___________________________________________________
AML News / Updates
June 19, 2011 - The United Nations Security Council voted
unanimously to pass two resolutions on Friday, which will create two
separate sanctions regimes, one for Al-Qaida and another for the
Taliban, in Afghanistan.
Read Press Release
Links:
Worldwide AML Legislation (International Bar Association)
Financial Transactions and Reports Analysis Center of Afghanistan
AML News / Updates
June 19, 2011 - The United Nations Security Council voted
unanimously to pass two resolutions on Friday, which will create two
separate sanctions regimes, one for Al-Qaida and another for the
Taliban, in Afghanistan.
Read Press Release
Links:
Worldwide AML Legislation (International Bar Association)
Financial Transactions and Reports Analysis Center of Afghanistan
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Key Findings extracted from IMF Report - Report on
Observance of Standards and Codes—FATF
Recommendations for Anti-Money Laundering and
Combating the Financing of Terrorism (November 2011)
Afghanistan is one of the poorest countries in the world and, after
decades of ongoing conflicts and strife, it is still at an early stage
of developing its legal and institutional framework. The main
challenges that the authorities face are the precarious
security situation (including regular occurrence of insurgency
attacks), vested interests and corruption, capacity constraints, a
large illicit narcotics sector, and a weak business environment.
Measures have nevertheless been taken to fight crime, including
financial crime, and to lay the foundations for an AML/CFT regime.
In particular, two legislative decrees were issued by the President
in 2004 to fight against money laundering and terrorist
financing (ML/TF). Although they still require Parliamentary
approval, both decrees are enforceable and have been
implemented, to a certain extent, by the authorities and the
private sector.
However, current efforts are not commensurate with the high risk
of ML/TF in the country. Illicit narcotics trade and corruption alone
generate considerable amounts of illegal funds. Afghanistan is the
world’s largest opium producer and exporter, with an export
value of opiates estimated to amount to some US$4 billion. It also
ranks amongst the most corrupt countries in the world with
domestic proceeds of corruption estimated to be up to US$2.4
billion in 2009. Smuggling and fraud are other major sources of
illegal funds. In addition, terrorism and its financing remain a
major concern both in terms of the security of Afghanistan and of
the funding of terrorist individuals or organizations, and terrorist
acts in the country and abroad. Despite the authorities’ efforts,
investigations into ML and TF have been few and none of them
resulted in charges being brought before the courts.
Structural elements make the effective implementation of
AML/CFT preventive measures challenging in some sectors. Both
rudimentary financial relations (cash-based economy, low rate of
financial intermediation in an environment characterized by
illiteracy and a general lack of appropriate identification
documents), and a small banking sector consisting of banks
relatively well connected to the outside world (at least through
correspondent accounts and SWIFT) coexist in Afghanistan. While
preventive measures are certainly difficult to implement, even in
the medium term, in relation to transactions in cash, they could be
better implemented in the banking sector. Indeed, it would appear
that the lack of implementation and supervision of preventive
measures applicable to financial institutions, such as identification
of customers and fit and proper testing played a role in the
making of a major financial fraud in Afghanistan’s main
commercial bank.
Click here to view full report
Sanctions:
On 3 October 2011, the EU Council implemented amendments to
Regulation EU 968/2011 in response to the amendments
approved by the UN.
http://www.hm-treasury.gov.uk/d/fin_sanc_public_notice031011.
pdf
On 15 August 2011 by the United Nations Security Council
Committee Resolution 1988 (2011) was amended to add a
further individual to the UN list established pursuant to
resolution 1988 (2011) and to amend the identifying information
of two existing entries.
On 17 June 2011 The Security Council Committee established
Resolution 1988 (2011). The resolution requires all States to take
the following measures in connection with any individuals, groups,
undertakings and entities associated with the Taliban in
constituting a threat to the peace, stability and security of
Afghanistan: -
- freeze without delay the funds and other financial assets or
economic resources of designated individuals and entities [assets
freeze],
- prevent the entry into or transit through their territories by
designated individuals [travel ban], and
- their territories or by their nationals outside their territories,
or using their flag vessels or aircraft, of arms and related materiel
of all types, spare parts, and technical advice, assistance, or
training related to military activities, to designated individuals and
entities [arms embargo].
By resolution 1988 (2011) the Security Council split the Al-Qaida
and Taliban sanctions regime into two groups - an Al-Qaida
regime and a country-specific Afghanistan regime.
UN Security Council resolutions 1267 (1999), 1333 (2000), 1390
(2002), 1455 (2003), 1526 (2004), 1617 (2005), 1735 (2006),
1822 (2008) and 1904 (2009) require all member states to freeze
the assets, prevent the entry into or the transit through their
territories, and prevent the direct or indirect supply, sale and
transfer of arms and military equipment with regard to any
individual or entity associated with Al-Qaida, Usama bin Laden
and/or the Taliban as designated by the Council’s Al-Qaida and
Taliban Sanctions Committee.
The UN measures are currently implemented in the EU by Council
Regulation (EC) No 881/2002, which is enforced in the UK by The
Al-Qaida and Taliban (Asset-Freezing) Regulations 2010.
____________________________________________________
Offshore Jurisdiction Blacklists:
Information unavailable.
____________________________________________________
US State Department Money Laundering Report 2012:
Afghanistan is not a regional or offshore center. Terrorist and
insurgent financing, money laundering, cash smuggling, abuse of
informal value transfer systems, and other illicit activities designed
to finance organized criminal activity continue to pose serious
threats to the security and development of Afghanistan.
Afghanistan remains a major drug trafficking and drug producing
country, and is the world’s largest opium producer and exporter.
The growth in Afghanistan’s banking sector has slowed
considerably in recent years; and traditional payment systems,
particularly hawala networks, remain significant in their reach and
scale. The weaknesses of the banking sector, as demonstrated
by the Kabul Bank crisis, further incentivize the use of informal
mechanisms and exacerbate the difficulty of developing a
transparent formal financial sector in Afghanistan. The narcotics
trade, corruption and contract fraud are major sources of illicit
revenue and laundered funds. The unlicensed and unregulated
hawalas in major drug areas such as Helmand likely account for a
substantial portion of the illicit proceeds being moved in the
financial system, undetected by authorities. There are estimates
that hawaladars in Kandahar, the country’s second largest city,
and the opium producing province of Helmand handle $1 billion in
drug money per year. Despite ongoing efforts by the international
community to build Afghanistan’s capacity to regulate its financial
sector and the capacity of law enforcement to investigate financial
crimes, it is unable to consistently uncover and disrupt financial
crimes because of limited resources, lack of expertise, corruption,
and insufficient political will. Proposed reforms and efforts to urge
law enforcement and the judiciary to take action on financial
crimes often conflict with established, traditional processes, which
can delay compliance with international standards.
Corruption permeates all levels of Afghan government and society
and has a direct impact on the willingness of authorities to
investigate financial crimes. Afghanistan ranked 180 out of 182
countries surveyed in Transparency International’s 2011
Corruption Perception Index. Afghanistan’s laws related to terrorist
financing are not in line with international standards and do not
criminalize the full scope of the terrorist financing offense.
