Financial Institutions Must Boost Anti-Money Laundering Measures

New regulations aimed at combating money laundering and terrorism financing have been introduced for financial institutions in Afghanistan. The regulations require financial institutions to conduct enhanced customer due diligence (CDD) measures on higher-risk customers to identify suspicious activity and prevent illegal transactions.

Enhanced Customer Due Diligence Measures

Under the new rules, financial institutions are required to:

Obtain additional information about their background, purpose of transactions, and source of funds for higher-risk customers
Conduct enhanced CDD measures on these customers to help identify suspicious activity and prevent illegal transactions

Simplified CDD measures may be applied in certain circumstances where the risk of money laundering or terrorism financing is lower. However:

These simplified measures must still be commensurate with the identified risks
They cannot be applied in situations where there are suspicions of illegal activity

Financial institutions may engage in business relationships with customers prior to completing customer verification processes, provided that:

The verification occurs as soon as reasonably practicable
The ML/TF risks are effectively managed

Customer and Beneficial Owner Information

The regulations require financial institutions to:

Gather and maintain customer and beneficial owner information throughout the course of the business relationship
Keep this information up-to-date and relevant
- Review existing records at appropriate times, such as when significant transactions occur or when there is a material change in the way an account is operated

What Do the Regulations Mean for Financial Institutions?

The regulations aim to strengthen anti-money laundering measures and prevent illegal activities. This means that financial institutions must:

Implement enhanced CDD measures on higher-risk customers
Maintain accurate customer information throughout the business relationship
Adapt risk assessment processes and procedures to ensure effective ML/TF risk mitigation

What Are the Consequences of Non-Compliance?

Failure to comply with the regulations could result in serious consequences, including fines and penalties. Financial institutions must:

Ensure that they are meeting their regulatory obligations to maintain trust and confidence in the financial system
Implement measures to prevent non-compliance and ensure ongoing compliance

Conclusion

The new regulations aim to strengthen anti-money laundering measures and prevent illegal activities in Afghanistan’s financial sector. To comply with these regulations, financial institutions must:

Implement enhanced CDD measures on higher-risk customers
Maintain accurate customer information throughout the business relationship
Ensure effective ML/TF risk mitigation through adapted risk assessment processes and procedures