Financial Crime World

Best Practices for AML/CFT Compliance in Afghanistan

The Da Afghanistan Bank plays a crucial role in ensuring that financial institutions comply with anti-money laundering (AML) and combating the financing of terrorism (CFT) regulations.

Understanding AML/CFT Regulations in Afghanistan

To comply with AML/CFT regulations in Afghanistan, financial service providers must implement an effective program that includes:

  • Key Components: Adequate policies, procedures, and controls to combat potential money laundering and terrorism financing risks
    • Proper customer identification
    • Regular audits of the AML/CFT program, including risk assessments every two years or as requested by the AML/CFT supervisor
    • Reporting large cash transactions and suspicious transactions to FinTRACA
    • Retention of transaction records
    • Training of staff to carry out their duties under this regulation

Each financial institution must tailor its anti-money laundering policy to its specific scale, scope, risks, and sophistication of activities. The policy should be adopted by the bank’s or financial institution’s board of directors and apply to both domestic and international branches as well as majority-owned subsidiaries.

Risk-Based Approach

AML/CFT programs in Afghanistan must be risk-based, with a risk assessment serving as the foundation for the entire program. Financial institutions should have processes in place to:

  • Classify, evaluate, track, handle, and minimize threats associated with money laundering and terrorism financing

Reporting Obligations

As a financial service provider in Afghanistan, you are required to report certain transactions and suspicious matters to FinTRACA. Notable ongoing reporting obligations include:

  • Threshold Reporting: Large Cash Transaction Report - requires an individual to notify FINTRACA of the details of transactions (deposits, withdrawals, or transfers) in excess of AFS 1,000,000 or its equivalent in other currencies.
  • Suspicious Transaction Reporting: Within three business days of suspicions arising around any transaction or attempted transaction, regardless of size, including proceeds of crime or funds relating to or to be used for money laundering or terrorism financing, you should notify FINTRACA.
  • Tipping Off: Financial institutions, their directors, and staff are prohibited from reporting to a client or any other entity the existence of a FinTRACA or AML/CTF investigative study.

By understanding and implementing these best practices, financial service providers in Afghanistan can ensure compliance with AML/CFT regulations and help prevent money laundering and terrorism financing.