For additional information focusing on terrorist financing, please
refer to the Department of State’s Country Reports on Terrorism,
which can be found here: http://www.state.gov/j/ct/rls/crt/
Do Financial Institutions engage in currency transactions related
to international narcotics trafficking that include significant
amounts of US currency; currency derived from illegal sales in the
U.S.; or that otherwise significantly affect the U.S.: YES
Criminalization of Money Laundering:
“All serious crimes” approach or “list” approach to predicate
crimes: All serious crimes
Legal persons covered: criminally: YES civilly: NO
Know-your-customer (KYC) rules:
Enhanced due diligence procedures for PEPs: Foreign: YES
Domestic: YES
KYC covered entities: Central Bank of Afghanistan (DAB), banks,
registered money service providers, insurance companies,
dealers in precious metals and stones, lawyers, accountants,
securities dealers, and real estate agents
Suspicious Transaction Reporting (STR) Requirements:
Number of STRs received and time frame: 417 from January to
October 2011
Number of CTRs received and time frame: 1,744,169, from June
2006 to October 2010
STR covered entities: Financial institutions and money service
businesses including informal funds transfer providers such as
hawaladars
Money Laundering Criminal Prosecutions/Convictions:
Prosecutions: None
Convictions: None
Records exchange mechanism:
With U.S.: MLAT: NO Other mechanism: YES
With other governments/jurisdictions: YES
Afghanistan is a member of the Asia/Pacific Group on Money
Laundering (APG), a Financial Action Task Force (FATF)-style
regional body. Its most recent mutual evaluation can be found
here: http://www.apgml.org/documents/docs/17/Afghanistan%20-%
20published%20DAR.pdf .
Enforcement and implementation issues and comments:
Money laundering and terrorist financing investigations in
Afghanistan are hampered by a lack of political commitment by
the Government of Afghanistan (GOA), and the limited capacity of
the regulatory regime and criminal justice system.
Less than 5% of the Afghan population uses banks, depending
instead on the entrenched hawala system, which provides a range
of financial and non-financial business services in local, regional,
and international markets. Approximately 90% of financial
transactions run through the hawala system, including foreign
exchange transactions, funds transfers, micro and trade finance,
as well as some deposit-taking activities. While the hawala system
and formal financial sector are distinct, hawaladars often keep
accounts at banks and use wire transfer services to settle their
balances with other hawaladars abroad. Due to limited bank
branch networks, banks occasionally use hawaladars to transmit
funds to hard-to-reach areas within Afghanistan. Licensed
hawaladars and other money service providers submit few STRs,
which does not reflect their exposure to the risk of exploitation by
money launderers and terrorist financiers. The GOA should
create an outreach program to notify and educate hawaladars
about the licensing and STR filing processes.
Border security continues to be a major challenge throughout
Afghanistan, with only 14 official border crossings under central
government control. Most border areas are under-policed or not
policed at all, and are particularly susceptible to cross-border
trafficking, trade-based money laundering, and bulk cash
smuggling. Kabul International Airport lacks stringent inspection
controls for all passengers, and includes a VIP lane that does not
require subjects to undergo any inspections or controls. The GOA
should strengthen inspection controls for airport passengers.
Corruption continues to be an obstacle in the Customs service,
although some improvements have been made with assistance
from international partners. Approximately $1 billion a year of
declared cash flows from Afghanistan into Gulf countries, with
Dubai cited as the primary destination. The declared cash leaving
Afghanistan, primarily from Kabul International Airport, exceeds
Afghanistan’s official revenue of about $900 million.
The GOA has no formal extradition or mutual legal assistance
arrangements with the United States. Requests for extradition and
mutual legal assistance are processed on an ad hoc basis, with
assistance from the Afghan Attorney General’s Office. Newly
drafted extradition-related legislation is currently pending before
the upper house of the Afghan parliament.
The GOA lacks a comprehensive structure for maintaining
administrative freezes on seized terrorist assets, and there is no
mechanism for asset sharing. The GOA should revise its asset
seizure process to ensure its ability to seize and freeze terrorist
assets, maintain these asset freezes, and establish a procedure
for sharing seized assets with foreign partners. The GOA should
increase the capacity of enforcement officers, prosecutors, and
judges to provide them a better understanding of the basis for
seizing and forfeiting assets.
For Full report, click here
____________________________________________________
US State Dept Narcotics Report 2012 (introduction):
Afghanistan produces roughly 90 percent of the world’s illicit
opium. The United Nations Office on Drugs and Crime (UNODC)
estimated that Afghanistan cultivated 131,000 hectares of opium
poppy in 2011, with a total yield of 5,800 metric tons (MT) of raw
opium. This was a 7 percent increase in cultivation and a 61
percent increase in opium production from 2010, following a
poppy blight the previous year which cut production roughly in
half. Afghanistan remains involved in the full narcotics production
cycle, from cultivation to finished heroin. Afghanistan is also
believed to be among the world’s largest producers of hashish.
According to the United States Government’s (USG) 2011
assessment of the drug problem in Afghanistan, poppy cultivation
dropped by 3 percent, from 119,000 ha. in 2010 to 115,000 ha. in
2011, while potential opium production rose by 38 percent, from
3,200 MT in 2010 to 4,400 MT in 2011. The USG and UNODC
estimates differ due to dissimilar methodologies for estimating
poppy cultivation and opium yields.
The southern and southwestern provinces of Afghanistan account
for 92 percent of that country’s illicit poppy cultivation. Taliban
insurgents are also active in this area. Narcotics traffickers
provide revenue and material support to insurgents in exchange
for protection to the growers and traffickers. Insecurity continues
to be a problem, but improvements in Afghanistan’s infrastructure
have helped to create some viable economic alternatives to
poppy cultivation. While Helmand continues to be the largest
poppy cultivating province, according to both UNODC and USG
estimates, cultivation there was down between 3 and 19 percent
this year, respectively. These reductions were the resultof
improved security, a significant alternative livelihood program
supported by the international community, and strong political will
on the part of the governor.
The Government of the Islamic Republic of Afghanistan (GIRoA)
generally relies on assistance from the international community to
implement its counternarcotics strategy. Greater political will,
increased institutional capacity, enhanced security, and more
robust efforts at all levels of government are required to decrease
cultivation, combat trafficking, and respond to a burgeoning
domestic addiction problem. Afghanistan is a party to the 1988
UN Drug Convention.
____________________________________________________
US State Dept Trafficking in Persons Report 2011
(introduction):
(Tier 2 Watch List)
Afghanistan is a source, transit, and destination country for men,
women, and children subjected to forced labor and sex trafficking.
