|Criminalization of Money Laundering (ML)|
Amend the AML LD where necessary and obtain Parliamentary approval on an expedited basis.2
Ensure that, as security improves, the AML legal framework is progressively implemented in the whole country.3
Criminalize participation in an organized criminal group and racketeering; trafficking in human beings and migrant smuggling; environmental crimes, kidnapping, illegal restraint and hostage-taking, as well as association with and conspiracy to commit or attempt to commit the ML offense.
Ensure that prior conviction for the predicate is not considered as a condition to proving that property is the proceeds of crime.
Establish dissuasive monetary sanctions and extend criminal liability for ML to corporate entities that are partially owned by the Afghan government.
|Criminalization of Terrorist Financing (TF)|
Amend the CFT LD where necessary and obtain Parliamentary approval on an expedited basis.
Ensure that, as security improves, the CFT framework is progressively implemented in the whole country.
Criminalize the collection of funds for and their provision to terrorist organizations and terrorist individuals; the organization, direction, motivation of individual terrorist and the contribution to the commission of a TF offense by an individual; as well as the funding of any of the terrorist offenses defined in the treaties listed in annex to the ICSFT.
Ensure that the TF offense extends to any funds, whether from a legitimate or illegitimate source; it is not required that the funds and property be linked to a specific terrorist act for successful prosecution for TF; intention can effectively be inferred from objective factual circumstances; and criminal sanctions do not preclude the possibility of parallel civil or administrative proceedings if such proceedings are available.
Extend criminal liability for TF to corporate entities that are partially owned by the Afghan government.
Vigorously pursue TF investigations and prosecutions.
|Confiscation, freezing, and seizing of proceeds of crime|
Enable the confiscation of the proceeds of all predicate offenses, as well as of instrumentalities used or to be used in the commission of all predicate offenses and TF.
Ensure that (i) confiscation would apply to income and other benefits that derive directly as well as indirectly from the proceeds of crime and (ii) provisional measures may be taken in respect to all predicate offenses.
Ensure that bona fide third parties can fully defend their rights.
Ensure that steps may be taken to prevent or void actions that would prejudice confiscation.
|Freezing of funds used for TF|
Clarify the freezing mechanism under UNSCR 1267 and ensure it can be used effectively to freeze without delay.
Establish a clear legal basis to implement the freezing obligations under UNSCR 1373 and clear procedures to meet the obligations.
Establish clear procedures to give suit to other countries’ designations and requests for freezing of terrorist assets.
Ensure that funds and property subject to freezing orders extend to all funds and other assets listed under Criterion III.4.
Establish clear procedures to allow for domestic freezing of terrorist assets, as well as for delisting, unfreezing of funds or other assets of persons or entities inadvertently affected by a freezing order, and access to frozen funds or other property to cover expenses as set out in UNSCR 1452.
Ensure that freezing, seizing and confiscation measures in other circumstances are not unduly restrictive.
Establish clear obligations for the private sector to implement freezing orders, provide guidance on these obligations and ensure effective monitoring of compliance with all freezing obligations under SR III.
|The Financial Intelligence Unit and its functions|
Provide FinTRACA with the authority to disseminate financial information to AGO for investigation when there are grounds to suspect TF reported by DNFBPs.
Ensure that FinTRACA raises awareness on the reporting requirement among all reporting entities.
Ensure that FinTRACA enhances the depth and quality of its STRs tactical, operational, and strategic analysis, in particular by granting it access to the necessary financial, administrative and law enforcement information, and enabling it to request on regular basis additional information from reporting entities.
Enhance FinTRACA’s independence by securing its independent budget that takes into account its increasing financial needs. Also, provide FinTRACA with adequate staffing to enable it to perform its functions effectively.
Ensure that FinTRACA publishes annual reports, typologies and trends of ML/TF.
Ensure that FinTRACA provides additional specialized and practical in-depth training to its employees.
|Law enforcement, prosecution and other competent authorities|
Investigate ML and/or TF as a standalone crime irrespective of whether the source of information emanates from the FinTRACA or any other source.
Enhance dialogue amongst the competent LEAs and increase the effectiveness of investigations into ML or TF cases.
Provide AML/CFT training to all investigative agencies at senior level and in particular for all dedicated financial crime investigators.
|Cross Border Declaration or disclosure|
Implement cross-border currency declarations for inbound and outbound transportation of currency and bearer negotiable instruments and extend these requirements to all travelers.
Clearly define the term “bearer negotiable instruments” in line with the standard.
Take legislative steps to ensure that Customs has the authority to collect and request further information from the carrier of currency or bearer negotiable instruments on the origin of the currency or bearer negotiable instruments and their intended use in cases of suspicion of ML or TF.
