Afghanistan

The Anti-Money Laundering Law (2014) remains part of Afghanistan's legal framework as referenced in some sources, but its operational status under the current Taliban administration is uncertain and the law is not the active governing standard.

These laws, while on the books from the previous government, **do not specifically address virtual assets or VASPs**. They were drafted before cryptocurrencies became a significant regulatory concern globally.

The current de facto Taliban administration's official stance, as widely reported since August 2022, is a **ban on cryptocurrency trading**, deeming it "haram" (forbidden in Islam) and a source of fraud. This outright ban supersedes any potential regulatory framework for VASPs.

Any entity attempting to operate as a VASP would be doing so outside of the law as enforced by the current de facto authorities.

Identification and verification requirements for licensing are governed by the Real Estate Board for salespersons, brokers, and firms, and also by federal regulations for certain sectors.

Customer and beneficial owner identification is part of licensing requirements for real estate brokers in Virginia, enforced by the Real Estate Board.

Verifying identity using reliable, independent source documents (e.g., national ID cards, passports). Note: In the U.S., REAL ID is officially unreliable for confirming citizenship per DHS, though passports remain a standard for identity verification in contexts like employment authorization.

Identifying the beneficial owner for legal persons and arrangements.

The business relationship between the Army and its contractors is defined by AFARS Part 5101 supplementing the FAR, with DoDI 5000.35 governing the acquisition system; however, subcontracting reporting now occurs via the Subcontracting Planning Report in SAM.gov following the eSRS retirement in February 2026.

Obtaining information on the purpose and intended nature of the business relationship.

Conducting ongoing monitoring of the business relationship and transactions undertaken throughout the course of the relationship to ensure they are consistent with the obliged entity's knowledge of the customer, their business, and risk profile.

Ensuring that documents, data, or information obtained are kept up-to-date.

Applying enhanced due diligence for high-risk customers or transactions (e.g., Politically Exposed Persons – PEPs, complex transactions, high-value transfers, or transactions with high-risk jurisdictions).

Under the previous AML/CFT framework, financial institutions (including any future regulated VASPs) were obliged to report suspicious transactions to the **Financial Intelligence Unit of Afghanistan (FinTRACA)**.

STRs would typically involve transactions suspected of being linked to money laundering, terrorist financing, or other criminal activities.

While FinTRACA technically still exists under the de facto administration, its functionality, independence, and engagement with international AML bodies (like the Egmont Group or FATF) are severely compromised.

As of April 2026, Pakistan has partially lifted its ban on crypto by allowing licensed VASPs to open bank accounts, and while the new framework does not explicitly amend FinTRACA's reporting guidelines, licensed VASPs are expected to file STRs under FATF guidance, making the claim that no formal mechanism or expectation exists inaccurate for licensed entities.

The AML law typically required obliged entities to retain records of customer identification data, account files, business correspondence, and transaction data for a minimum period (often 5-7 years) after the business relationship has ended or the transaction was completed.

With Pakistan's April 2026 partial lifting of the ban on banks servicing licensed virtual asset providers, CDD and STR-like obligations are now applicable to licensed VASPs, though unlicensed VASPs still face practical inapplicability due to ongoing restrictions.

Da Afghanistan Bank's Banking Supervision and Financial Services Directorate General is the primary financial sector regulator responsible for licensing, supervision, and enforcement of AML/CFT compliance for financial institutions.

The Financial Intelligence Unit of Afghanistan (FinTRACA) existed pre-2021 as the national centre for receiving, analysing, and disseminating suspicious transaction reports, but its current operational status under the Taliban regime is unverified and likely not recognized by international bodies.

**FinTRACA:** Its operational capacity and international recognition are highly questionable under the current regime.

**Law on Anti-Money Laundering (2014)** (from previous government)

**Da Afghanistan Bank (DAB) - Central Bank:**

*Note: DAB under the Taliban administration is the de facto enforcer of the crypto ban.*

*Note: This website's functionality and the body's independence and international standing are highly uncertain under the current de facto administration.*

**Custodial License Requirements:** There are no specific custodial license requirements for digital asset custody in Afghanistan. The operation of any crypto-related business, let alone a custody provider, would be highly precarious and likely illegal under the current regime's informal decrees.

**Segregation of Client Assets Rules:** No rules exist for the segregation of client digital assets.

Insurance or bonding requirements are mandated for digital asset custodians in certain US jurisdictions, such as California under the Digital Financial Assets Law.