According to the Ministry of the Interior, trafficking within
Afghanistan is more prevalent than transnational trafficking. The
extent of the problem is not known due to weak governmental
capacity, the result of 30 years of war. The majority of victims are
children, and the Ministry of Interior reported that boys were more
at risk for forced labor, commercial sexual exploitation, and forced
drug smuggling, than girls. Some Afghan boys and girls are
trafficked within the country, in forced prostitution, forced labor in
carpet-making factories, and in forced domestic service. They
also are taken to Saudi Arabia for forced begging and street
vending. Forced begging is a growing problem in Afghanistan;
mafia groups organize professional begging rings. Afghan boys
are subjected to forced prostitution and forced labor in the drug
smuggling industry in Pakistan and Iran. Some Afghan women and
girls are subjected to forced prostitution, forced marriages –
including through forced marriages in which husbands force their
wives into prostitution, and where they are given by their families
to settle debts or disputes – and involuntary domestic servitude in
Pakistan and Iran, and possibly India. Some families knowingly sell
their children for forced prostitution, including for bacha baazi –
where wealthy men use groups of young boys for social and
sexual entertainment. Other families send their children with
brokers to gain employment. Many of these children end up in
forced labor, particularly in Pakistani carpet factories. Families
often sell their children to traffickers. Some Afghan families,
including children, are trapped in debt bondage in the brick-
making industry.
Many Afghan men are subjected to forced labor and debt
bondage in the agriculture and construction sectors in Iran,
Pakistan, Greece, the Gulf States, and possibly Southeast Asian
countries. Under the pretense of high-paying employment
opportunities, traffickers lure foreign workers, including those from
Sri Lanka, Nepal, and India, to Afghanistan, and lure Afghan
villagers to Afghan cities or India or Pakistan, then sometimes
subject them to forced labor or forced prostitution subsequent to
their arrival. At the end of 2009 and beginning of 2010, an
increasing number of male migrants from Sri Lanka, Nepal, and
India who migrated willingly to Afghanistan were later subjected to
forced labor. The Ministry of Interior reports that male migrants
from Nepal are forced to work in Afghanistan more than any other
group of foreign workers. Some Afghan women and children are
forced into prostitution in Iran and Slovenia. An increasing number
of Afghan children and men are forced laborers in Greece;
Afghan boys also are forced into prostitution in that country.
Women and girls from Iran, Tajikistan, and possibly Uganda and
China are reportedly forced into prostitution in Afghanistan.
Brothels and prostitution rings are sometimes run by foreigners,
sometimes with links to larger criminal networks. Tajik women also
are believed to be trafficked through Afghanistan to other
countries for prostitution. Trafficked Iranian women transit
Afghanistan en route to Pakistan. According to the government
and the UN, the Taliban use children between 12 to 16 years old
as suicide bombers. Some children have been tricked or forced to
become suicide bombers. Others are heavily indoctrinated or are
not aware that they are carrying explosives that are then set off
remotely without their knowledge. Some child soldiers used by
insurgent groups were sexually exploited. Boys are sometimes
promised enrollment in Islamic schools in Pakistan and Iran, but
instead are trafficked to camps for paramilitary training by
extremist groups.
The Government of Afghanistan does not fully comply with the
minimum standards for the elimination of trafficking; however, it is
making significant efforts to do so. Despite these efforts, the
government did not show evidence of increasing efforts to
address human trafficking over the previous year; therefore,
Afghanistan is placed on Tier 2 Watch List for a second
consecutive year. Specifically, the Afghan government did not
prosecute or convict trafficking offenders under its 2008 law, and
it reportedly punished victims of sex trafficking with imprisonment
for adultery or prostitution. The government seems to seriously
underestimate the significance of human trafficking within the
country.
For full report click here
____________________________________________________
US State Dept Terrorism Report 2010
Overview: During a year in which it conducted contentious
Parliamentary elections and International Security Assistance
Force (ISAF) troop numbers surged to over 131,000, Afghanistan
continued to confront the challenges of building a stable,
democratic government in the face of a sophisticated, multi-
faceted insurgency that primarily relied on asymmetric tactics. The
insurgency targeted coalition forces, the UN Assistance Mission to
Afghanistan (UNAMA), international non-governmental
organizations (NGOs), foreign diplomatic missions, Afghan
civilians, and Afghan government officials and security forces.
Separate but intertwined and affiliated extremist organizations led
by Mullah Omar (Taliban), Sirajuddin Haqqani (Haqqani Network),
and Gulbuddin Hekmatyar (Hezb-e-Islami Gulbuddin) increased
their use of improvised explosive devices (IEDs) and coordinated
attacks using multiple suicide bombers, particularly in the eastern
and southern portions of the country. As they did prior to the
August 2009 presidential and provincial elections, Taliban
militants and other insurgents made a concentrated effort to
depress voter turnout during the September 2010 parliamentary
elections. A variety of threats, attacks, and intimidation tactics
were used to prevent Afghan citizens from voting. Pashtun
parliamentary losses in several provinces increased electoral
dissatisfaction and ethnic tension.
The Commander of U.S. Central Command maintained command
and control of U.S. forces operating in Afghanistan. United States
forces targeted insurgent leaders, facilitators, IED networks, the
narcotics-insurgent nexus, and insurgent training and logistics
centers with the objective of eliminating terrorists and facilitating
reconstruction and development. The Afghan National Army
(ANA), and to a lesser extent, the Afghan National Police (ANP),
continued to lead in the majority of counterterrorism operations in
close cooperation with coalition forces. The Afghan National
Security Forces (ANSF) continued to work in close partnership
with ISAF to develop the capability necessary to assume the lead
in security across Afghanistan and take a greater role in planning
and execution operations. With support from the international
civilian and military community, the ANSF exceeded their
recruitment goals for 2010 with an end strength of approximately
150,000 ANA and 117,000 ANP. Notwithstanding the promising
growth, key challenges remained: retention and attrition, officer
and non-commissioned officer shortages, logistical shortfalls, poor
literacy rates, and pay problems.
2010 Terrorist Incidents: IED attacks, direct and indirect fire, and
suicide attacks increased in 2010. The increase in ISAF troop
presence from 100,000 to 131,730 and their kinetic activities likely
led insurgents to increase their activity. There was a 72 percent
increase in total kinetic events, with IEDs representing 25 to 40
percent of this activity. According to ISAF, the total number of
civilians killed in 2010 exceeded those in 2009, totaling more than
1,408; the vast majority of these deaths were caused by insurgent
elements. The UN, which employed a different methodology,
reported that, during the first 10 months of the year, more than
2,400 civilians were killed and 3,800 were injured; 76 percent of
those casualties were caused by insurgents. The insurgents also
continued their attacks on humanitarian workers, with almost 100
killed in 2010.
While insurgent activity occurred daily, high profile attacks
included:
* On February 26, 16 were killed, including nine Indian nationals,
during an attack on two Indian guesthouses.
* On May 28, the Taliban destroyed one school and threatened
two others in the Lakan area of Khost; the attackers demanded
the release of certain detainees before they would allow the
schools to reopen.
* On July 2, four were killed and 24 were wounded in an attack on
the Kunduz office of Development Alternatives Incorporated.
