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Dirty Money in Afghanistan

How Kabul is Cleaning Up the Illicit Economy

A currency trader in Kandahar Province, January 2002.  Zainal Abd Halim / REUTERS

In 2015, the profits generated by Afghanistan's illicit economy were worth more than $1 billion. Drug trafficking, smuggling, unregulated trade, and fraud in procurement contracts are encumbering the country's economic development and funding the terrorist groups that undermine its stability.

Money laundering plays a crucial role in supporting this criminality. Yet over the past decade, the government has not been able to do much to crack down on it: of the many clear cases of the practice that have appeared, only a few have been prosecuted. The problem is a product of several factors, including lax financial and customs controls, inadequate expertise in the Afghan government, high-level opposition to change, and weak enforcement mechanisms.

The hawala system is appealing to Afghans seeking to shield ill-gotten gains from the state.

Chief among the roadblocks, however, is the nature of Afghanistan's capital flows. Most of the country's economic activity is informal, and data provided

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