Afghanistan’s Law Enforcement Efforts Fall Short in Curbing Crime

A Lack of Adequate Resources, Expertise, and Coordination Plagues the Country

Kabul, Afghanistan - Despite significant progress in establishing specialized agencies and laws to combat money laundering and terrorist financing, Afghanistan’s law enforcement efforts appear to be ineffective. This is due to a lack of adequate resources, expertise, and coordination.

Inadequate Agencies and Laws

The Afghan government has established several agencies, including the Financial Transactions and Reports Analysis Center (FinTRACA), to investigate and prosecute financial crimes. However, these agencies have not been granted clear powers or definitions in law, leading to duplication of efforts and waste of scarce resources.

Investigation and Prosecution Challenges

Investigations into money laundering and terrorist financing cases have been led, but none has resulted in prosecution and conviction. The lack of focus on the money trail, limited resources, corruption, and inadequate expertise have all contributed to this failure.

Cross-Border Transportation and Declaration System

The declaration system for cross-border transportation of currency and bearer instruments is only partially implemented at Kabul International Airport (KIA), with implementation at other border crossings being particularly challenging due to the proliferation of government agencies present at the airport.

Preventive Measures

Financial institutions in Afghanistan are subject to anti-money laundering and combating the financing of terrorism (AML/CFT) regulations. However, these regulations fall short of international standards, with requirements for customer due diligence and record-keeping measures being inadequate.

Correspondent Banking Relationships and Wire Transfer Rules

Correspondent banking relationships have been established with financial institutions abroad, but there is a lack of regulation over these relationships. The wire transfer rules are also unclear, particularly with respect to domestic transfers.

Reporting Suspicious Transactions

Financial institutions are required to report suspicious transactions to FinTRACA, but few have done so in practice. The scope of this requirement is too narrow, and some reporting has been limited to suspicions of money laundering rather than terrorist financing.

Internal Policies and Procedures

Internal policies and procedures for preventing money laundering have not been developed or implemented effectively, with varying levels of coverage and depth across institutions.

Market Entry Conditions and AML/CFT Supervision

Market entry conditions and AML/CFT supervision are also lacking, with insufficient resources and expertise available. The central bank is responsible for supervising banks, but corruption and vested interests have hindered effective implementation.

Conclusion

The assessment highlights the need for significant improvements in Afghanistan’s law enforcement efforts to combat money laundering and terrorist financing. The government must prioritize resource allocation, expertise development, and coordination between agencies to effectively combat these threats.