FATF Status

Afghanistan is no longer on the FATF List of Countries that have been identified as having strategic AML deficiencies

Latest FATF Statement - 23 June 2017

The FATF welcomes Afghanistan’s significant progress in improving its AML/CFT regime and notes that Afghanistan has established the legal and regulatory framework to meet its commitments in its action plan regarding the strategic deficiencies that the FATF had identified in June 2012. Afghanistan is therefore no longer subject to the FATF’s monitoring process under its on-going global AML/CFT compliance process. Afghanistan will work with APG as it continues to address the full range of AML/CFT issues identified in its mutual evaluation report, in particular, fully implementing the cross-border regulations at its official land border crossing points.

European Commission List of Countries with Strategic Deficiencies in their AML/CFT Regimes

Afghanistan is on the EU Commission list of High Risk jurisdictions which have been identified as having strategic deficiencies in their anti-money laundering and countering the financing of terrorism (AML/CFT) regimes that pose significant threats to the financial system of the European Union (‘high-risk third countries’).

Compliance with FATF Recommendations

It should be noted that the new style FATF Mutual Evaluation has not yet been undertaken.

The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Afghanistan was undertaken by the Financial Action Task Force (FATF) in 2011. According to that Evaluation, Afghanistan was deemed Compliant for 1 and Largely Compliant for 1 of the FATF 40 + 9 Recommendations. It was Partially Compliant or Non-Compliant for all 6 of the Core Recommendations.

Corruption remains a significant barrier to business in Afghanistan, affecting various sectors such as permitting, procurement, and taxation, with systemic issues reported at border crossings. Despite some anti-corruption initiatives, including the establishment of the Anti-Corruption Justice Center and the operationalization of the Anti-Corruption Commission, enforcement challenges persist, and high-level corruption continues to undermine economic development. The Afghan government is working on improving transparency and accountability, but effective implementation of reforms is crucial for meaningful progress.

Afghanistan's economy is primarily agrarian, with over 55 percent of the population living below the poverty line and a GDP that grew from USD 2.4 billion in 2001 to USD 20.1 billion in 2018, largely due to international support. Despite some improvements in tax revenue and business facilitation, the economy remains heavily reliant on international donors, with agriculture employing 60-80 percent of the population but contributing less than a third of GDP due to structural challenges.

Afghanistan's investment climate is characterized by significant challenges, including a developing legal environment, persistent insecurity, and corruption, which hinder business operations. Despite recent reforms aimed at attracting foreign and domestic investment, such as improvements in business licensing and tax collection, the country still faces obstacles like inconsistent application of laws and bureaucratic delays. The government has made strides in promoting public-private partnerships and has established a framework for foreign direct investment, yet many investors remain cautious due to the complex regulatory landscape and security concerns.