Anti-laundering unit goes off-grid, worsening Afghan ties to global finance

FILE PHOTO: Money changer holds a stack of Afghan currency on a street in central Kabul
FILE PHOTO: Money changers keep a pile of Afghan currency on a street in central Kabul
FILE PHOTO: A money changer holds a stack of Afghan currency on a street in central Kabul, April 2, 2014. Reuters/Tim Wimborne/Files/File Photo

September 15, 2021

by Tom Arnold

LONDON (Reuters) – A unit at Afghanistan’s central bank leading a 15-year effort to combat illicit money flows, four staff members said, threatened to accelerate the country’s slide from the global financial system.

Since 2006, Afghanistan’s Financial Transactions and Reports Analysis Center (FINTRACA) has gathered intelligence on thousands of suspicious transactions and helped convict smugglers and terrorist financiers, according to its website.

UN officials have said the Taliban, which captured Kabul on August 15, made hundreds of millions of dollars from the drug trade and other illegal sources while they were fighting government troops. The group has vowed that from now on there will be no drug cultivation in Afghanistan.

Information on FinTRACA’s website indicated the Taliban was one of those people, while Reuters employees said the group had been a target since its launch.

He declined to be named due to the fear of reprisal due to the sensitive nature of his work.

Some experts warned that with the Islamist militant movement back in power, the absence of a functioning Financial Intelligence Unit (FIU) could undermine Afghanistan’s ties with the international financial system and lenders abroad.

Stuart Jones, Jr., founder and chief executive of risk intelligence firm Sigma Ratings, said such entities, which investigate money flows for potentially suspicious activity, are vital for any country participating in the global financial community.

He was also the US Treasury Attaché to Afghanistan between 2008 and 2010.

Reconnecting with the financial system could be complicated by current sanctions against the Taliban and the fact that a senior government minister heads a US-designated terrorist organization.

“Afghanistan was considered high-risk by almost all global financial institutions prior to the Taliban takeover,” Jones said.

“Now, with untapped leadership in the central bank, an incompetent financial intelligence unit and current assets piling on the ruling government by the United States and terrorist designations of key figures by the United States, I tread extremely cautiously on foreign financial institutions. I expect.”

The central bank did not respond to multiple attempts to reach him via email and telephone.

Taliban seeks access to reserves https://www.reuters.com/world/us/us-has-no-plans-release-billions-afghan-assets-treasury-says-2021-09-03 Also held abroad aid and other financing as the economy grapples with decades of war, drought, food shortages and the exodus of thousands of professionals.

employees ran away

The Taliban have said they want professionals to return to work to help revive the economy and vowed there would be no retaliation against old adversaries. But many members of the deposed administration have fled the country or are in hiding.

Three of the staff members said some of the 60 FinTRACA employees have left Afghanistan or gone underground in recent weeks.

One, which is still in Afghanistan, complained that international partners failed to evacuate employees and their dependents during the mass evacuation from Kabul that ended last month.

A Taliban spokesman did not immediately respond to a request for comment on the status of Fintraca employees or whether the unit will operate in the future.

The US Treasury, which provided technical support to the unit along with other national and international bodies, still declined to comment on FinTRACA staff in Afghanistan.

An employee said some FinTRACA employees returned to office last week after the central bank’s acting governor Haji Mohammad Idris – a Taliban loyalist – requested all central bank employees to be present at the bank.

The employee said that the senior management of the unit was not present and it was still not functioning.

Some parts of the central bank are operational. Idris is meeting with commercial banks and the central bank has issued directives to control the supply of scarce US dollars to supply limited liquidity to banks https://www.reuters.com/world/asia-pacific/ afghanistan-remittance-payouts-limited-local-currency-source-2021-09-11, say bankers.

Unit disconnected

FinTRACA provided intelligence to the international community through agreements with similar units in countries including the UK and the United States.

It also did so through the Egmont Group, which exchanges information on illicit flows between more than 160 intelligence units and partners various bodies in the fight against money laundering and terror financing.

Fintraca was disconnected from Egmont Group’s international secure servers on 15 August, the day the Taliban captured Kabul, the Egmont Group said on 2 September.

The group said it “stands in solidarity with our partners in Fintraca and hopes they and their families are safe.”

Egmont Group did not respond to requests for updates on the status of Fintraca. A FinTRACA staff member said it was still disconnected on Tuesday.

“Disconnecting is a loss to the global FIU community as the aim is always to foster greater cooperation, but the underlying principle under which this collaboration takes place is trust and this is not the case in Afghanistan at this time,” said Mariano Federici, Managing K2 Integrity and former chairman of the Egmont Group.

Fintraca’s website, which appears largely untouched since the Taliban takeover, lists the Taliban as a terrorist group entity banned from depositing or withdrawing US dollar banknotes.

One of the unit’s roles included creating a “watch-list” of individuals at high risk for the financial system.

As recently as August, the unit reported 25 suspicious transactions to its database, bringing the total to 645 so far, as shown on its website.

With FinTRACA’s mothball, local banks hope to ease the situation in Afghanistan by the Financial Action Task Force (FATF), an illegal flow watchdog, a move that could further reduce its connectivity to the global financial community .

“The FATF is closely monitoring the developing situation in Afghanistan,” the group said in a statement.

The Asia/Pacific Group on Money Laundering, of which Afghanistan is a member, did not respond to a request for comment.

(Additional reporting by Karin Strohecker and Andrea Schall; Editing by Mike Collett-White)

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