towards achieving this goal.