**Cold Storage Mandates:** No specific mandates for cold storage or other security protocols for digital assets exist.

**Qualified Custodian Definitions:** There is no legal or regulatory definition of a "qualified custodian" for digital assets in Afghanistan.

**Pending Custody Legislation:** There is no known pending legislation regarding digital asset custody. The focus of the current government is not on developing a regulatory framework for cryptocurrencies but rather on controlling their use or banning them outright.

**Reports of Bans and Arrests:** Various news outlets have reported on the Taliban's informal ban on cryptocurrency trading and the subsequent arrests of traders. These actions are typically based on verbal decrees or local enforcement rather than codified law.

*Example Search Term (you'd need to search for current news):* "Afghanistan cryptocurrency ban Taliban TOLOnews"

**URL:** https://www.chainalysis.com/reports/2025-geo-crypto-report/ (Provides updated context on global crypto adoption and regulation challenges, superseding the 2023 report with 2025 data on evolving trends.) (AF, custody)

**Reuters/Bloomberg/CoinDesk:** Reputable international news sources have covered the Taliban's stance on crypto.

*Example (search for relevant articles):* "Taliban bans crypto Afghanistan"

**Da Afghanistan Bank (Central Bank) Website:** While the official website of the Da Afghanistan Bank (https://dab.gov.af/) contains financial laws and regulations related to traditional banking, you will **not** find any specific laws, decrees, or guidelines related to cryptocurrency or digital asset custody. Its focus remains on conventional monetary policy, banking supervision, and currency management. Checking their website confirms the absence of such regulations.

**Prohibition:** Since late 2021/early 2022, the Taliban has issued decrees and undertaken enforcement actions, including arrests, against individuals and businesses involved in cryptocurrency trading.

**Legal Basis:** While formal legislation in the traditional sense may not be publicly available, the de facto ban and enforcement actions are widely reported.

Al Jazeera: "Taliban arrests crypto dealers as it bans digital currencies" (August 2022) - https://www.aljazeera.com/economy/2022/8/23/taliban-arrests-crypto-dealers-as-it-bans-digital-currencies

Bitcoin.com: "Taliban Authorities Arrest 13 Crypto Dealers as Crackdown Continues in Afghanistan" (August 2022) - https://news.bitcoin.com/taliban-authorities-arrest-13-crypto-dealers-as-crackdown-continues-in-afghanistan/

**ISIL (Da'esh) and Al-Qaida Sanctions Committee (1267/1989/2253):** This regime lists individuals and entities associated with ISIL (Da'esh) and Al-Qaida, including many with ties to Afghanistan. Sanctions include asset freezes, travel bans, and an arms embargo.

**Reference:** UN Security Council Resolution 2253 (2015) - https://undocs.org/S/RES/2253(2015))

**Sanctions List:** ISIL (Da'esh) and Al-Qaida Sanctions List - https://www.un.org/securitycouncil/sanctions/1267/aq_sanctions_list

**Taliban Sanctions Committee (1988/2255):** Specifically targets individuals and entities associated with the Taliban in Afghanistan. Sanctions include asset freezes, travel bans, and an arms embargo.

**Reference:** UN Security Council Resolution 2255 (2015) - https://undocs.org/S/RES/2255(2015))

**Sanctions List:** Taliban Sanctions List - https://www.un.org/securitycouncil/sanctions/1988/taliban_sanctions_list

**Asset Freeze:** VASPs must immediately freeze any virtual assets (and other economic resources) belonging to, or controlled by, designated individuals or entities.

**Prohibition on Making Funds Available:** VASPs are prohibited from making any funds, financial assets, or economic resources (including virtual currency) directly or indirectly available to or for the benefit of listed individuals or entities.

**Reporting:** Member states require their financial institutions, including VASPs, to report frozen assets and attempted transactions.

**Counter Terrorism (CT) Sanctions Program:** Targets terrorists and those who provide support to terrorists or acts of terrorism. Many individuals and entities linked to the Taliban, Haqqani Network, and other groups in Afghanistan are designated under this program.

**Reference:** Executive Order 13224 (as amended) - https://www.federalregister.gov/documents/2001/09/25/01-24016/blocking-property-and-prohibiting-transactions-with-persons-who-commit-threaten-to-commit-or-support

**Regulations:** Global Terrorism Sanctions Regulations (GTSR), 31 CFR Part 594 - https://www.ecfr.gov/current/title-31/subtitle-B/chapter-V/part-594

**Foreign Terrorist Organizations (FTO) List:** While not an OFAC list per se, FTO designations by the Secretary of State (e.g., the Taliban, Haqqani Network) trigger OFAC sanctions under E.O. 13224.

