Afghanistan Country Summary

FATF Status

Afghanistan is not 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.

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 is a significant barrier to business in Afghanistan, affecting various sectors such as permitting, procurement, and taxation, with officials often engaging in corrupt practices without fear of repercussions. Despite President Ghani's anti-corruption initiatives, including the establishment of the Anti-Corruption Justice Center, corruption remains pervasive, particularly in land disputes and government dealings. The evolving institutional framework for combating corruption faces challenges, including the need for effective enforcement of asset declarations and transparency measures.

Afghanistan's economy is characterized by a poor agrarian structure with a limited manufacturing base and a significant portion of the population living below the poverty line. Despite international support that helped grow the GDP from USD 2.4 billion in 2001 to USD 20.1 billion in 2018, the economy remains heavily reliant on agriculture, which employs 60-80% of the population but contributes less than a third to GDP due to various structural challenges. The country faces ongoing issues such as high dependency on international aid, slow economic growth, and a substantial informal economy valued at approximately USD 4.1 billion.

Afghanistan's investment climate is characterized by significant challenges, including a developing legal environment, persistent insecurity, and corruption, which hinder business operations. Despite 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.