Financial Crime World

Afghanistan’s Law Enforcement Efforts Fall Short in Curbing Crime

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Revamping Law Enforcement Agencies

Kabul, Afghanistan - In a bid to revamp its law enforcement agencies, the Afghan government has made significant strides in establishing new specialized units. However, despite these efforts, experts say that the country continues to struggle in effectively curbing crime, including money laundering and terrorist financing.

Challenges Facing Law Enforcement

  • Lack of Adequate Resources: Investigations have been conducted into several cases, but none have resulted in convictions due to the lack of resources.
  • Coordination Issues: Coordination between law enforcement agencies is hindered, making it difficult to investigate and prosecute financial crimes.
  • Porous Border: The porous border makes it challenging to implement the country’s declaration system for cross-border transportation of currency and bearer instruments.

Weaknesses in Financial Institutions

  • Anti-Money Laundering (AML) and Counter-Terrorism Financing (CFT) Measures: Financial institutions lack adequate AML/CFT measures, falling short of international standards.
    • Customer Due Diligence: Requirements for customer due diligence are not sufficient.
    • Record-Keeping: Record-keeping requirements are inadequate.
  • Correspondent Relationships: Correspondent relationships with foreign banks are not sufficiently regulated.
  • Wire Transfer Rules: Wire transfer rules lack clarity, particularly with respect to domestic transfers.

Reporting Suspicious Transactions

  • Few Reports Filed: Few financial institutions have reported suspicious transactions (STRs) to FinTRACA in practice.
  • Narrow Scope: The scope of this requirement is too narrow and only covers money laundering suspicions, not terrorist financing.

Supervision and Market Entry Conditions

  • Da Afghanistan Bank (DAB): The country’s central bank lacks the resources and expertise to effectively implement the existing framework for supervising banks.
  • Market Entry Conditions: Market entry conditions and AML/CFT supervision fall short of international standards.

Government Response

The government has acknowledged these challenges and has pledged to address them. However, experts say that more needs to be done to ensure that Afghanistan’s law enforcement agencies are equipped to combat financial crime and terrorism financing.

Sources

  • Afghan Ministry of Finance
  • Da Afghanistan Bank (DAB)
  • International Monetary Fund (IMF)
  • Financial Action Task Force (FATF)