Provide Customs with the authority to stop or restrain cash or bearer negotiable instruments for a reasonable time in order to ascertain whether evidence of ML or TF may be found, where there is a suspicion of ML or TF; or where there is a false declaration.
Establish in law effective, proportionate and dissuasive sanctions for false cross-border currency declarations and for transportation of currency or bearer negotiable instruments that are related to ML or TF.
Clarify the responsibility of each agency operating at the border and specifically designate the authority responsible for the implementation of SRIX.
Ensure that the prescribed threshold for declaration does not exceed US$/EUR 15,000.
|Preventive Measures: Financial Institutions|
|Customer due diligence, including enhanced or reduced measures|
Require in primary or secondary legislation FIs to i), undertake CDD measures when carrying out transactions above US$15,000; ii) verify the identity of legal persons; iii) verify that a person purporting to act on behalf of a natural person is so authorized, and identify and verify the identity of that person; iv) determine whether a customer is acting on behalf of another person; v) determine who are the persons who exercise ultimate effective control over a legal person or arrangement, and vi) conduct ongoing due diligence of the business relationship.
Remove from the AML/CFT RR the inadequate exceptions in the identification and verification of occasional customers that are legal persons.
Review the AML/CFT RR to require verification of the identity of natural persons in all cases.
Require FIs not supervised by DAB to i) verify the legal status of the legal person or legal arrangement and ii) obtain information on the purpose and intended nature of the business relationship with legal persons.
Require FIs to understand the ownership and control structure of corporate customers.
Require FIs to obtain information on the purpose and intended nature of the business relationship for natural persons.
Put in place detailed and enforceable regulations on ongoing due diligence.
Clarify current requirements to update of CDD records and ensure that they apply to all FIs.
Require FIs to perform enhanced due diligence for higher risk categories of customers, business relationships or transactions.
Require FIs to verify the identity of the customer and beneficial owner before or during the course of establishing a business relationship or conducting transactions for occasional customers.
Prohibit FIs to open an account, commence business relations or perform a transaction in case of failure to satisfactorily complete the verification of identity, and require them to consider making a suspicious transaction report.
Require FIs to perform CDD measures on holders of existing anonymous accounts.
In addition, in order to improve the implementation of the CDD measures, the authorities should consider i) establishing a proper system of identification of natural and legal persons, and ii) developing and implementing a supervision strategy aiming at sanctioning FIs failing to implement existing CDD measures in cases where information is available and verifiable.
Require FIs to put in place appropriate risk management systems to determine whether a potential customer or a beneficial owner is a PEP.
Require FIs to obtain senior management approval to continue the business relationship, where a customer has been accepted and the customer or beneficial owner is subsequently found to be, or subsequently becomes a PEP.
Require FIs to take reasonable measures to establish the source or wealth and the source of funds of beneficial owners identified as PEPs.
In addition, the authorities should consider i) make assets disclosures available online both in Dari and in English, ii) create a list of domestic PEPs to be sent to FIs.
Set out a legal framework governing cross-border correspondent banking and other similar relationships in line with R.7.
Require FIs to pay special attention to any ML threats that may arise from new or developing technologies in line with R.8.
|Third parties and introduced business|
Set out rules governing the reliance on intermediaries or other third parties in line with R. 9.
|Financial institution secrecy or confidentiality|
Lower the current threshold of “strong grounds” that judicial authorities face to access information covered by financial secrecy.
Enable the sharing of information between FIs in cases where it is required in the FATF standard.
|Record keeping and wire transfer rules|
Require in primary or secondary legislation that FIs keep records of business correspondence.
Lower the current threshold of “strong grounds” that judicial authorities face to access identification data and transaction records.
Harmonize the wire transfer rules in the AML LD, CFT LD, and AML/CFT RR.
Require verification of originator information for transactions above US$/EUR 1,000 or their equivalent in Af.
Require FIs to adopt procedures that establish, on the basis of the risk of ML/TF, how to identify and deal with wires that are not accompanied by full originator information.
Add the maximum time frame of three days within which full originator information should be made available to the beneficiary FIs and to appropriate authorities upon request.
Ensure that wire transfer rules are implemented.
|Monitoring of transactions and relationships|
Remove the obligation to report STRs on all transactions and business relationships subject to special attention.
Expand the requirement under Article 12.3 of the AML LD, to jurisdictions which do not or insufficiently apply the FATF recommendations.
Provide for the possibility to apply counter-measures in cases where a country continues not to apply or to apply insufficiently the FATF Recommendations.
|Suspicious transaction reports and other reporting|
Issue implementing regulations for non banks FIs and MSPs to clarify the requirements of the AML and CFT LDs and implementing regulation taking into consideration the specificities of the sector.
Ensure that supervisors and FinTRACA draw up an action plan to encourage reporting across all sectors - a prioritized and phased plan based on potential risk posed by the different sectors may be necessary, given overall resources, to effectively bring this about.