**Specially Designated Nationals and Blocked Persons (SDN) List:** The primary OFAC sanctions list. It includes thousands of individuals and entities designated under various programs, including those linked to Afghanistan (e.g., senior Taliban officials, Haqqani Network members, Al-Qaeda facilitators).

**Reference:** OFAC SDN List - https://ofac.treasury.gov/specially-designated-nationals-and-blocked-persons-list-sdn-human-readable-list

**OFAC Guidance on Virtual Currency:** OFAC explicitly states that its sanctions apply to transactions involving virtual currency in the same way they apply to traditional fiat currency.

**Reference:** Sanctions Compliance Guidance for the Virtual Currency Industry (OFAC, October 2020) - https://ofac.treasury.gov/media/1908/download?inline

**Blocking Property:** U.S. persons (and anyone engaging in transactions subject to U.S. jurisdiction) must block all property and interests in property (including virtual assets) of SDNs and other blocked persons.

**Prohibition on Transactions:** All transactions and dealings by U.S. persons with SDNs are prohibited. This includes providing services, sending or receiving funds/crypto, or engaging in any economic exchange.

**Risk-Based Compliance Program:** VASPs are expected to implement a robust, risk-based sanctions compliance program, including KYC/CDD, transaction monitoring, and sanctions screening.

**Implementation of UN Sanctions:** The EU adopts Council Decisions and Regulations to transpose UN Security Council Resolutions, including those related to ISIL/Al-Qaida and the Taliban.

**Example (ISIL/Al-Qaida):** Council Regulation (EC) No 881/2002 (as amended) concerning certain specific restrictive measures directed against certain persons and entities associated with the ISIL (Da'esh) and Al-Qaida organisations.

**Example (Taliban):** Council Regulation (EU) No 753/2011 (as amended) concerning restrictive measures directed against certain individuals and entities in view of the situation in Afghanistan.

**EU Autonomous Counter-Terrorism Sanctions:** The EU also maintains an autonomous list of persons, groups, and entities involved in terrorist acts, some of whom may have links to Afghanistan.

**Reference:** Council Common Position 2001/931/CFSP and Council Regulation (EC) No 2580/2001.

**Asset Freeze:** VASPs operating in the EU must freeze funds and economic resources (including virtual assets) belonging to listed individuals and entities.

**Prohibition on Making Funds Available:** Prohibits making funds or economic resources available, directly or indirectly, to or for the benefit of listed individuals and entities.

**Reporting:** Obligations to report frozen assets and attempted transactions to national competent authorities.

**Risk-Based Approach:** Assess and manage the specific risks associated with transactions involving Afghanistan, considering the domestic ban and international sanctions.

**Customer Due Diligence (CDD) / Know Your Customer (KYC):**

Thorough identification and verification of all customers and beneficial owners.

Enhanced Due Diligence (EDD) for customers linked to Afghanistan or other high-risk jurisdictions.

Understanding the source of funds and destination of virtual assets.

**Real-time Screening:** Screen all new customers, existing customer databases, and transaction counterparties against all relevant sanctions lists (UN, OFAC SDN, EU Consolidated List, national lists).

**Ongoing Monitoring:** Regularly re-screen customer bases against updated sanctions lists.

**Beneficial Ownership:** Screen beneficial owners, not just direct customers.

**Geographic Risk Indicators:** Look for red flags related to Afghanistan, such as IP addresses originating from Afghanistan, Afghan phone numbers, or self-declared residency.

**Wallet Addresses:** While not always linked to a specific person, some advanced analytics tools can help identify wallet addresses associated with sanctioned entities if such information is available (e.g., from OFAC advisories).

**Transaction Monitoring:** Implement systems to detect unusual transaction patterns, large value transfers, or transactions involving known high-risk addresses or jurisdictions.

**Record-Keeping:** Maintain comprehensive records of all transactions, CDD information, and sanctions screening results.

**Reporting:** Report blocked assets, attempted prohibited transactions, and suspicious activities (SARs/STRs) to relevant authorities.

**Prohibit all transactions with IP addresses originating from Afghanistan.**

**Decline to onboard customers residing in or linked to Afghanistan.**

**Impose enhanced due diligence requirements on any transactions or customers with even indirect links to Afghanistan.**

**Civil Penalties:** Can range from thousands to millions of dollars per violation, depending on the program, severity, and intent.