* On August 7, Taliban and Hezb-e-Islami claimed responsibility
for killing 10 members of a medical mission team in Badakhshan
Province.
* On September 26, a British national who was kidnapped by
insurgents was killed during a rescue attempt.
* On October 8, the Kunduz governor Engineer Mohammad
Omar, was assassinated.
* On December 19, a suicide attack in Kabul killed five ANA
officers.
Legislation and Law Enforcement: The Governments of
Afghanistan and the United States investigated a variety of
criminal acts, including kidnappings, assassinations, contracting
corruption fraud, and other crimes against military and security
forces, NGOs, and civilians. U.S. government law enforcement
bodies regularly passed actionable information to the Ministry of
Interior and the National Directorate of Security and Afghan
authorities who then took actions to disrupt, dismantle, and
prosecute terrorist suspects based on the information. In 2010,
the Afghan Attorney General office received 1170 national
security threat cases for prosecution, passing 743 to the courts.
The U.S. government often participated in prisoner interviews and
debriefings with Afghan authorities of persons suspected of
terrorist activity in Afghanistan and persons with connections to
the United States.
The implementation of a widespread biometrics program was
important to improving the law enforcement environment.
Biometric enrollments of the Afghan population would significantly
improve the security environment and reduce the ability of
extremists and criminals to act anonymously and with impunity.
The Afghan Ministry of Interior led the development of a
biometrics program called “Afghan 1000,” which aimed to enroll
80 percent of the population by late 2012. The Afghan
government also considered a National Security Detentions Law
that would provide the government with a legal regime better
suited to the investigation and prosecution of terrorist and
insurgent cases.
Afghanistan continued to process travelers on entry and
departure at Kabul international airport with the Personal
Identification Secure Comparison and Evaluation System
(PISCES). Afghan authorities reviewed plans for expanded
PISCES installations at additional locations.
Countering Terrorist Finance: In 2004, Afghanistan passed two
laws to formalize the combating of money laundering and terrorist
financing, and established Afghanistan’s financial intelligence unit
(FIU), the Financial Transactions and Reports Analysis Centre of
Afghanistan (FinTRACA). FinTRACA was responsible for collecting
“suspicious transaction reports” from banks, analyzing them, and
disseminating financial intelligence from this analysis to Afghan
law enforcement agencies. FinTRACA also worked closely with
other global FIUs and in summer 2010 became a member of the
Egmont Group of FIUs, which allowed it to share financial
intelligence with, and request financial intelligence from, more
than 100 Egmont-member FIUs around the world. Despite these
increased efforts by the international community against funding
flows, streams of Taliban financing from abroad, along with funds
gained from narcotics trafficking and kidnapping, criminal
enterprises, and taxing the local population, have allowed the
insurgency to strengthen its military and technical capabilities.
Narcotics trafficking in particular remained an important financing
mechanism of terrorist/insurgent operations.
Regional and International Cooperation: The Government of
Afghanistan continued to increase its international cooperation on
counterterrorism. In November, Afghanistan joined over 60
countries and the World Customs Organization to partner in the
on-going Project Global Shield (PGS), the goal of which is to
monitor and curtail the illicit diversion of 14 explosive and drug
precursor chemicals used for terrorist purposes. (PGS-targeted
precursors were used in insurgent IED attacks targeting civilian,
Afghan, and ISAF elements.) The August Summit in Sochi, Russia
convened the Presidents of Afghanistan, Russia, Tajikistan, and
Pakistan and included discussions of counterterrorism
cooperation. The President of Afghanistan and the Prime Minister
of Pakistan issued a joint statement after their September 15-16
meeting in Pakistan that recognized the need for close
cooperation against terrorism and reaffirmed this commitment in
their December 4 meeting in Kabul.
Countering Radicalization and Violent Extremism: The Afghan
government supported counter-radicalization programs, mainly by
engaging networks of supportive local and traditional leaders that
promulgated a tolerant interpretation of Islam. The Ministry of
Information, Culture, and Youth and the Ministry of Hajj and
Religious Affairs have both convened numerous meetings at both
local and national levels to encourage discussion and dialogue on
religious issues, including radicalization. Lack of resources and
capacity at the Ministry of Hajj and Religious Affairs, however, was
a serious impediment to monitoring themes of Friday sermons
across the country, and the Ministry lacked the capability to
provide guidance to the many thousands of mullahs and imams in
the country. The Ministry’s Islamic Sciences Research Center
produced small books and brochures providing Islamic arguments
against terrorism, suicide bombing, and radicalism for distribution
throughout the country.
The United States assisted the Afghan government to develop
programs to counter radicalization in prisons, as internal prison
networks have a great deal of influence on active external terrorist
networks. The separation of prisoners who constitute national
security threats from common criminals was necessary to prevent
insurgent recruitment within prisons.
Observance of Standards and Codes—FATF
Recommendations for Anti-Money Laundering and
Combating the Financing of Terrorism (November 2011)
Afghanistan is one of the poorest countries in the world and, after
decades of ongoing conflicts and strife, it is still at an early stage
of developing its legal and institutional framework. The main
challenges that the authorities face are the precarious
security situation (including regular occurrence of insurgency
attacks), vested interests and corruption, capacity constraints, a
large illicit narcotics sector, and a weak business environment.
Measures have nevertheless been taken to fight crime, including
financial crime, and to lay the foundations for an AML/CFT regime.
In particular, two legislative decrees were issued by the President
in 2004 to fight against money laundering and terrorist
financing (ML/TF). Although they still require Parliamentary
approval, both decrees are enforceable and have been
implemented, to a certain extent, by the authorities and the
private sector.
However, current efforts are not commensurate with the high risk
of ML/TF in the country. Illicit narcotics trade and corruption alone
generate considerable amounts of illegal funds. Afghanistan is the
world’s largest opium producer and exporter, with an export
value of opiates estimated to amount to some US$4 billion. It also
ranks amongst the most corrupt countries in the world with
domestic proceeds of corruption estimated to be up to US$2.4
billion in 2009. Smuggling and fraud are other major sources of
illegal funds. In addition, terrorism and its financing remain a
major concern both in terms of the security of Afghanistan and of
the funding of terrorist individuals or organizations, and terrorist
acts in the country and abroad. Despite the authorities’ efforts,
investigations into ML and TF have been few and none of them
resulted in charges being brought before the courts.
Structural elements make the effective implementation of
AML/CFT preventive measures challenging in some sectors. Both
rudimentary financial relations (cash-based economy, low rate of
financial intermediation in an environment characterized by
illiteracy and a general lack of appropriate identification
documents), and a small banking sector consisting of banks
relatively well connected to the outside world (at least through
correspondent accounts and SWIFT) coexist in Afghanistan. While
preventive measures are certainly difficult to implement, even in
the medium term, in relation to transactions in cash, they could be
better implemented in the banking sector. Indeed, it would appear
that the lack of implementation and supervision of preventive
measures applicable to financial institutions, such as identification
of customers and fit and proper testing played a role in the
making of a major financial fraud in Afghanistan’s main
commercial bank.
