Afghan banks could find themselves on an international black list if an anti-money laundering bill waiting government approval is not passed by month-end.
Afghan banks could find themselves on an international black list if an anti-money laundering bill waiting government approval is not passed by month-end.Nurullah Delawari, governor of the Milli Bank (central bank) has warned Afghan banks could be at risk of being cut off from international financial institutions.
However, a parliamentary economic commission which has been studying the draft law has said it requires more time. Members said other business including the elections for a new president and provincial councils have interrupted their work.
But time may be running out for Afghanistan with the Financial Action Task Force (FATF), an international body that sets standards on how to combat money laundering, due to decide in an end-June meeting in Paris whether Afghanistan should be blacklisted.
Concern about the impact on the economy has mounted with the decision of Chinese banks to halt dollar transactions with most Afghan banks making it difficult for businesses to pay for imports. The unprecedented decision came as a surprise.
Central bank governor Delawari said western countries were not ready to give Afghanistan more breathing time. He spoke to the press after western ambassadors in Kabul held an emergency meeting with the country’s security adviser.
Saifudin Saihoon, a lecturer at Kabul University, thinks the government should pass a strong anti-money laundering law. As long as there is no law, or if it is weak, drug traffickers and smugglers will continue to pump in “hidden” money and destabilise the economy.
Nurullah Nawabi, acting director at the department of peace and conflict studies, Kabul University, thinks the absence of a law encourages the mafia in illegal activities.
No law, why?
Saihoon thinks the government, which has looked the other way on corruption, has not taken anti-money laundering seriously. “Even were the law to be approved it would be only on paper,” he observes. The draft has been delayed by the complexity of the issue it seeks to tackle, he thinks.
Drafted in 2004 by the central bank as a law with seven chapters and 75 articles – one article was amended a year later – it has been awaiting approval from the Ministry of Justice and the Council of Ministers. Only after the law is approved can it be sent to Parliament.
Civil society activists have been awaiting the passage of the law, which they hope will curb the hands of criminals and powerful corrupt officials. The law has been made mandatory under the Palermo convention of 2006, which seeks to choke the flow of funds to terrorist groups across the world. Under the law anyone seeking to transfer one million USD or more would have to seek permission, according to Dawood Qaneaoen, an activist.
There are fears the legal curbs on money laundering is being stymied by government authorities with a stake in the black economy. The central bank has watched helplessly while some key provisions of the law were removed from the draft law.
Habiba Danesh, MP, fears, “The mafia has extended its control over the government, and even Parliament. Their presence is also in low-level government ranks,” the MP said. But no details were provided.
The presence of drug and other undisclosed money in the economy has long been known. “There is enough evidence,” says Kabul University lecturer Saihoon. “There is clear evidence that the building boom in Afghan cities, which includes the construction of multi-storied towers, is through illegal sources,” he adds.
Will Afghanistan be able to meet the deadline set by western countries on an anti-money laundering law? Should it fail the country could be blacklisted for a minimum of five years.