**Criminal Penalties:** For willful violations, individuals can face substantial prison sentences (e.g., up to 20 years) and corporate fines reaching millions of dollars.

**Statutory Basis:** Primarily the International Emergency Economic Powers Act (IEEPA) and other relevant statutes.

**Reference:** OFAC Penalties and Enforcement Information - https://ofac.treasury.gov/sanctions-programs-data/enforcement-information

**Member State Enforcement:** Penalties are defined by individual EU member states, as there is no single EU-wide sanctions enforcement body for penalties.

**Fines and Imprisonment:** Typically involve significant financial penalties and/or terms of imprisonment for individuals.

**Reputational Damage:** Significant reputational harm to the VASP and individuals involved.

**UN Sanctions:** While the UN itself does not impose penalties, member states are obligated to enforce UN sanctions through their domestic laws, leading to penalties similar to those for national sanctions violations.

**UN:** ISIL (Da'esh) and Al-Qaida Sanctions List, Taliban Sanctions List.

**OFAC:** Specially Designated Nationals and Blocked Persons (SDN) List.

**EU:** Persons, groups and entities subject to EU financial sanctions.

The Taliban regime, as the de facto state, through a unified legal and enforcement system codified in the 2026 Criminal Procedural Regulations, with Da Afghanistan Bank’s directives integrated into a centralized enforcement mechanism rather than separate provincial police forces.

Enforcement targets specific bad actors (e.g., sanctioned entities, scam networks) and imposes compliance obligations on businesses, not the general public broadly.

**Violation Type:** Engaging in unauthorized and prohibited financial activity (trading cryptocurrency). The Taliban's acting central bank chief has called crypto "haram" (forbidden in Islam) and a form of "gambling."

**Penalty Amount:** No specific fine amount is publicly reported for this blanket ban. Penalties involve arrests, detention, closure of businesses, and confiscation of assets.

**Outcome:** Significant suppression of the cryptocurrency market in Afghanistan, forcing traders underground or to flee the country. Numerous arrests have been reported.

Reuters: Afghanistan central bank bans online foreign currency trading, crypto (August 24, 2022) - https://www.reuters.com/markets/currencies/afghanistan-central-bank-bans-online-foreign-currency-trading-crypto-2022-08-24/

**Al Jazeera:** Taliban cracks down on crypto trading in Afghanistan (August 24, 2022) - https://www.aljazeera.com/news/2022/8/24/taliban-cracks-down-on-crypto-trading-in-afghanistan

**CoinDesk:** Afghanistan’s Taliban Shuts Down 16 Crypto Exchanges, Arrests Dealers (August 23, 2022) - https://www.coindesk.com/policy/2022/08/23/afghanistans-taliban-shuts-down-16-crypto-exchanges-arrests-dealers/

**Regulator Name (de facto):** Herat provincial police, under the authority of the Taliban regime.

**Entity Targeted:** At least **13 individuals** involved in cryptocurrency exchanges and trading.

**Violation Type:** Operating cryptocurrency exchanges and engaging in crypto trading, violating the nationwide ban imposed by the Taliban.

**Penalty Amount:** Not specified as a monetary fine. The individuals were **arrested**, and the involved businesses were **shut down**. Further legal proceedings and outcomes (e.g., length of detention, confiscation of assets) are not publicly detailed by the regime.

**Date:** Mid to late **August 2022**.

**Outcome:** Arrests of key individuals, closure of an estimated 16 cryptocurrency exchanges in Herat alone, effectively dismantling the local crypto market.

**TOLOnews:** Crypto Currency Trading Banned in Afghanistan (August 24, 2022) - https://tolonews.com/business-179830 (This source reports the statement from Da Afghanistan Bank official confirming the ban and arrests in Herat.)

**Transparency:** Under the Taliban regime, there is a severe lack of transparency regarding legal processes, court decisions, specific charges, and exact penalties. Information is primarily derived from official statements or reports from international news agencies.

**Regulatory Framework:** Afghanistan lacks a modern, institutionalized cryptocurrency regulatory framework. The "enforcement" stems from a religious decree and a ban enforced by police powers, rather than a financial regulatory body issuing fines under established laws.

**Continuing Risk:** The ban remains in effect, and anyone found engaging in crypto trading faces the risk of arrest and other punitive measures by the Taliban authorities.