Financial Crime World

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Financial Crime and Risk Management in Afghanistan: A Growing Concern

The ongoing developments in Afghanistan have underscored the pressing need for robust financial crime risk management systems to counter evolving threats. As firms assess risks associated with customers and flows of funds, they must also consider the potential impact of these events on patterns of financial activity.

Regulatory Requirements

In line with regulatory requirements, firms are expected to establish and maintain effective systems and controls to prevent their use in furthering financial crimes. This includes compliance with:

  • The Proceeds of Crime Act 2002
  • The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017

Key Provisions

Firms must adhere to provisions related to:

  • Firm Risk Assessments: Conduct thorough risk assessments to identify potential vulnerabilities.
  • Customer Due Diligence: Perform due diligence on customers to verify their identity and assess their risks.
  • Enhanced Due Diligence: Apply enhanced due diligence measures where there is a high risk of money laundering or terrorist financing.
  • Transaction Monitoring: Monitor transactions to detect suspicious activity.

Reassessing Anti-Money Laundering Policies

In light of these developments, firms are urged to reassess their anti-money laundering policies and procedures in a risk-based manner. Key steps include:

  • Monitoring and Assessing Transactions: Mitigate the risks of money laundering or terrorism financing by monitoring transactions to Afghanistan.
  • Reporting Suspicious Activity: Report suspicious activity to the UK Financial Intelligence Unit (UKFIU) at the National Crime Agency (NCA).
  • Meeting Obligations: Meet obligations under Money Laundering Regulations and terrorist financing legislation.

Sanctions Screening

Firms must continue to screen against the UK Sanctions List, particularly the regime-pecific list for Afghanistan. Our expectations of firms’ systems and controls in relation to compliance with financial sanctions are outlined in FCG 6 of our Financial Crime Guide.

Conclusion

As a result, firms are advised to review their current risk management strategies and take necessary steps to ensure they continue to meet legal and regulatory requirements in this critical area.