Regulatory Shortfalls of Afghanistan Anti-Money Laundering Regime in the Banking Sector

Abstract

This paper analyses the regulatory shortfalls of Afghanistan Anti-Money Laundering (AML) regime in the banking, while attempting to answer the question: “how is the AML regime in Afghanistan? Is it adequate? Which is certainly not and there is some shortfalls that needs to be addressed. The second question arises from the first question that “then how to make the regulatory and supervisory regime effective to minimize or mitigate the money laundering in the banking sector of Afghanistan?” More specifically, this paper conducts analysis and investigates in the effectiveness of the regulations and to what extent it helps in minimizing the problem. The emphasis is on the IMF’s Detailed Assessment Reports (DARs) of Afghanistan and Pakistan and tries to compare the level of AML compliance of these two countries from FATF Recommendations and Standards. The study hopes to add to the emergent literature on the topic as it explores the most important regulatory shortfalls in the country that might harm the Financial and economic Sector the most from Financial Integrity perspective.