In a statement issued on 31 August, the FCA has reminded financial services firms about the potential financial crime risks linked to Afghanistan.
Following the fall of Afghanistan to the Taliban, the FCA has warned firms to be aware of the risks of money laundering or terror financing and of the possible impact these events may have on patterns of financial activity when they assess risks related to particular customers and flows of funds. The FCA has reinforced that it expects firms to establish and maintain systems and controls to counter the risk they might be used to further financial crime.
The situation is rapidly changing in Afghanistan. The Taliban has historically remained outside of traditional banking channels. Banks and financial services firms will need to decide upon the most appropriate risk strategy and remain vigilant about the latest sanctions updates including Politically Exposed Person (PEP) designations.
Afghanistan is the world's largest producer of opium which can be refined to make heroin. The drug trade is big business. Afghanistan is also rich in minerals and illegal mining operations also provide a source of income. The Taliban now essentially controls once of the world's largest reserves of natural minerals which will potentially provide leverage and political capital.
These criminal operations are lucrative and there is likely to be an increase in money laundering activities. As ever, vigilance is the key.
The statement can be read here.
We expect firms to consider the impact of these developments on their anti-money laundering policies and procedures in a risk-based manner, and to take the steps necessary to ensure they continue to meet their legal and regulatory anti-money laundering and reporting obligations