FINANCIAL TRANSACTIONS AND REPORTS ANALYSIS CENTER OF AFGHANISTAN
Fewer than 10 percent of Afghans use the formal financial sector for banking services. Instead, many citizens continue to use informal financial systems, such as hawala, to transfer money. Unfortunately, these informal financial transactions are difficult to track, and while often used for licit means, they are also known to be used for money laundering and terrorist financing.
Since 2004, the Financial Transactions and Reports Analysis Center of Afghanistan (FinTRACA) has dedicated itself to protecting and promoting the financial integrity of Afghanistan. It works with multiple government organizations to target those who seek to exploit financial weaknesses and vulnerabilities for personal gain.
FinTRACA was established under the Anti-Money Laundering and Proceeds of Crime Law as a financial intelligence unit (FIU) and administratively retained by the Central Bank of Afghanistan (Da Afghanistan Bank). The organization’s goal is to help integrate the country with global financial systems and enable growth, investment and prosperity in Afghanistan.
FinTRACA is a member of the Egmont Group of Financial Intelligence Units, the Financial Action Task Force (FATF), and the Asia Pacific Group on Money Laundering. These organizations work with international governments and FIUs to create and enforce standards and improve information sharing in the fight against money laundering and terrorist financing. For many years, FinTRACA has worked with FATF to strengthen its regulatory regime to bring Afghanistan up to international standards for anti-money laundering and countering the financing of terrorism (AML/CFT).
Accomplishments
One of FinTRACA’s biggest accomplishments lies in its vast database of financial transactions reports that banks and nonbank financial institutions are required to file. These records include suspicious transaction reports, large currency transaction reports, and cross-border cash declarations that detail specific transaction information. These reports often contain details needed to begin or finish a money-laundering or criminal investigation.
FinTRACA has also fostered an environment of cooperation among various members of the government to expand information sharing and enforce finance laws and regulations. Notably, FinTRACA has signed memorandums of understanding (MOUs) with 12 Afghan government agencies to include the departments of the National Security Directorate, Ministry of Interior, and High Office of Oversight. These MOUs enable a rapid exchange of information regarding suspected persons and their illicit financial activities and transactions. Each of these organizations has a specific interest in fighting the use of informal financing as a means for money laundering and terrorist financing.
Since substantial amounts of money move through the informal financial sector, FinTRACA has increased efforts to track these businesses and transactions. FinTRACA was an essential part of the team that wrote regulations requiring money service providers (MSPs) to register their businesses and report transactions. MSPs are now required to maintain records that are subject to auditing at any time. These records may be filed manually or electronically and have become part of the vast database of financial transactions that FinTRACA monitors.
FinTRACA helps the government of Afghanistan to enhance communication systems, provide comprehensive reporting to the requests of agencies, maintain objectivity and prevent political influence in its business. In addition, FinTRACA uses information technology to increase the efficiency of operations and to coordinate within its own organization and fellow government agencies. FinTRACA also tries to identify and address issues affecting operations.
Future Outlook
In the near future, FinTRACA will lead the Afghan government in planning and conducting the first AML/CFT national risk assessment. This assessment will be used to develop a national strategy on combating money laundering and terrorist financing.
FinTRACA also plans to focus on training and education with reporting institutions and the public. For the government and private sector, the organization will provide comprehensive training to identify AML/CFT vulnerabilities to help these entities identify and address risks. A national outreach program for the public, government agencies and reporting entities will increase knowledge about money laundering and terrorism financing.
Conclusion
The shared efforts of FinTRACA, the Afghan government and international partners have created more transparency in Afghan governance and built further trust among Afghan citizens in the financial sector, which is essential for improving security of the country.
Combating money laundering and the financing of terrorism remains a priority and an important battlefield that must be conquered in Afghanistan. FinTRACA continues its commitment to deny the use of the Afghan financial system to those who obtain funds from illegal activity and to those who would use the system to support terrorism.