Afghanistan Strengthens Anti-Money Laundering Regulations
In its ongoing efforts to combat money laundering and terrorism financing, Afghanistan has taken significant steps to strengthen its anti-money laundering (AML) regulations.
The Role of the Da Afghanistan Bank
As the central bank of Afghanistan, the Da Afghanistan Bank is responsible for licensing, regulating, and supervising financial institutions, including banks, foreign exchange brokers, and money service providers. This enables the bank to effectively oversee the country’s financial sector and ensure compliance with AML regulations.
The Afghanistan Financial Intelligence Unit: FinTRACA
FinTRACA (Afghanistan Financial Transactions and Reports Analysis Center), established in 2006 as a Financial Intelligence Unit (FIU), plays a crucial role in collecting, analyzing, and disseminating information on money laundering and terrorism financing. FinTRACA collaborates with financial regulators, law enforcement agencies, and lawyers to create an environment conducive to detecting and combating these crimes.
Compliance Requirements for Financial Service Providers
To comply with AML regulations in Afghanistan, financial service providers must establish and maintain an effective anti-money laundering/counter-terrorism financing (AML/CTF) program. The key requirements include:
- Implementing adequate policies, procedures, and controls to combat potential money laundering and terrorism financing risks
- Identifying customers properly
- Conducting regular audits of the AML/CTF program and risk assessment every two years or as requested by supervisors
- Submitting reports to FinTRACA for large cash transactions and suspicious transactions
- Retaining records of transactions
- Providing sufficient training to staff members
Risk-Based Approach
Each reporting entity in Afghanistan poses unique money laundering and terrorism financing threats. A financial institution’s anti-money laundering policy must be proportionate to its scale, scope, risks, and sophistication of activities.
AML/CTF Reporting Obligations
Financial service providers in Afghanistan are required to report certain transactions and suspicious matters to FinTRACA. The key reporting obligations include:
- Threshold reporting: Notifying FinTRACA of large cash transactions exceeding AFS 1,000,000 or its equivalent in other currencies
- Suspicious transaction reporting: Notifying FinTRACA within three business days of suspicions arising around any transaction or attempted transaction
- Tipping off: Prohibiting financial institutions and their staff from reporting the existence of a FinTRACA or AML/CTF investigative study to clients or other entities
Conclusion
By strengthening its AML regulations, Afghanistan is demonstrating its commitment to combating money laundering and terrorism financing. Financial service providers are urged to ensure compliance with these regulations to maintain a safe and secure financial system in the country.