Afghanistan Takes Step Towards Financial Inclusion, But Faces Risk of Financial Crime
Promoting Financial Inclusion and Stability in Afghanistan
In a bid to promote financial inclusion and stability in Afghanistan, the country’s central bank, Da Afghanistan Bank, and the World Bank have launched the Afghanistan National Financial Inclusion Strategy. The strategy aims to increase access to finance for households and businesses, including digital payments and services, and improve formal financial services.
Risks of Financial Crime
However, as Afghanistan moves towards greater financial inclusion, experts warn that it also increases the risk of financial crime, particularly money laundering and terrorist financing. To mitigate this risk, Da Afghanistan Bank and the World Bank have also conducted a National Risk Assessment for Money Laundering and Terrorism Financing.
Key Findings and Recommendations
The assessment, which was conducted in line with recommendations from the International Monetary Fund (IMF) and the Financial Action Task Force (FATF), aims to identify vulnerabilities in the country’s financial system and provide recommendations to strengthen its defenses against money laundering and terrorist financing. The key findings and recommendations include:
- Improving regulation and supervision of financial institutions
- Enhancing customer due diligence and anti-money laundering measures
- Strengthening national payments infrastructure
- Promoting digital payments and services
Quotes from Experts
“Achieving an inclusive and sound financial system where all Afghan citizens and businesses have access to finance is key to boosting economic growth and reducing poverty across Afghanistan.” - Homa-Zahra Fotouhi, Acting Country Director for Afghanistan at the World Bank
“Afghanistan is facing a critical juncture in its economic development. We must ensure that our financial system is robust and resilient enough to withstand the risks of financial crime.” - Wahid Nosher, Acting Governor of Da Afghanistan Bank
Conclusion
The launch of the strategy comes after a period of significant growth in Afghanistan’s economy, driven in part by increased foreign investment and remittances from Afghan expatriates. However, this growth has also brought new challenges, including the risk of financial crime. The National Financial Inclusion Strategy aims to achieve financial inclusion while mitigating the risks of financial crime.