Click here to view full report
Sanctions:
On 3 October 2011, the EU Council implemented amendments to
Regulation EU 968/2011 in response to the amendments
approved by the UN.
http://www.hm-treasury.gov.uk/d/fin_sanc_public_notice031011.
On 15 August 2011 by the United Nations Security Council
Committee Resolution 1988 (2011) was amended to add a
further individual to the UN list established pursuant to
resolution 1988 (2011) and to amend the identifying information
of two existing entries.
On 17 June 2011 The Security Council Committee established
Resolution 1988 (2011). The resolution requires all States to take
the following measures in connection with any individuals, groups,
undertakings and entities associated with the Taliban in
constituting a threat to the peace, stability and security of
Afghanistan: -
- freeze without delay the funds and other financial assets or
economic resources of designated individuals and entities [assets
freeze],
- prevent the entry into or transit through their territories by
designated individuals [travel ban], and
- their territories or by their nationals outside their territories,
or using their flag vessels or aircraft, of arms and related materiel
of all types, spare parts, and technical advice, assistance, or
training related to military activities, to designated individuals and
entities [arms embargo].
By resolution 1988 (2011) the Security Council split the Al-Qaida
and Taliban sanctions regime into two groups - an Al-Qaida
regime and a country-specific Afghanistan regime.
UN Security Council resolutions 1267 (1999), 1333 (2000), 1390
(2002), 1455 (2003), 1526 (2004), 1617 (2005), 1735 (2006),
1822 (2008) and 1904 (2009) require all member states to freeze
the assets, prevent the entry into or the transit through their
territories, and prevent the direct or indirect supply, sale and
transfer of arms and military equipment with regard to any
individual or entity associated with Al-Qaida, Usama bin Laden
and/or the Taliban as designated by the Council’s Al-Qaida and
Taliban Sanctions Committee.
The UN measures are currently implemented in the EU by Council
Regulation (EC) No 881/2002, which is enforced in the UK by The
Al-Qaida and Taliban (Asset-Freezing) Regulations 2010.
____________________________________________________
Offshore Jurisdiction Blacklists:
Information unavailable.
____________________________________________________
US State Department Money Laundering Report 2012:
Afghanistan is not a regional or offshore center. Terrorist and
insurgent financing, money laundering, cash smuggling, abuse of
informal value transfer systems, and other illicit activities designed
to finance organized criminal activity continue to pose serious
threats to the security and development of Afghanistan.
Afghanistan remains a major drug trafficking and drug producing
country, and is the world’s largest opium producer and exporter.
The growth in Afghanistan’s banking sector has slowed
considerably in recent years; and traditional payment systems,
particularly hawala networks, remain significant in their reach and
scale. The weaknesses of the banking sector, as demonstrated
by the Kabul Bank crisis, further incentivize the use of informal
mechanisms and exacerbate the difficulty of developing a
transparent formal financial sector in Afghanistan. The narcotics
trade, corruption and contract fraud are major sources of illicit
revenue and laundered funds. The unlicensed and unregulated
hawalas in major drug areas such as Helmand likely account for a
substantial portion of the illicit proceeds being moved in the
financial system, undetected by authorities. There are estimates
that hawaladars in Kandahar, the country’s second largest city,
and the opium producing province of Helmand handle $1 billion in
drug money per year. Despite ongoing efforts by the international
community to build Afghanistan’s capacity to regulate its financial
sector and the capacity of law enforcement to investigate financial
crimes, it is unable to consistently uncover and disrupt financial
crimes because of limited resources, lack of expertise, corruption,
and insufficient political will. Proposed reforms and efforts to urge
law enforcement and the judiciary to take action on financial
crimes often conflict with established, traditional processes, which
can delay compliance with international standards.
Corruption permeates all levels of Afghan government and society
and has a direct impact on the willingness of authorities to
investigate financial crimes. Afghanistan ranked 180 out of 182
countries surveyed in Transparency International’s 2011
Corruption Perception Index. Afghanistan’s laws related to terrorist
financing are not in line with international standards and do not
criminalize the full scope of the terrorist financing offense.
For additional information focusing on terrorist financing, please
refer to the Department of State’s Country Reports on Terrorism,
which can be found here: http://www.state.gov/j/ct/rls/crt/
Do Financial Institutions engage in currency transactions related
to international narcotics trafficking that include significant
amounts of US currency; currency derived from illegal sales in the
U.S.; or that otherwise significantly affect the U.S.: YES
Criminalization of Money Laundering:
“All serious crimes” approach or “list” approach to predicate
crimes: All serious crimes
Legal persons covered: criminally: YES civilly: NO
Know-your-customer (KYC) rules:
Enhanced due diligence procedures for PEPs: Foreign: YES
Domestic: YES
KYC covered entities: Central Bank of Afghanistan (DAB), banks,
registered money service providers, insurance companies,
dealers in precious metals and stones, lawyers, accountants,
securities dealers, and real estate agents
Suspicious Transaction Reporting (STR) Requirements:
Number of STRs received and time frame: 417 from January to
October 2011
Number of CTRs received and time frame: 1,744,169, from June
2006 to October 2010
STR covered entities: Financial institutions and money service
businesses including informal funds transfer providers such as
hawaladars
Money Laundering Criminal Prosecutions/Convictions:
Prosecutions: None
Convictions: None
Records exchange mechanism:
With U.S.: MLAT: NO Other mechanism: YES
With other governments/jurisdictions: YES
Afghanistan is a member of the Asia/Pacific Group on Money
Laundering (APG), a Financial Action Task Force (FATF)-style
regional body. Its most recent mutual evaluation can be found
here: http://www.apgml.org/documents/docs/17/Afghanistan%20-%
20published%20DAR.pdf .
Enforcement and implementation issues and comments:
Money laundering and terrorist financing investigations in
Afghanistan are hampered by a lack of political commitment by
the Government of Afghanistan (GOA), and the limited capacity of
the regulatory regime and criminal justice system.
Less than 5% of the Afghan population uses banks, depending
instead on the entrenched hawala system, which provides a range
of financial and non-financial business services in local, regional,
and international markets. Approximately 90% of financial
transactions run through the hawala system, including foreign
exchange transactions, funds transfers, micro and trade finance,
as well as some deposit-taking activities. While the hawala system
and formal financial sector are distinct, hawaladars often keep
accounts at banks and use wire transfer services to settle their
balances with other hawaladars abroad. Due to limited bank
branch networks, banks occasionally use hawaladars to transmit
funds to hard-to-reach areas within Afghanistan. Licensed
hawaladars and other money service providers submit few STRs,
which does not reflect their exposure to the risk of exploitation by
money launderers and terrorist financiers. The GOA should
create an outreach program to notify and educate hawaladars
about the licensing and STR filing processes.
