Financial Crime World

Assessment Report: Afghanistan’s Anti-Money Laundering (AML) and Countering Financing of Terrorism (CFT) Framework

Key Findings

The following are the key findings of this assessment report on Afghanistan’s AML/CFT framework:

Weak AML/CFT Measures

  • The current AML/CFT preventive measures imposed on all financial institutions need to be strengthened considerably to improve compliance with international standards.

Lack of Customer Due Diligence

  • There are no requirements to determine whether a customer is acting on behalf of another person.
  • No understanding of the ownership and control of legal persons.
  • No enhanced due diligence for higher-risk customers.

Inadequate Correspondent Banking Regulation

  • Correspondent relationships are not sufficiently regulated.
  • No requirements to gather information on the respondent institution to understand its business and determine its reputation.

Weak Wire Transfer Rules

  • The current wire transfer rules lack clarity, particularly with respect to domestic transfers.
  • A substantially higher threshold for verification of originator information than international standards.

Limited Suspicious Transaction Reporting

  • Few financial institutions have reported suspicious transactions, despite being required to do so by law.

Inadequate Internal Policies and Procedures

  • Financial institutions are required to develop internal policies, procedures, and controls to prevent money laundering.
  • No guidance has been provided on what exactly should be covered.

Insufficient Market Entry Conditions and AML/CFT Supervision

  • Market entry conditions and AML/CFT supervision fall short of international standards.
  • General lack of resources and expertise, as well as vested interest and corruption.
  • Despite efforts to bring them under government monitoring, a large number of Money Service Providers (MSPs) continue to operate outside the legal framework.

Conclusion

Overall, this assessment report highlights significant gaps in Afghanistan’s AML/CFT framework, which need to be addressed to prevent and combat money laundering and terrorist financing.