Afghan president may not have signed terror finance law -source

KABUL, June 27 Fri Jun 27, 2014 8:55am EDT

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KABUL, June 27 (Reuters) - The Afghan president may not have signed a key measure aimed at clamping down on the financing of terrorism, reviving concern the country's banks could go on a money laundering blacklist, an international official in Kabul said on Friday.

On Wednesday the government said President Hamid Karzai had signed legislation cracking down on financial crime, temporarily easing concern Afghan banks would be put on the blacklist this week, alongside Yemen and Syria.

But international officials in the Afghan capital have since told Reuters only one of the two laws needed to avoid the blacklist had been signed by Thursday night.

"One was signed, the anti-money laundering law," an official close to the matter said, adding that the officials were trying to determine if the second measure had been signed.

The laws are part of measures needed to save Afghanistan from being blacklisted by the international watchdog, the Financial Action Task Force (FATF).

"The meeting is still happening in Paris, the question is whether the combating the financing of terrorism law has been signed," a second official said.

The president's press office confirmed on Friday the law fighting money laundering had been signed, but did not comment on the law to battle the financing of terrorism.

Banking and government officials are hoping eleventh-hour efforts to push through the legislation will convince the FATF Afghanistan has done enough to prove it is serious about cracking down on money laundering and terrorist financing.

If Afghanistan goes on the watchdog's blacklist, its banks could be cut off from the global financial system, disrupting up to $10 billion worth of annual imports, putting all sectors of its aid-dependent economy under strain.

Many banks have already stopped dealing with Afghanistan because of weak regulation and last month most Afghan banks were dealt a fresh blow when their Chinese counterparts abruptly put a halt to dollar transactions.

The FATF watchdog is expected to discuss Afghanistan on Friday, the last day of a meeting that started from June 23. (Reporting by Jessica Donati; Editing by Clarence Fernandez)

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