Financial Crime World

Banking Industry Standards for Compliance in Afghanistan Under Scrutiny

In a bid to strengthen anti-money laundering (AML) and combating the financing of terrorism (CFT) measures, the Financial Transactions and Reports Analysis Center of Afghanistan (FinTRACA) has been cracking down on banking institutions and financial service providers that fail to comply with regulations.

Enforcement Measures

According to Article 24 of the AML Law, FinTRACA has the authority to issue written warnings, revoke or suspend business licenses, and impose fines ranging from 50,000 to 500,000 Afghanis (AFN) on reporting entities that do not adhere to industry standards.

  • In 2021, a total of 60 warning letters were issued to money service providers (MSPs) and foreign exchange dealers (FXDs), followed by 11 in 2020.
  • Similarly, 3 warning letters were sent to electronic money institutions (EMIs) last year.
  • The enforcement measures have resulted in the suspension of business licenses for 13 MSPs and FXDs in 2021, with another 46 cases recorded in previous years.
  • Furthermore, a total of 71 business licenses were revoked in 2021, bringing the total number of revocations to 47 over the past few years.

Consequences of Non-Compliance

The agency has also taken steps to freeze bank accounts linked to non-compliant entities, with:

  • 86 cases reported last year
  • Several hundred thousand US dollars, Pakistani rupees, and euros frozen
    • AFN 2,486,135
    • PKR 638,800
    • USD 75,831

In addition to these measures, FinTRACA has imposed financial penalties on banking institutions, ranging from AFN 50,000 to AFN 1,900,000, as well as on MSPs and FXDs, with fines reaching up to AFN 11,089,900. Microfinance institutions (MFIs) have also faced penalties, with amounts ranging from AFN 27,500 to AFN 80,000.

Objective of FinTRACA’s Efforts

The efforts by FinTRACA are aimed at ensuring that the banking industry in Afghanistan adheres to international standards and best practices for AML/CFT compliance. By implementing these measures, FinTRACA is working towards a safer and more transparent financial system in Afghanistan.