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Thomas Fox Contributing Editor

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Bill Waite Contributing Editor

Shruti J. Shah Contributing Editor

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Friday
Jun272014

Afghanistan tries to avoid FATF blacklist, and South Korea is cleared

Hamid Karzai, courtesy of News Loop Top News via YouTubeAfghan president Hamid Karzai said Wednesday that he signed a key package of legislation aimed at combating financial crime, making it less likely the country will be added to the Financial Action Task Force's blacklist this week.

In addition, the international watchdog said Wednesday that South Korea has met the international standards for combating money laundering and terrorism-related financing.

Afghanistan's package of financial crime-related laws were rushed through both houses of parliament in a last-ditch bid to meet the deadline set by the FATF after the draft was worked by ministers for over a year, Reuters reported.

The government is hoping the eleventh-hour set of laws that it hammered out will convince the FATF it has done enough to prove it is serious about combating money laundering and terrorist financing.

If FATF isn't convinced, Afghanistan would join states such as Iran and Pakistan on the blacklist. Its banks could be cut off from the global financial system, disrupting up to $10 billion worth of annual imports and putting its aid-dependent economy under further strain.

Some banks have already stopped dealing with Afghanistan because of weak regulation. Last month, Afghan banks were dealt a blow when their Chinese counterparts abruptly put a halt to dollar transactions. 

With regard to South Korea, the FATF said the country has met the requirements in 16 key categories, demonstrating that it is enforcing legal and financial procedures with systems compatible with international standards, the Yonhap News Agency reported.

South Korea had failed nine categories out of the 16 in its last examination in 2009.

FAFT is meeting in Paris this week.

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Julie DiMauro is the executive editor of FCPA Blog and can be reached here.