FCA reminds finance firms to be vigilant on fraud risks emerging from Afghanistan

FCA reminds finance firms to be vigilant on fraud risks emerging from Afghanistan


The Financial Conduct Authority (FCA) said firms should be aware 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 collapse of the Afghan National Security Forces following the Taliban fighters’ successful bid for power took global governments by surprise, leaving the country’s institutional, political and fiscal structures shaken.

The regulator said it expected firms to ‘establish and maintain systems and controls to counter the risk they might be used to further financial crime.’

While Afghanistan is not currently listed as a high-risk jurisdiction in Schedule 3ZA of the money laundering regulations (MLRs), firms are required to apply risk sensitive enhanced due diligence measures where there is a high risk of money laundering or terrorist financing, stated the watchdog.

It said: “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.”

Those obligations include ensuring firms appropriately monitor and assess transactions to Afghanistan to mitigate the risks of their firm being exploited to launder money or finance terrorism – and that they report suspicious activity to the UK Financial Intelligence Unit (UKFIU) at the National Crime Agency (NCA).

The FCA offers a list of all the financial sanctions targets in Afghanistan for all firms to check individuals and entities against here.

It also offers guidelines on the systems and controls it expects for individual firms in its FCG financial crime guide.