Border security continues to be a major challenge throughout
Afghanistan, with only 14 official border crossings under central
government control. Most border areas are under-policed or not
policed at all, and are particularly susceptible to cross-border
trafficking, trade-based money laundering, and bulk cash
smuggling. Kabul International Airport lacks stringent inspection
controls for all passengers, and includes a VIP lane that does not
require subjects to undergo any inspections or controls. The GOA
should strengthen inspection controls for airport passengers.
Corruption continues to be an obstacle in the Customs service,
although some improvements have been made with assistance
from international partners. Approximately $1 billion a year of
declared cash flows from Afghanistan into Gulf countries, with
Dubai cited as the primary destination. The declared cash leaving
Afghanistan, primarily from Kabul International Airport, exceeds
Afghanistan’s official revenue of about $900 million.
The GOA has no formal extradition or mutual legal assistance
arrangements with the United States. Requests for extradition and
mutual legal assistance are processed on an ad hoc basis, with
assistance from the Afghan Attorney General’s Office. Newly
drafted extradition-related legislation is currently pending before
the upper house of the Afghan parliament.
The GOA lacks a comprehensive structure for maintaining
administrative freezes on seized terrorist assets, and there is no
mechanism for asset sharing. The GOA should revise its asset
seizure process to ensure its ability to seize and freeze terrorist
assets, maintain these asset freezes, and establish a procedure
for sharing seized assets with foreign partners. The GOA should
increase the capacity of enforcement officers, prosecutors, and
judges to provide them a better understanding of the basis for
seizing and forfeiting assets.
For Full report, click here
____________________________________________________
US State Dept Narcotics Report 2012 (introduction):
Afghanistan produces roughly 90 percent of the world’s illicit
opium. The United Nations Office on Drugs and Crime (UNODC)
estimated that Afghanistan cultivated 131,000 hectares of opium
poppy in 2011, with a total yield of 5,800 metric tons (MT) of raw
opium. This was a 7 percent increase in cultivation and a 61
percent increase in opium production from 2010, following a
poppy blight the previous year which cut production roughly in
half. Afghanistan remains involved in the full narcotics production
cycle, from cultivation to finished heroin. Afghanistan is also
believed to be among the world’s largest producers of hashish.
According to the United States Government’s (USG) 2011
assessment of the drug problem in Afghanistan, poppy cultivation
dropped by 3 percent, from 119,000 ha. in 2010 to 115,000 ha. in
2011, while potential opium production rose by 38 percent, from
3,200 MT in 2010 to 4,400 MT in 2011. The USG and UNODC
estimates differ due to dissimilar methodologies for estimating
poppy cultivation and opium yields.
The southern and southwestern provinces of Afghanistan account
for 92 percent of that country’s illicit poppy cultivation. Taliban
insurgents are also active in this area. Narcotics traffickers
provide revenue and material support to insurgents in exchange
for protection to the growers and traffickers. Insecurity continues
to be a problem, but improvements in Afghanistan’s infrastructure
have helped to create some viable economic alternatives to
poppy cultivation. While Helmand continues to be the largest
poppy cultivating province, according to both UNODC and USG
estimates, cultivation there was down between 3 and 19 percent
this year, respectively. These reductions were the resultof
improved security, a significant alternative livelihood program
supported by the international community, and strong political will
on the part of the governor.
The Government of the Islamic Republic of Afghanistan (GIRoA)
generally relies on assistance from the international community to
implement its counternarcotics strategy. Greater political will,
increased institutional capacity, enhanced security, and more
robust efforts at all levels of government are required to decrease
cultivation, combat trafficking, and respond to a burgeoning
domestic addiction problem. Afghanistan is a party to the 1988
UN Drug Convention.
____________________________________________________
US State Dept Trafficking in Persons Report 2011
(introduction):
(Tier 2 Watch List)
Afghanistan is a source, transit, and destination country for men,
women, and children subjected to forced labor and sex trafficking.
According to the Ministry of the Interior, trafficking within
Afghanistan is more prevalent than transnational trafficking. The
extent of the problem is not known due to weak governmental
capacity, the result of 30 years of war. The majority of victims are
children, and the Ministry of Interior reported that boys were more
at risk for forced labor, commercial sexual exploitation, and forced
drug smuggling, than girls. Some Afghan boys and girls are
trafficked within the country, in forced prostitution, forced labor in
carpet-making factories, and in forced domestic service. They
also are taken to Saudi Arabia for forced begging and street
vending. Forced begging is a growing problem in Afghanistan;
mafia groups organize professional begging rings. Afghan boys
are subjected to forced prostitution and forced labor in the drug
smuggling industry in Pakistan and Iran. Some Afghan women and
girls are subjected to forced prostitution, forced marriages –
including through forced marriages in which husbands force their
wives into prostitution, and where they are given by their families
to settle debts or disputes – and involuntary domestic servitude in
Pakistan and Iran, and possibly India. Some families knowingly sell
their children for forced prostitution, including for bacha baazi –
where wealthy men use groups of young boys for social and
sexual entertainment. Other families send their children with
brokers to gain employment. Many of these children end up in
forced labor, particularly in Pakistani carpet factories. Families
often sell their children to traffickers. Some Afghan families,
including children, are trapped in debt bondage in the brick-
making industry.
Many Afghan men are subjected to forced labor and debt
bondage in the agriculture and construction sectors in Iran,
Pakistan, Greece, the Gulf States, and possibly Southeast Asian
countries. Under the pretense of high-paying employment
opportunities, traffickers lure foreign workers, including those from
Sri Lanka, Nepal, and India, to Afghanistan, and lure Afghan
villagers to Afghan cities or India or Pakistan, then sometimes
subject them to forced labor or forced prostitution subsequent to
their arrival. At the end of 2009 and beginning of 2010, an
increasing number of male migrants from Sri Lanka, Nepal, and
India who migrated willingly to Afghanistan were later subjected to
forced labor. The Ministry of Interior reports that male migrants
from Nepal are forced to work in Afghanistan more than any other
group of foreign workers. Some Afghan women and children are
forced into prostitution in Iran and Slovenia. An increasing number
of Afghan children and men are forced laborers in Greece;
Afghan boys also are forced into prostitution in that country.
Women and girls from Iran, Tajikistan, and possibly Uganda and
China are reportedly forced into prostitution in Afghanistan.
Brothels and prostitution rings are sometimes run by foreigners,
sometimes with links to larger criminal networks. Tajik women also
are believed to be trafficked through Afghanistan to other
countries for prostitution. Trafficked Iranian women transit
Afghanistan en route to Pakistan. According to the government
and the UN, the Taliban use children between 12 to 16 years old
as suicide bombers. Some children have been tricked or forced to
become suicide bombers. Others are heavily indoctrinated or are
not aware that they are carrying explosives that are then set off
remotely without their knowledge. Some child soldiers used by
insurgent groups were sexually exploited. Boys are sometimes
promised enrollment in Islamic schools in Pakistan and Iran, but
instead are trafficked to camps for paramilitary training by
extremist groups.
