Afghanistan Country Summary
Sanctions
Yes
FATF AML Deficient List
No, but on EU list of high risk jurisdictions
Terrorism
Corruption
US State ML Assessment
Criminal Markets (GI Index)
EU Tax Blacklist
Offshore Finance Center
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Anti Money Laundering
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.
Sanctions
Afghanistan's UN membership is currently deferred, and if reinstated, it must adhere to UN sanctions aimed at maintaining international peace and security. The UN Security Council has established 31 sanctions regimes since 1966, which include measures like economic sanctions and arms embargoes, with a focus on protecting the rights of those targeted.
The U.S. has extended its national emergency regarding Afghanistan and issued General License 20 to ensure that sanctions do not hinder humanitarian efforts. Various sanctions are also enforced by the EU and UK, including asset freezes and travel restrictions, while the use of Hawala banking remains a critical financial lifeline for many in Afghanistan.
Bribery & Corruption
Rating | 0 (bad) - 100 (good) |
---|---|
Transparency International Corruption Index | 20 |
World Bank: Control of Corruption Percentile Rank | 14 |
Corruption is a significant barrier to business in Afghanistan, affecting various sectors such as permitting, procurement, and taxation, with systemic issues reported at border crossings that hinder economic development. Despite some anti-corruption initiatives led by President Ghani, including the establishment of the Anti-Corruption Justice Center, corruption remains pervasive, with reports of land disputes and officials engaging in corrupt practices without facing penalties. The Afghan government is working on improving its anti-corruption framework, including the operationalization of the Anti-Corruption Commission and the introduction of regulations for transparency, but challenges in enforcement and capacity persist.
Economy
Afghanistan's economy is characterized by a poor agrarian structure with a small manufacturing base and significant reliance on agriculture, which employs 60-80% of the population but contributes less than a third of GDP. Despite international financial support that increased GDP from USD 2.4 billion in 2001 to USD 20.1 billion in 2018, over 55% of the population lives below the poverty line, and the economy remains heavily dependent on foreign aid due to government revenues consistently falling short of expenditures.
Afghanistan's investment climate is characterized by significant reforms aimed at attracting both domestic and foreign investment, including improvements in business licensing and tax collection. However, challenges such as a developing legal environment, persistent insecurity, and corruption hinder the overall business environment. Despite these obstacles, the government has established frameworks to promote foreign direct investment, although foreign ownership of land is prohibited, necessitating partnerships with local entities.
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- Risk Analysis
- Corruption
- Economy
- Sanctions
- Narcotics
- Executive Summaries
- Investment Climates
- FATF Status
- Compliance
- Key Findings