MLROs are used to reacting to lists and warnings issued by governments and by agencies such as the FATF. But when things change rapidly in a jurisdiction, it may be unwise to wait for an official notification, and more sensible to make an independent decision. Over the past few – very few – days, Afghanistan has changed dramatically: a search on Wikipedia brings up an entry that is headed thus: “This article is about the country of Afghanistan. For the internationally recognized government, see Islamic Republic of Afghanistan. For the current de facto Afghan government, see Islamic Emirate of Afghanistan.” The latter is the name under which the Taliban (an Islamist militant group) rules the country, and this is now its second “term in office”: from 1996 until 2001, it controlled approximately 90% of the country, and since the fall of Kabul on 15 August 2021, it has controlled the whole country. In the more outward-looking period in between, Afghanistan joined the Asia/Pacific Group on Money Laundering (an FATF-style regional body) in 2006, and the Egmont Group (the “trade body” for FIUs) in 2010. It was visited by an APG evaluation team in early 2011, and the first mutual evaluation report on its AML/CFT regime was published in November 2011.
In June 2012, Afghanistan and the FATF announced that they had made a plan: “Afghanistan will work on implementing its action plan to address [its AML/CFT] deficiencies, including by: (1) adequately criminalising money laundering and terrorist financing; (2) establishing and implementing an adequate legal framework for identifying, tracing and freezing terrorist assets: (3) implementing an adequate AML/CFT supervisory and oversight programme for all financial sectors; (4) establishing and implementing adequate procedures for the confiscation of assets related to money laundering; (5) establishing a fully operational and effectively functioning Financial Intelligence Unit; and (6) establishing and implementing effective controls for cross-border cash transactions.” And if you track the thrice-yearly updates to the FATF list, you can see Afghanistan ticking off these tasks one by one, until in the June 2017 version of the list we read this: “The FATF welcomes Afghanistan’s significant progress in improving its AML/CFT regime and notes that Afghanistan has established the legal and regulatory framework to meet its commitments in its action plan regarding the strategic deficiencies that the FATF had identified in June 2012. Afghanistan is therefore no longer subject to the FATF’s monitoring process under its on-going global AML/CFT compliance process.”
Presumably, therefore, many MLROs have removed Afghanistan from their list of high risk jurisdictions – from June 2017 to date, it has not reappeared on the FATF’s list. I appreciate that some of those MLROs would have preferred to keep it there, perhaps waiting for the proof of the pudding, perhaps feeling that there are other issues with the jurisdiction, but commercial expediency will play its part – and a high risk jurisdiction brings with it the higher costs and effort of EDD. So should we now wait for the next FATF list – due on 22 October 2021, at the end of the next FATF plenary meeting? Or should we take matters into our own hands and pop Afghanistan back onto that high risk list straight away?
The decision is probably clear with Afghanistan, but there are many other jurisdictions whose alteration – in the form of improvement or (sadly more common) deterioration – is more gradual, and therefore harder to spot and harder to “sell” as a change to the list. What of Tunisia and Turkey – neither of them on the FATF’s list, but both tackling high levels of political instability and changing alliances? In today’s fast-moving world, where a country of over thirty million people can see its government toppled almost overnight, perhaps we need updates more frequently than three times a year.