Afghanistan’s Central Bank and Financial Intelligence Unit Strengthen Anti-Money Laundering Efforts

Introduction

The Da Afghanistan Bank, Afghanistan’s central bank, has reaffirmed its commitment to combating money laundering and terrorism financing in the country. To strengthen anti-money laundering (AML) efforts, the bank has outlined compliance procedures for financial institutions operating in Afghanistan.

The Role of FinTRACA

The Financial Transactions and Reports Analysis Center (FinTRACA), established in 2006 as a Financial Intelligence Unit (FIU), plays a crucial role in detecting and combating money laundering and terrorist financing. FinTRACA works closely with financial regulators, law enforcement agencies, and lawyers to create an environment conducive to identifying and preventing these illicit activities.

Compliance Requirements

Financial institutions operating in Afghanistan are required to establish an AML program that includes:

• Identifying customers properly
• Conducting regular risk assessments and auditing the AML program every two years or as requested by supervisors
• Reporting large cash transactions and suspicious activities to FinTRACA
• Retaining records of transactions
• Ensuring staff have received adequate training on AML/CFT regulations

Each financial institution is required to have a tailored AML policy that takes into account its unique risks, scale, and scope of operations. The risk assessment serves as the foundation for the entire anti-money laundering/counter-terrorism financing program.

Reporting Requirements

As part of their AML/CFT obligations, financial institutions must also report certain transactions and suspicious matters to FinTRACA. Threshold reporting requires notification of large cash transactions exceeding AFN 1,000,000 or its equivalent in other currencies within a specific timeframe. Suspicious transaction reporting must be made within three business days of suspicion arising.

Emphasis on Compliance

The Da Afghanistan Bank has emphasized the importance of compliance with AML/CFT regulations and warned against “tipping off” clients about investigative studies conducted by FinTRACA or law enforcement agencies.

Conclusion

In light of these requirements, financial institutions operating in Afghanistan are urged to prioritize AML/CFT compliance to ensure a safe and secure financial environment for all stakeholders. By adhering to these guidelines, financial institutions can help prevent money laundering and terrorism financing, and support the growth of a stable and transparent financial system in Afghanistan.