Financial Crime World

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AFGHANISTAN: CDD Regulations Take Center Stage Amidst Ongoing Conflicts

Financial Sector Must Remain Vigilant in Combating Money Laundering and Terrorist Financing

As Afghanistan continues to grapple with ongoing conflicts, the financial sector must remain vigilant in its efforts to combat money laundering and terrorist financing. In light of recent developments, firms operating in the region are being urged to reassess their anti-money laundering (AML) policies and procedures to ensure compliance with regulatory requirements.

Compliance with UK Regulations

The UK’s Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs) remain relevant in this context. Specifically, firms must adhere to provisions related to:

  • Firm Risk Assessments: Conduct regular risk assessments to identify potential money laundering and terrorist financing risks.
  • Customer Due Diligence: Gather sufficient information about customers and perform ongoing monitoring of their transactions.
  • Enhanced Due Diligence: Apply additional measures where there is a heightened risk of money laundering or terrorist financing.
  • Transaction Monitoring: Monitor transactions for suspicious activity.

Country Risks and Enhanced Due Diligence

While Afghanistan is not currently classified as a high-risk jurisdiction under Schedule 3ZA of the MLRs, firms are still required to apply risk-sensitive enhanced due diligence measures where there is a heightened risk of money laundering or terrorist financing. Factors such as country risks must be taken into account when assessing these risks.

Transaction Monitoring and Reporting

Firms operating in Afghanistan are advised to:

  • Closely Monitor Transactions: Closely monitor transactions involving the region to mitigate the risk of being exploited for illicit activities.
  • Report Suspicious Activity: Report suspicious activity to the UK Financial Intelligence Unit (UKFIU) at the National Crime Agency (NCA).
  • Meet AML Obligations: Meet obligations under Money Laundering Regulations and terrorist financing legislation.

Sanctions Against Afghanistan

Sanctions against Afghanistan are already in place, and firms are required to screen against the UK Sanctions List, including the regime-specific list for Afghanistan. The Financial Crime Guide’s expectations regarding firm systems and controls in relation to compliance with financial sanctions remain unchanged.

Conclusion

In light of these requirements, firms operating in Afghanistan must take a risk-based approach to ensure they continue to meet their legal and regulatory AML obligations.