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Banking Regulations and Compliance Requirements in Afghanistan

The financial sector in Afghanistan is governed by a complex web of regulations and compliance requirements, aimed at ensuring stability, security, and transparency.

Key Banking Regulations

  • Afghanistan Interbank Payment & Securities Settlement System (AIPSSS): This regulation governs the settlement of payments and securities transactions in Afghanistan.
  • Reporting and Control of Physical Transfers of Currency: Financial institutions must report and control physical transfers of currency.
  • Counter Financing of Terrorism Regulations: These regulations aim to prevent the financing of terrorist activities through financial transactions.

Other Important Regulations

  • Regulation on Financial Leasing 1394: Sets out the rules and guidelines for financial leasing in Afghanistan.
  • Regulation on Electronic Fund Transfers: Governs the transfer of funds electronically.
  • Liquidity Regulation: Ensures that banks maintain adequate liquidity levels.

Additional Regulations

  • Related Person Regulation: Requires financial institutions to disclose relationships with related parties.
  • Capital Adequacy Regulation: Sets out the capital requirements for banks.
  • Controlling Regulation: Regulates the control of financial institutions by their parent companies or shareholders.

Corporate Governance and Enforcement

  • Corporate Governance Regulation: Ensures that financial institutions are governed in a manner that promotes transparency, accountability, and good corporate governance practices.
  • Enforcement Regulation: Provides for the enforcement of banking regulations.
  • Large Exposure Regulation: Sets out the limits on large exposures to single counterparties.

Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT)

  • Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) Responsibilities and Preventative Measures Regulation: Requires financial institutions to implement measures to prevent money laundering and terrorist financing.

Other Regulations

  • Asset Classification and Provisioning Regulation: Sets out the rules for classifying assets and provisioning for potential losses.
  • Regulation on Licensing and Oversight of Payment and Securities Transfer Systems (Payment Service Operator): Regulates payment and securities transfer systems.
  • Foreign Currency Auction Regulation: Governs the auction of foreign currency.

Credit Reporting and Domestic Payments

  • Credit Reporting Regulation: Requires financial institutions to report credit information to credit reporting agencies.
  • Regulation on domestic payment operations in Afghanistan: Sets out the rules for domestic payment operations.

Capital Notes and Standing Facilities

  • Capital Notes Issuance and Auction regulation: Provides for the issuance and auction of capital notes.
  • Standing Facilities: Regulates the provision of temporary liquidity support to financial institutions.

Registration of Securing Charges

  • Regulation on Registration of Securing charges (Secured Transaction): Sets out the rules for registering securing charges.

Licensing and Operation of Financial Institutions

  • DMFI Regulation: Governs the licensing and operation of deposit money financial institutions.
  • Open Foreign Exchange Position regulation: Requires financial institutions to report their open foreign exchange positions.

Prohibited And Authorized Activities

  • Prohibited And Authorized Activities regulation: Prohibits certain activities and authorizes others in the financial sector.

These regulations and compliance requirements are crucial for ensuring stability, security, and transparency in Afghanistan’s financial sector. Understanding these regulations is essential for banks, financial institutions, and individuals operating in the sector.