The Government of Afghanistan does not fully comply with the
minimum standards for the elimination of trafficking; however, it is
making significant efforts to do so. Despite these efforts, the
government did not show evidence of increasing efforts to
address human trafficking over the previous year; therefore,
Afghanistan is placed on Tier 2 Watch List for a second
consecutive year. Specifically, the Afghan government did not
prosecute or convict trafficking offenders under its 2008 law, and
it reportedly punished victims of sex trafficking with imprisonment
for adultery or prostitution. The government seems to seriously
underestimate the significance of human trafficking within the
country.
For full report click here
____________________________________________________
US State Dept Terrorism Report 2010
Overview: During a year in which it conducted contentious
Parliamentary elections and International Security Assistance
Force (ISAF) troop numbers surged to over 131,000, Afghanistan
continued to confront the challenges of building a stable,
democratic government in the face of a sophisticated, multi-
faceted insurgency that primarily relied on asymmetric tactics. The
insurgency targeted coalition forces, the UN Assistance Mission to
Afghanistan (UNAMA), international non-governmental
organizations (NGOs), foreign diplomatic missions, Afghan
civilians, and Afghan government officials and security forces.
Separate but intertwined and affiliated extremist organizations led
by Mullah Omar (Taliban), Sirajuddin Haqqani (Haqqani Network),
and Gulbuddin Hekmatyar (Hezb-e-Islami Gulbuddin) increased
their use of improvised explosive devices (IEDs) and coordinated
attacks using multiple suicide bombers, particularly in the eastern
and southern portions of the country. As they did prior to the
August 2009 presidential and provincial elections, Taliban
militants and other insurgents made a concentrated effort to
depress voter turnout during the September 2010 parliamentary
elections. A variety of threats, attacks, and intimidation tactics
were used to prevent Afghan citizens from voting. Pashtun
parliamentary losses in several provinces increased electoral
dissatisfaction and ethnic tension.
The Commander of U.S. Central Command maintained command
and control of U.S. forces operating in Afghanistan. United States
forces targeted insurgent leaders, facilitators, IED networks, the
narcotics-insurgent nexus, and insurgent training and logistics
centers with the objective of eliminating terrorists and facilitating
reconstruction and development. The Afghan National Army
(ANA), and to a lesser extent, the Afghan National Police (ANP),
continued to lead in the majority of counterterrorism operations in
close cooperation with coalition forces. The Afghan National
Security Forces (ANSF) continued to work in close partnership
with ISAF to develop the capability necessary to assume the lead
in security across Afghanistan and take a greater role in planning
and execution operations. With support from the international
civilian and military community, the ANSF exceeded their
recruitment goals for 2010 with an end strength of approximately
150,000 ANA and 117,000 ANP. Notwithstanding the promising
growth, key challenges remained: retention and attrition, officer
and non-commissioned officer shortages, logistical shortfalls, poor
literacy rates, and pay problems.
2010 Terrorist Incidents: IED attacks, direct and indirect fire, and
suicide attacks increased in 2010. The increase in ISAF troop
presence from 100,000 to 131,730 and their kinetic activities likely
led insurgents to increase their activity. There was a 72 percent
increase in total kinetic events, with IEDs representing 25 to 40
percent of this activity. According to ISAF, the total number of
civilians killed in 2010 exceeded those in 2009, totaling more than
1,408; the vast majority of these deaths were caused by insurgent
elements. The UN, which employed a different methodology,
reported that, during the first 10 months of the year, more than
2,400 civilians were killed and 3,800 were injured; 76 percent of
those casualties were caused by insurgents. The insurgents also
continued their attacks on humanitarian workers, with almost 100
killed in 2010.
While insurgent activity occurred daily, high profile attacks
included:
* On February 26, 16 were killed, including nine Indian nationals,
during an attack on two Indian guesthouses.
* On May 28, the Taliban destroyed one school and threatened
two others in the Lakan area of Khost; the attackers demanded
the release of certain detainees before they would allow the
schools to reopen.
* On July 2, four were killed and 24 were wounded in an attack on
the Kunduz office of Development Alternatives Incorporated.
* On August 7, Taliban and Hezb-e-Islami claimed responsibility
for killing 10 members of a medical mission team in Badakhshan
Province.
* On September 26, a British national who was kidnapped by
insurgents was killed during a rescue attempt.
* On October 8, the Kunduz governor Engineer Mohammad
Omar, was assassinated.
* On December 19, a suicide attack in Kabul killed five ANA
officers.
Legislation and Law Enforcement: The Governments of
Afghanistan and the United States investigated a variety of
criminal acts, including kidnappings, assassinations, contracting
corruption fraud, and other crimes against military and security
forces, NGOs, and civilians. U.S. government law enforcement
bodies regularly passed actionable information to the Ministry of
Interior and the National Directorate of Security and Afghan
authorities who then took actions to disrupt, dismantle, and
prosecute terrorist suspects based on the information. In 2010,
the Afghan Attorney General office received 1170 national
security threat cases for prosecution, passing 743 to the courts.
The U.S. government often participated in prisoner interviews and
debriefings with Afghan authorities of persons suspected of
terrorist activity in Afghanistan and persons with connections to
the United States.
The implementation of a widespread biometrics program was
important to improving the law enforcement environment.
Biometric enrollments of the Afghan population would significantly
improve the security environment and reduce the ability of
extremists and criminals to act anonymously and with impunity.
The Afghan Ministry of Interior led the development of a
biometrics program called “Afghan 1000,” which aimed to enroll
80 percent of the population by late 2012. The Afghan
government also considered a National Security Detentions Law
that would provide the government with a legal regime better
suited to the investigation and prosecution of terrorist and
insurgent cases.
Afghanistan continued to process travelers on entry and
departure at Kabul international airport with the Personal
Identification Secure Comparison and Evaluation System
(PISCES). Afghan authorities reviewed plans for expanded
PISCES installations at additional locations.
Countering Terrorist Finance: In 2004, Afghanistan passed two
laws to formalize the combating of money laundering and terrorist
financing, and established Afghanistan’s financial intelligence unit
(FIU), the Financial Transactions and Reports Analysis Centre of
Afghanistan (FinTRACA). FinTRACA was responsible for collecting
“suspicious transaction reports” from banks, analyzing them, and
disseminating financial intelligence from this analysis to Afghan
law enforcement agencies. FinTRACA also worked closely with
other global FIUs and in summer 2010 became a member of the
Egmont Group of FIUs, which allowed it to share financial
intelligence with, and request financial intelligence from, more
than 100 Egmont-member FIUs around the world. Despite these
increased efforts by the international community against funding
flows, streams of Taliban financing from abroad, along with funds
gained from narcotics trafficking and kidnapping, criminal
enterprises, and taxing the local population, have allowed the
insurgency to strengthen its military and technical capabilities.
Narcotics trafficking in particular remained an important financing
mechanism of terrorist/insurgent operations.
