How Compliance Professionals Should Be Thinking About Afghanistan
From a financial crime perspective, financial institutions, fintechs, and others should proactively seek to understand directly and indirectly via their vast counterparty networks their nexus to Afghanistan. Below are some proactive steps organizations can and should take to get in front of what to date has been a slow moving response from governments. For example, of the new FinCEN-issued National AML Priorities, several are directly relevant to the current situation in Afghanistan - including, but not limited to: i) corruption, ii) terrorist financing, iii) transnational organized crime and iv) drug trafficking.
Practical AML/CFT & sanctions mitigants in the wake of the Afghanistan collapse:
- Refresh AML/CFT risk assessments, particularly in light of changes in Afghanistan. This would likely also include a review of countries in South Asia and the Middle East with a close relationship economically or politically with Afghanistan and the Taliban.
- Review and refresh sanction-risk analysis associated with Afghanistan, as well as companies that may be working with or for the Taliban.
- Review country-risk models to include and reflect the change in government - particularly given how important country-risk is to customer risk analysis, transaction monitoring and other risk-based approaches.
- Review direct counterparty relationships, including those that are linked to Afghanistan - including, but not limited to corridor countries (e.g., Pakistan, Central Asia, the United Arab Emirates and China).
- Review direct or indirect relationships with money remitting organizations that work in Afghanistan or that are used to move or store funds within the country or internationally. This may include formal and informal channels (e.g., hawala networks).
- Review exposure to logistics companies that may operate in South Asia and who may have business relationships in Afghanistan - these companies are likely subject to customers and border taxes that will be imposed and collected by the Taliban.
- Review relationships with mining organizations that operate in Afghanistan, as well as companies that work in and with minerals and other material extracted from Afghanistan.
The above is not exhaustive, but should provoke some additional questions and thinking for proactive compliance teams.