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Fit and Proper Individuals for Supervisory and Management Boards
In Afghanistan, the banking law requires that individuals and legal entities with qualifying holdings in financial institutions must possess certain qualities to be considered fit and proper.
Qualifying Holdings
According to Article [X] of the Banking Law, a person shall not be deemed fit and proper if they have been convicted by a competent court for an offense other than their political or religious views. Additionally, persons declared bankrupt, disqualified, or suspended by a competent authority are also considered unfit.
- Associates, beneficial owners, or representatives of individuals or entities deemed unfit are also excluded from holding qualifying holdings in financial institutions.
Money Service Providers and Foreign Exchange Dealers Regulation
The Financial Action Task Force (FATF) recommends that jurisdictions regulate money service providers (MSPs) to ensure compliance with anti-money laundering (AML) and combating the financing of terrorism (CFT) recommendations.
Services Provided by MSPs
In Afghanistan, MSPs provide a range of services including:
- Foreign exchange
- Check cashing
- Money transfer
- Issuing money orders or travelers’ checks
- Distributing prepaid access cards
Historically, these services have been attractive due to their affordability, speed, and ease.
The Regulation
The Money Service Providers and Foreign Exchange Dealers Regulation was amended and passed by the Supreme Council of Afghanistan in [Year]. The regulation aims to regulate MSPs and ensure compliance with AML/CFT recommendations.
Electronic Money Institution’s Regulation
The Electronic Money Institution’s Regulation was introduced to regulate electronic money institutions (EMIs) in Afghanistan. EMIs are companies that issue electronic money, which is a digital representation of currency.
Requirements for EMIs
Under the regulation, EMIs must comply with specific requirements, including:
- Maintaining accurate records
- Reporting suspicious transactions
Fit and Proper Regulation
The Fit and Proper Regulation was introduced to ensure that individuals holding qualifying holdings in financial institutions possess the necessary skills, experience, and integrity to manage such institutions effectively.
Criteria for Assessing Fitness
The regulation sets out specific criteria for assessing an individual’s fitness, including:
- Reputation
- Financial standing
- Ability to make informed decisions
Cash and BNI Control Regulation
The Cash and BNI Control Regulation was introduced to regulate physical transfers of currency in Afghanistan. The regulation aims to prevent money laundering and terrorist financing by requiring banks and financial institutions to report suspicious transactions.
Counter Financing of Terrorism Law
The Counter Financing of Terrorism Law was passed to criminalize the financing of terrorism and ensure that financial institutions do not facilitate such activities.
Penalties for Financiers of Terrorism
Under the law, individuals and entities found guilty of financing terrorism can face severe penalties, including imprisonment.
AML/CFT Responsibilities and Preventative Measures Regulation
The AML/CFT Responsibilities and Preventative Measures Regulation aims to prevent money laundering and terrorist financing by requiring financial institutions to implement effective measures to detect and report suspicious transactions.
Requirements for Financial Institutions
Under the regulation, financial institutions must also establish internal policies and procedures to prevent money laundering and terrorist financing.
Standing Freezing Order
The Standing Freezing Order allows authorities to freeze assets belonging to individuals or entities suspected of engaging in money laundering or terrorist financing activities.
Purpose of the Order
The order is designed to disrupt the flow of funds to terrorist organizations and prevent the misuse of financial institutions.