Establish a mechanism for providing feedback to reporting institutions including general and specific or case-by-case feedback.
Provide specialized training to reporting entities to improve the quality and quantity of STRs.
|Internal controls, compliance, audit and foreign branches|
Specify what should be covered under the internal control requirements.
Require FIs to designate an AML/CFT compliance officer at the senior management level and to ensure that the AML/CFT compliance officer and other appropriate staff have timely access to relevant information.
Guide and assist MSPs and foreign exchange dealers in developing internal control policies and procedures.
Issue implementing regulations for FIs that are regulated by other competent authorities than DAB.
Ensure that all banks have effective internal audit systems in place, and ensure that they adequately cover all ML and TF risks.
Require all the reporting entities to enhance their AML/CFT training programs to ensure that all relevant staff are aware of ML and TF risks and AML/CFT measures.
For effective internal control, ensure that the compliance officer is independent.
Require foreign subsidiaries of Afghan MSPs to follow the laws and regulations of Afghanistan to the extent the host country’s laws and regulations permit, and consider requiring the same for foreign branches and subsidiaries of Afghan banks. Ensure that this principle is observed in particular in countries which do not or insufficiently apply the FATF Recommendations.
Require foreign branches and subsidiaries to apply the higher standard, to the extent that host country’s laws and regulations permit, when AML/CFT laws and regulations in the host country and Afghanistan differ.
Require foreign branches and subsidiaries to inform DAB supervision department when a foreign branch or subsidiary is unable to observe appropriate AML/CFT measures because of the prohibition by host country’s laws, regulations or other measures.
Require foreign branches and subsidiaries to apply consistent CDD measures at the group level, taking into account the activity of the customer with the various branches and majority owned subsidiaries worldwide.
Prohibit explicitly the establishment and operation of shell banks on the territory of Afghanistan, and establish clear sanctions for contravention to this prohibition.
Prohibit explicitly FIs from entering into or continuing correspondent banking relationships with shell banks;
Require FIs to satisfy that respondent FIs do not permit their accounts used by shell banks.
|Supervisory and oversight system–competent authorities and SROs Role, functions, duties and powers (including sanctions)|
Ensure that monetary penalties are proportionate, dissuasive and effective.
Consider extending the criminal liability imposed on an individual who obstructs, hinders or fails to cooperate with the FIU to those who obstruct, hinder or fail to cooperate with DAB since DAB is also a supervisory authority.
Ensure that all the provisions in the AML/CFT RR can be enforced.
Ensure that criminal background check is required for administrators, sponsors, and investors of the depository micro finance institutions (DMFIs) during the licensing process; ensure that those with a criminal record not qualify as fit-and-proper and that the license is not granted.
Require identification of beneficial owners and controllers of FIs during licensing process and whenever changes of management and shareholders occur; and ensure that they are subject to fit-and-proper tests.
Develop an inspection strategy and schedule for all supervised entities, and consider introducing a risk-based approach to supervision.
Increase the number of AML/CFT inspections of MSPs and initiate AML/CFT supervision of foreign exchange dealers, microfinance institutions, DFMIs, financial leasing companies and mortgage finance companies, applying a risk based approach.
Ensure that other regulated entities outside the scope of DAB’s supervisory authority (for example, in the case of insurance companies, brokers and agents) are supervised.
Develop sector specific guidelines to assist FIs with the implementation of regulatory requirements.
Although not directly required by the standard, it is recommended that measures be introduced by DAB to mitigate the current concentration of decision making-powers in the hands of the Director General of the Financial Supervision Department at the DAB, when bank inspection reports are approved. A committee can be established to share decision-making responsibility. An independent auditor can conduct an ex-post review of decisions made by the committee.
|Money value transfer services|
Although not required under the standard, in order to enhance effectiveness:
Expand the implementation of the licensing regime for MSPs in the remaining provinces and ensure oversight of MSPs throughout the territory.
Strengthen the sanction regime to provide for dissuasive, effective and proportionate sanctions for larger MSPs.
Clarify what provisions of the MPS regulation apply to the electronic Money Institutions as opposed to MSPs, including applicable sanctions.
Increase the number of staff responsible for licensing and supervision of MSPs.
Provide guidance and training for MSPs to comply with AML/CFT requirements.
Consider adopting a risk-based approach to on-site examination of MSPs.
