This Week in AML

Afghanistan - From Bad to Worse

This week saw the rapid fall of the Afghan government to the Taliban. John and Elliot discuss the collateral damage from this sudden change, examining the impact on financial access for individuals, NGOs and national government, the safety of historical artifacts, and how these changes can affect civil liberties.



Afghanistan - From Bad to Worse TRANSCRIPT


Elliot Berman: Hi, John.

John Byrne: Hey, Elliot. How are you doing today?

Elliot Berman: I'm good. Yourself?

John Byrne: Good. As we are recording this, there is an individual by the library of Congress with a bomb five bombs, apparently, and I've just heard. By the time people listen to this, hopefully, it'll be resolved, but I just heard that he wants the president to resign, and then he'll get out of the truck.

So that's what we have going in Washington DC, as we talk about this. So we'll obviously see what happens and our thoughts and support for all the first responders and everybody in the neighborhood. But, obviously, the other thing that's happened is we all know the disengagement from Afghanistan. While we're not remotely foreign affairs experts, what we thought we would talk about for a couple of minutes is how these international events can impact the AML world.

[Elliot] talk a bit about some of the things that I know haven't been answered yet that you think about when we look at countries like Afghanistan and what's happening right now.

Elliot Berman: It's complicated, as everybody knows. [The] First thing that comes to mind for me, particularly thinking about financial crime space, is financial access.

So, on the one hand, there are going to be individuals on the ground there who will need access to funds day in and day out. And the NGOs [non-governmental organization] that are still operating, they're providing humanitarian relief. At the same time, at a national level [and] at a country level, there's a lot of activity going on to cut off, funding to the national government now in the hands of the Taliban. And so, you know, there's activity going on at the IMF, there's activity going on at the federal reserve and other places. So I think, you know, for our listeners, one of the big challenges is how do you identify the kinds of transactions that are high risk?

Not because they're going there, but because of who they're going to, or who they're being done with. And how do we make that, what is often a really fine line distinction? So that we're really, again, treating the right risks. That one, to me, just is huge.

John Byrne: Right?

Yeah. And you know, we just recently did an interview with a couple of folks who wrote a report for the federal reserve bank of Atlanta talking about de-risking.

And this was certainly a topic that we covered. I want to jump back to Afghanistan [for] a minute, but I just want to flag something else. That, again, it continues to be relevant in our world of just paying attention internationally, the Secretary of State, secretary Blinken sent out a note earlier this week stating very clearly that the most reasonably signed law in Poland by president Duda severely restricts restitution and compensation for property that was clearly wrongly confiscated during the communist reign in Poland. So signed by the president, so obviously passed by the legislature there. Secretary Blinken is obviously urging the government to talk to affected parties and make sure there is a procedure so people can get their properties back.

But we've seen this obviously since World War II. Right? 

Every time there's been a takeover of a country, our friends at the Antiquities Coalition know that cultural artifacts get taken. There's fear about that back in Afghanistan. The museum in Kabul, Afghanistan - I guess 20 years ago, they said they lost probably 50% of their artifacts then, and they fear it's going to happen again.

So, you know, this is just another way in which our world intersects with so many other areas that aren't financial crimes specific but certainly have those elements.

Elliot Berman: Agreed. I guess if I were going to try to take something really complicated and try to sum it up in a very short phrase, it would be that the risk profile of that area has obviously been complicated for a long time. In the last, you know, 72 hours, five days, it has become incredibly complex, you know, if that makes sense from an escalation perspective. And so everybody needs to be thinking about the situation as it is today. Not as it was even two weeks ago. And think through how we tune our sensitivity to recognize what really needs to be attended to and what doesn't.

Hopefully, again, thinking about the individuals in the NGOs who might need financial access, the solution isn't well; just turn the Afghanistan switch to off.

It's more thinking about what transactions or activities need to be attended to from a risk management perspective and which transactions going through to NGOs and appropriate individuals, to the extent that [they] can be distinguished. Which I understand is very complicated.

John Byrne: You know, it's interesting. Just two days ago, there was something in the news that said Western Union was suspending money transfers into Afghanistan. And their statements said that they understand that they are a vital channel for our customers and they're going to continue to monitor everything closely.

So, it looks like it's a slow, or it's a pause, if you will, with the hope that they will go back and do it. Cause this is the problem we had in Somalia and other countries as well. So I just note that I know that Western union said they will be looking at this closely, but these are the types of things that have to be considered again: adjacencies or collateral impact of these horrible challenges.

Elliot Berman: Agreed.

John Byrne: All right, Elliot. 

Hey, stay safe, hang in there, and we will talk again next week.

Elliot Berman: Yeah, thank you, John. I will talk to you next week. 

In fact, I'm going to see you next week. I also want to remind everybody they can find us on Spotify and Apple Podcasts and wherever you get your podcasts. So, listen to us every week and check out our other podcasts as well.

John, you have a great weekend.

John Byrne: You too. Take care. Talk to you soon.

Elliot Berman: Bye-bye.