Financial services firms should be aware of the possible impact the developments in Afghanistan may have on "patterns of financial activity when they assess risks related to particular customers and flows of funds", the Financial Conduct Authority said in a statement today (31 August).
On the day the US leaves Afghanistan bringing an end to a 20-year war launched after the September 11 attacks, the regulator highlighted that it expected firms to establish and maintain systems and controls to counter the risk they might be used to further financial crime.
"Firms must also comply with their legal obligations under the Proceeds of Crime Act 2002 and the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (‘MLRs' as amended).
In the MLRs provisions related to firm risk assessments (Regulations 18), customer due diligence (Regulation 27-32), enhanced due diligence (Regulation 33) and transaction monitoring (Regulations 28(11)) are particularly relevant in this context", it stated.
The FCA added that while Afghanistan is not currently listed as a high-risk jurisdiction in Schedule 3ZA of the MLRs, Regulation 33(1)(a) compels firms to apply "risk sensitive enhanced due diligence measures where there is a high risk of money laundering or terrorist financing, Regulation 33(6) sets out factors that firms may use in their assessment including, but not limited to, country risks".
"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."
It further set out two specific actions points:
• ensure that they appropriately monitor and assess transactions to Afghanistan to mitigate the risks if their firm being exploited to launder money or finance terrorism
• continue to ensure that suspicious activity is reported to the UK Financial Intelligence Unit (UKFIU) at the National Crime Agency (NCA) and that they meet their obligations under Money Laundering Regulations and terrorist financing legislation
Sanctions are already in place in respect of Afghanistan and firms should continue to screen against the UK Sanctions List and in particular the regime specific list for Afghanistan, it added.