Risk Indicators
- FATF/EU Blacklist/Greylist (Higher Concern)
- Terrorism Financing (Higher Concern)
- US Dept of State INCSR
- Proliferation Financing
- Corruption
- Criminality
- Resilience & Governance
- Financial Transparency
- Offshore Finance Centres
- Sanctions
Background
Founded by Ahmad Shah Durrani in 1747, Afghanistan emerged through imperial rivalry, achieved independence from nominal British control in 1919, and later endured coups, communist rule, and the Soviet invasion. Internationally supported mujahidin resistance compelled the Soviet withdrawal in 1989, but subsequent civil wars culminated in the Taliban’s capture of Kabul in 1996 and its removal after the 2001 terrorist attacks. These successive conflicts left Afghanistan at the center of a prolonged regional security crisis involving Pakistan, Iran, and Central Asia.
The UN-sponsored Bonn process introduced a new constitutional and electoral framework, followed by the presidencies of Hamid Karzai and Ashraf Ghani amid a continuing Taliban insurgency. The Taliban’s 2021 return to power brought an interim leadership dominated by Pashtun clerics under Haivatrullah Akhundzada, alongside sweeping restrictions on women’s movement, work, and education and the absence of formal recognition by any country. Cross-border militancy involving groups such as TTP, ISKP, and Jaish al-Adl, combined with refugee pressures and sanctions concerns involving Iran, Pakistan, China, and Central Asian states, continues to shape Afghanistan’s wider environment.
AML & Terrorist Financing
Afghanistan has made formal AML/CFT progress, including its 2017 exit from FATF monitoring, but unresolved weaknesses and the absence of a newer FATF-style mutual evaluation leave the overall picture uncertain. Since 2021, reliance on cash and hawala networks, illicit revenues from drugs and other cross-border activity, porous borders, corruption, and limited financial inclusion continue to complicate efforts to distinguish legitimate funds from money laundering and terrorist financing. Da Afghanistan Bank and FinTRACA have taken some steps toward oversight and transparency, yet institutional constraints, Taliban interference, FinTRACA’s expulsion from the Egmont Group, and diminished international engagement remain significant concerns.
Sanctions
Afghanistan does not appear to enforce sanctions against other nations in the material provided, while its deferred UN membership would require compliance with applicable Security Council measures if reinstated. Restrictions imposed against Afghanistan are principally targeted at the Taliban, Haqqani Network, Al-Qaida, ISIL and associated persons, including arms embargoes, asset freezes, travel bans and limited controls on military-related trade under frameworks such as UN Resolutions 1988 and 2255, US OFAC authorities, and corresponding EU, UK, Canadian, Japanese, Australian and Swiss regimes. General commerce and humanitarian activity generally remain possible through exemptions and licenses—including OFAC authorizations and arrangements linked to Resolution 2615—although hawala networks, diverted aid, shell companies and routes involving Iran, Pakistan, the UAE and Turkey are identified as areas of sanctions-evasion concern.
Criminality
Corruption remains deeply embedded in Afghanistan’s public and commercial life, affecting licensing, procurement, taxation, border crossings, land, and dispute resolution, while illicit markets span trafficking, arms, counterfeit goods, logging, wildlife, narcotics, cybercrime, and financial fraud. Although bodies such as the Anti-Corruption Justice Center, Anti-Corruption Commission, High Office of Oversight & Anti-Corruption, and Asset Registration and Verification Agency have pursued reforms and some cases, enforcement and accountability remain uneven amid the involvement of state-linked and criminal actors.
Reports
Afghanistan’s narcotics landscape shows sharply reduced poppy cultivation following the Taliban’s ban, alongside persistent trafficking routes, expanding methamphetamine concerns, severe substance-use needs, and uncertain enforcement reflected in UNODC and neighboring-country seizure data. At the same time, Afghanistan remains marked by widespread trafficking vulnerabilities—including child labor, bacha bazi, forced marriage, and child-soldier recruitment—while ISIS-K, al-Qaida, AQIS, the Haqqani Network, and TTP continue shaping a volatile security environment.
Economy & Investment Climate
Afghanistan’s economy remains predominantly agrarian and fragile, with agriculture supporting much of the population while services account for the largest reported share of GDP and growth continues to face pressure from insecurity, limited skills, weak infrastructure, and donor dependence. Reforms involving the Afghanistan Central Business Registry, Da Afghanistan Bank, and investment bodies such as the High Commission on Investment suggest avenues for private and foreign participation, but restricted finance, uncertain property rights, overlapping legal systems, and uneven regulatory enforcement continue to shape the commercial landscape.
Cryptocurrency Regulations
Afghanistan maintains a prohibitionist stance toward cryptocurrency, with Da Afghanistan Bank treating digital assets as illegal and enforcement actions in Herat reportedly shutting exchanges and arresting traders since August 2022. With no recognized VASP licensing, Travel Rule, crypto-tax framework, or token-offering regime—and continued FATF suspension—the country offers no formal pathway for compliant digital-asset activity.
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