Consider introducing a risk-based approach to CDD. Different CDD requirements can be placed on small value transactions v.s. large values, and some of the customer information (such as monthly salary, source of income) does not need to be repeatedly obtained each time the repeat customer visit the MSP.
|Preventive Measures: Non-Financial Businesses and Professions|
|Customer due diligence and record-keeping|
Impose CDD and record keeping requirements on all DNFBPs active in Afghanistan, taking care, in particular, to: lower the threshold for CDD by dealers in precious metals and stones to meet the international standard; and ensure that the activities of DNFBPs that are subject to the AML LD are comprehensively listed within the LD, to include the opening or management of a bank, savings or securities account on behalf of a client by lawyers, any other independent legal professionals and accountants.
|Suspicious transaction reporting|
Issue a regulation clarifying the STR requirements for DNFBPs and putting in place mechanisms to facilitate reporting of suspicious transactions to the FIU.
Ensure that lawyers’ duty to maintain client confidentiality is not an obstacle to reporting suspicions transactions in the circumstances described in the methodology.
Amend the threshold for STR reporting by dealers in precious metals and stones to meet the international standard.
Make sure that the DNFBPs and circumstances under which the law applies to the institutions are accurately described within the law.
Require in primary or secondary legislation company service providers to report suspicious transactions to the FIU.
|Regulation, supervision, monitoring, and sanctions|
Identify competent bodies or develop mechanisms for the implementation of effective systems for monitoring the compliance of DNFBPs with AML/CFT requirements.
Issue guidelines to DNFBPs to assist with implementation and compliance of institutions with AML/CFT requirements.
Establish mechanisms to enable general and case-by-case feedback from DNFBPs on their responsibilities under existing AML/CFT laws.
|Other designated non-financial businesses and professions|
Conduct an assessment to determine whether or not businesses other than designated non-financial businesses and professions, such as car dealers and the hospitality industry, pose a ML or TF risk.
Conduct a risk assessment in order to ascertain whether or not other businesses and professions should be subjected to the provisions of the AML and CFT laws.
Encourage the development and use of modern and secure technologies, such as the electronic salary payment delivery system, for conducting financial transactions, which by their nature minimize cash in circulation and are therefore less vulnerable to ML and TF.
|Legal Persons and Arrangements & Nonprofit Organizations|
|Legal Persons–Access to beneficial ownership and control information|
Review the Commercial Law to ensure adequate transparency concerning the beneficial ownership and control of legal persons.
Ensure that adequate, accurate and current information on the beneficial ownership and control of legal persons is available (for example through ACBAR or AISA) to competent authorities in a timely fashion.
|Legal Arrangements-Access to beneficial ownership.|
Undertake a comprehensive risk assessment of the sector.
Expand outreach efforts to the sector.
Require NPOs to maintain records of transactions for a period of at least 5 years and to make them available to appropriate authorities.
Strengthen the legal requirement for NPOs to provide relevant information.
Strengthen sanctions available and clarify the government body responsible for their implementation.
Ensure that law enforcement agencies coordinate with the MOE when they need information on NPOs of potential TF concern.
Ensure that the MOE has the investigative capacity to examine those NPOs that are suspected of either being exploited by or actively supporting terrorist activity or terrorist organizations. Measures should also be in place to ensure prompt investigative or preventative action.
|National and International Cooperation|
|National cooperation and coordination|
A national AML/CFT coordination committee should be established.
Enhance the cooperation and coordination of concerned agencies’ efforts to overcome fragmentation and ensure effective implementation of AML/CFT measures across the whole of Afghanistan. Individual agencies should commit to support coordinated approaches to implement targeted AML/CFT policies across Afghanistan.
|The Conventions and UN Special Resolutions|
Implement fully the Vienna and Palermo Conventions, the ICSFT and the relevant UNSCR, in particular in light of the recommendations made under R. 1, 2, 3, and SR II and III.
|Mutual Legal Assistance (MLA)|
Address the deficiencies noted under R. 1, 2, 3, 26 and 28, and under SR II.
Ensure that MLA requests are executed in a timely way without undue delay, and that confidentially requirements cannot be raised as obstacles without reasonable justification.
Consider devising and applying mechanisms for determining the best venue for prosecution of defendants in the interests of justice in cases that are subject to prosecution in more than one country.
Allow for the execution of foreign requests for seizure, freezing and confiscation of the proceeds of, as well as the instrumentalities used or to be used in the commission of all predicate offenses to ML.
Address the deficiencies noted under R. 1, 2 and SR II.
Seek to conclude bilateral or multilateral extradition agreements.
Ensure that requests for extradition are handled without undue delay.
|Other Forms of Cooperation|
Law enforcement agencies should be more proactive in requesting information on ML/TF from their counterparts.
Law enforcement agencies should develop clear and effective gateways or channels that will allow for prompt and constructive exchanges of information directly between counterparts.
DAB and AIA should develop effective mechanisms to exchange information with foreign counterparts.
|Resources & Statistics|
Allocate more resources and provide specialized training to the competent authorities.
Develop comprehensive statistics in all relevant areas.
Review the effectiveness of the AML/CFT system.
|Other relevant AML/CFT measures or issues|
|General framework - structural issues|