TERRORIST FINANCING RISKS IN AFGHANISTAN: EU TAKES ACTION TO PROTECT EUROPE’S FINANCIAL SYSTEM
The European Union has identified Afghanistan as a high-risk country for terrorist financing, citing strategic deficiencies in its anti-money laundering and counter-terrorism financing regimes. This move is part of the EU’s efforts to combat the global circulation of dirty money and protect its financial system from threats.
EU Identifies Strategic Deficiencies
According to the EU’s latest list of high-risk third countries, Afghanistan has been identified as having strategic deficiencies since September 2016. The country’s listing means that European financial institutions will be required to implement additional checks and controls when dealing with Afghan businesses or transactions.
Methodology for Identifying High-Risk Countries
The EU developed a methodology in 2020 to identify high-risk countries based on the faults in their national AML/CTF regimes posing significant threats to the EU’s financial system. The Commission’s staged approach includes:
- Pre-assessment
- Assessment
- Listing
- Monitoring of high-risk countries
Afghanistan’s Inclusion on the List
Afghanistan’s inclusion on the list comes amid concerns over the country’s struggling economy and porous borders, which have made it vulnerable to terrorist financing. The Taliban, which seized power in August 2021, has been accused of relying heavily on illegal activities, including drug trafficking and extortion, to fund its operations.
Implications for European Businesses
The EU’s listing of Afghanistan as a high-risk country has significant implications for European businesses operating in the country or dealing with Afghan entities. Financial institutions will be required to implement additional due diligence measures and report any suspicious transactions to the relevant authorities.
International Cooperation
The EU is actively working with international partners, including the Financial Action Task Force (FATF), to identify high-risk countries and prevent the misuse of the financial system for terrorist purposes.
Quotes from Senior EU Official
“Combating terrorist financing requires a coordinated approach at the international level,” said a senior EU official. “We are committed to working with our partners to identify and address the risks posed by high-risk countries like Afghanistan, and to protect the EU’s financial system from threats.”
Government Response
In response to the EU’s move, the Afghan government has pledged to strengthen its anti-money laundering and counter-terrorism financing regimes to address the concerns raised by the EU. The country has also sought to improve its cooperation with international partners to combat terrorist financing and protect its financial system.
Experts’ Warning
The EU’s decision is seen as a positive step towards strengthening international efforts to combat terrorist financing, but experts warn that more needs to be done to effectively address the risks posed by high-risk countries like Afghanistan.