Financial Crime World

Strengthening Anti-Money Laundering Measures in Afghanistan

Regulatory bodies in Afghanistan are urging financial institutions to enhance their systems and controls to prevent money laundering and terrorist financing. This move comes as a response to growing concerns over financial crime in the country.

Background

Developments in Afghanistan have highlighted the need for robust anti-money laundering policies and procedures. Industry insiders emphasize that firms must be aware of the potential impact of these events on patterns of financial activity when assessing risks related to particular customers and flows of funds.

Compliance Obligations

Financial institutions are reminded that they must comply with their legal obligations under the Proceeds of Crime Act 2002 and the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017. Specifically, firms are required to establish and maintain systems and controls to counter the risk of being used to further financial crime.

Key Provisions

The following provisions in the MLRs are particularly relevant:

  • Firm risk assessments
  • Customer due diligence
  • Enhanced due diligence
  • Transaction monitoring

While Afghanistan is not currently listed as a high-risk jurisdiction, firms must still apply risk-sensitive enhanced due diligence measures where there is a high risk of money laundering or terrorist financing.

Regulatory Expectations

Regulatory bodies expect firms to consider the impact of these developments on their anti-money laundering policies and procedures in a risk-based manner. To ensure compliance, firms are advised to:

  • Ensure that transactions to Afghanistan are appropriately monitored and assessed to mitigate the risks of being exploited to launder money or finance terrorism.
  • Continue to report suspicious activity to the UK Financial Intelligence Unit (UKFIU) at the National Crime Agency (NCA).
  • Meet their obligations under Money Laundering Regulations and terrorist financing legislation.

Additional Requirements

Firms are also reminded to screen against the UK Sanctions List, particularly the regime-specific list for Afghanistan. Regulatory bodies have set out their expectations of firms’ systems and controls in relation to compliance with financial sanctions in FCG 6 of the Financial Crime Guide.

By taking these steps, financial institutions can help prevent money laundering and terrorist financing in Afghanistan and ensure they continue to meet their legal and regulatory obligations.