Ten years after Afghanistan first considered adopting a money laundering law, shadowy figures within Kabul's political elite are still maneuvering behind the scenes to block it.
Members of the National Economic Commission of the Afghan parliament’s lower house, or Wolesi Jirga, said that the legislation is being resisted despite clear evidence that the lack of regulation is exposing Afghanistan's fragile economy to great danger.
"The problem is within the executive powers. The economic mafia inside the government is responsible [for blocking the legislation]," Qudratullah Zaki, a lawmaker on the commission, told RFE/RL’s Radio Free Afghanistan (RFA). "Some cabinet members -- some of those involved in such illegal practices -- intervened and delayed the approval of the legislation by using their authority and also through giving bribes to certain circles."
Officials at Da Afghanistan Bank, Afghanistan’s central bank, said that they first proposed legislation in 2004 to prevent dirty money, mostly earned through illegal trades and crimes, from entering the mainstream economy.
Noorullah Delawari, the bank’s governor, told RFA that international financial institutions and some foreign governments are pressing Kabul to enact the law so they can continue working with the country's financial institutions. He said his country needs to adopt the legislation by the end of this month.
The delay in adopting the law has already produced serious institutional threats.
In late May the Financial Action Task Force (FATF), an international body that monitors countries’ response to money laundering, told Afghanistan that its banks will be put on an international blacklist if it fails to pass the money laundering law immediately.
FATF is expected to decide at a meeting on June 22 whether to enact the ban. Several banks in Germany, China, and India have already halted dollar transactions with some Afghan commercial banks.
London-based Afghan economist Sarajuddin Isar said that the central bank officials themselves have neglected this issue for a long time, contributing to inaction on the law.
"I think that some individuals both in the legislative and executive branches of the government see this money laundering law as a threat to their personal benefits," he told RFA. "So, they tried from all sides to prevent the proposed legislation from becoming law."
Saifuddin Saihon, a professor of economics at Kabul University, said mainstreaming illegal money earned from drug trafficking, bribes, and embezzlement has never been difficult in Afghanistan.
He said that nongovernmental organizations involved in reconstruction projects are typically used in such deals.
"Setting up deposit accounts to buy property and obtaining contracts and other construction activities through nongovernmental organizations are all considered as ways to launder illegal money," he said. "Unfortunately, the process is very widespread in Afghanistan, and the fight against money laundering is also extremely complicated. There is no knowledge and expertise, and there is no political will to tackle this problem."
Saihon is adamant that the Afghan parliament adopt the pending legislation before the country is blacklisted.
Such a sanction, he says, would be devastating for Afghanistan's fragile economy. "The already prevalent illegal economy will prosper, but foreign investments in Afghanistan will deteriorate rapidly," he warned.
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Members of the National Economic Commission of the Afghan parliament’s lower house, or Wolesi Jirga, said that the legislation is being resisted despite clear evidence that the lack of regulation is exposing Afghanistan's fragile economy to great danger.
"The problem is within the executive powers. The economic mafia inside the government is responsible [for blocking the legislation]," Qudratullah Zaki, a lawmaker on the commission, told RFE/RL’s Radio Free Afghanistan (RFA). "Some cabinet members -- some of those involved in such illegal practices -- intervened and delayed the approval of the legislation by using their authority and also through giving bribes to certain circles."
Officials at Da Afghanistan Bank, Afghanistan’s central bank, said that they first proposed legislation in 2004 to prevent dirty money, mostly earned through illegal trades and crimes, from entering the mainstream economy.
Noorullah Delawari, the bank’s governor, told RFA that international financial institutions and some foreign governments are pressing Kabul to enact the law so they can continue working with the country's financial institutions. He said his country needs to adopt the legislation by the end of this month.
The delay in adopting the law has already produced serious institutional threats.
In late May the Financial Action Task Force (FATF), an international body that monitors countries’ response to money laundering, told Afghanistan that its banks will be put on an international blacklist if it fails to pass the money laundering law immediately.
FATF is expected to decide at a meeting on June 22 whether to enact the ban. Several banks in Germany, China, and India have already halted dollar transactions with some Afghan commercial banks.
London-based Afghan economist Sarajuddin Isar said that the central bank officials themselves have neglected this issue for a long time, contributing to inaction on the law.
"I think that some individuals both in the legislative and executive branches of the government see this money laundering law as a threat to their personal benefits," he told RFA. "So, they tried from all sides to prevent the proposed legislation from becoming law."
Saifuddin Saihon, a professor of economics at Kabul University, said mainstreaming illegal money earned from drug trafficking, bribes, and embezzlement has never been difficult in Afghanistan.
He said that nongovernmental organizations involved in reconstruction projects are typically used in such deals.
"Setting up deposit accounts to buy property and obtaining contracts and other construction activities through nongovernmental organizations are all considered as ways to launder illegal money," he said. "Unfortunately, the process is very widespread in Afghanistan, and the fight against money laundering is also extremely complicated. There is no knowledge and expertise, and there is no political will to tackle this problem."
Saihon is adamant that the Afghan parliament adopt the pending legislation before the country is blacklisted.
Such a sanction, he says, would be devastating for Afghanistan's fragile economy. "The already prevalent illegal economy will prosper, but foreign investments in Afghanistan will deteriorate rapidly," he warned.
as/