Regional and International Cooperation: The Government of
Afghanistan continued to increase its international cooperation on
counterterrorism. In November, Afghanistan joined over 60
countries and the World Customs Organization to partner in the
on-going Project Global Shield (PGS), the goal of which is to
monitor and curtail the illicit diversion of 14 explosive and drug
precursor chemicals used for terrorist purposes. (PGS-targeted
precursors were used in insurgent IED attacks targeting civilian,
Afghan, and ISAF elements.) The August Summit in Sochi, Russia
convened the Presidents of Afghanistan, Russia, Tajikistan, and
Pakistan and included discussions of counterterrorism
cooperation. The President of Afghanistan and the Prime Minister
of Pakistan issued a joint statement after their September 15-16
meeting in Pakistan that recognized the need for close
cooperation against terrorism and reaffirmed this commitment in
their December 4 meeting in Kabul.
Countering Radicalization and Violent Extremism: The Afghan
government supported counter-radicalization programs, mainly by
engaging networks of supportive local and traditional leaders that
promulgated a tolerant interpretation of Islam. The Ministry of
Information, Culture, and Youth and the Ministry of Hajj and
Religious Affairs have both convened numerous meetings at both
local and national levels to encourage discussion and dialogue on
religious issues, including radicalization. Lack of resources and
capacity at the Ministry of Hajj and Religious Affairs, however, was
a serious impediment to monitoring themes of Friday sermons
across the country, and the Ministry lacked the capability to
provide guidance to the many thousands of mullahs and imams in
the country. The Ministry’s Islamic Sciences Research Center
produced small books and brochures providing Islamic arguments
against terrorism, suicide bombing, and radicalism for distribution
throughout the country.
The United States assisted the Afghan government to develop
programs to counter radicalization in prisons, as internal prison
networks have a great deal of influence on active external terrorist
networks. The separation of prisoners who constitute national
security threats from common criminals was necessary to prevent
insurgent recruitment within prisons.
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| AFGHANISTAN |
| KnowYourCountry |
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*Please note that FATF deems that a country has significant aml deficiencies if
any of the 'Core' Recommendations, R1, R5, R10, R13, SRII, or SRIV are rated
either Partially of Non-Compliant. These are marked in red.
For FATF to remove a country from the regular follow-up process, it has to be rated
Compliant or Largely Compliant in the above mentioned Core Recommendations
and the following Key Recommendations: -
R3, R4, R23, R26, R35, R36, R40, SRI, SRIII, SRV
Please also note that any risk assessment should take into consideration all
follow-up reports.
any of the 'Core' Recommendations, R1, R5, R10, R13, SRII, or SRIV are rated
either Partially of Non-Compliant. These are marked in red.
For FATF to remove a country from the regular follow-up process, it has to be rated
Compliant or Largely Compliant in the above mentioned Core Recommendations
and the following Key Recommendations: -
R3, R4, R23, R26, R35, R36, R40, SRI, SRIII, SRV
Please also note that any risk assessment should take into consideration all
follow-up reports.
Key Findings
Afghanistan is one of the poorest countries in the world and, after
decades of ongoing conflicts and strife, it is still at an early stage
of developing its legal and institutional framework. The main
challenges that the authorities face are the precarious security
situation (including regular occurrence of insurgency attacks),
vested interests and corruption, capacity constraints, a large illicit
narcotics sector, a weak business environment, and low human capital.
Measures have nevertheless been taken to fight crime, including
financial crime, and to lay the foundations for an AML/CFT regime. In
particular, two legislative decrees were issued by the President in
2004 to fight against money laundering and terrorist financing.
Although their constitutionality and, ultimately, the validity of the
AML/CFT framework, have not been definitively established, both
decrees have been implemented, to a certain extent, by the
authorities and the private sector.
However, current efforts are not commensurate to the high risk of
money laundering and terrorist financing in the country. Illicit
narcotic trade and corruption alone generate considerable amounts
of illegal funds. Afghanistan is the world’s largest opium producer and
exporter and ranks amongst the most corrupt countries in the
world. Smuggling and fraud are other major sources of illegal
funds. In addition, terrorism and its financing remain a major concern
both in terms of the security of Afghanistan and of the funding of
terrorist individuals or organizations, and terrorist acts in the country
and abroad. Despite the authorities’ efforts, investigations into money
laundering and terrorist financing have been few and none of them
resulted in charges being brought before the courts.
Structural elements make the effective implementation of
AML/CFT preventive measures challenging in some sectors. Both
rudimentary financial relations (cash-based economy, low rate of
financial intermediation, illiteracy, and weaknesses in documentation of
identity), and a financial sector well connected to the outside
world (at least through correspondent accounts and SWIFT)
coexist in Afghanistan. Accordingly, while preventive measures
are certainly difficult to implement, even in the medium term, in
the rudimentary financial sector, they could be and could have
been better implemented in the banking sector. For example, it would
appear that the lack of implementation and supervision of preventive
measures, such as identification of customers and fit and proper
testing did play a role in the making of a major financial fraud in the
main commercial bank.
Click here to view full Mutual Evaluation Report (pdf file)
Afghanistan is one of the poorest countries in the world and, after
decades of ongoing conflicts and strife, it is still at an early stage
of developing its legal and institutional framework. The main
challenges that the authorities face are the precarious security
situation (including regular occurrence of insurgency attacks),
vested interests and corruption, capacity constraints, a large illicit
narcotics sector, a weak business environment, and low human capital.
Measures have nevertheless been taken to fight crime, including
financial crime, and to lay the foundations for an AML/CFT regime. In
particular, two legislative decrees were issued by the President in
2004 to fight against money laundering and terrorist financing.
Although their constitutionality and, ultimately, the validity of the
AML/CFT framework, have not been definitively established, both
decrees have been implemented, to a certain extent, by the
authorities and the private sector.
However, current efforts are not commensurate to the high risk of
money laundering and terrorist financing in the country. Illicit
narcotic trade and corruption alone generate considerable amounts
of illegal funds. Afghanistan is the world’s largest opium producer and
exporter and ranks amongst the most corrupt countries in the
world. Smuggling and fraud are other major sources of illegal
funds. In addition, terrorism and its financing remain a major concern
both in terms of the security of Afghanistan and of the funding of
terrorist individuals or organizations, and terrorist acts in the country
and abroad. Despite the authorities’ efforts, investigations into money
laundering and terrorist financing have been few and none of them
resulted in charges being brought before the courts.
Structural elements make the effective implementation of
AML/CFT preventive measures challenging in some sectors. Both
rudimentary financial relations (cash-based economy, low rate of
financial intermediation, illiteracy, and weaknesses in documentation of
identity), and a financial sector well connected to the outside
world (at least through correspondent accounts and SWIFT)
coexist in Afghanistan. Accordingly, while preventive measures
are certainly difficult to implement, even in the medium term, in
the rudimentary financial sector, they could be and could have
been better implemented in the banking sector. For example, it would
appear that the lack of implementation and supervision of preventive
measures, such as identification of customers and fit and proper
testing did play a role in the making of a major financial fraud in the
main commercial bank.
Click here to view full Mutual Evaluation Report (pdf file)
| Further Tables |
| Last Updated: 16 April 2012 |