Afghanistan Escapes Blacklist --- Afghan banks dodged an international black mark Friday when a watchdog organization gave the government another shot at cleaning up its corrupt banking system. --- Afghanistan narrowly missed being cut off from the global financial system Friday, after rushing through last-minute laws to crack down on criminal use of its banks. The near-miss underscores how the U.S. withdrawal from Afghanistan could undercut the security of Afghanistan’s fragile economy, as its notoriously corrupt banks can no longer hide from international scrutiny behind an American shield. -- The country was on the verge of being blacklisted -- along with Iran and North Korea -- by an intergovernmental organization that pressures countries to properly oversee banks to keep them from being used by terrorists, drug cartels, and corrupt politicians. The Financial Action Task Force (FATF) on Friday deemed Afghanistan's eleventh-hour legislating sufficient to escape the blacklist -- for now. But it warned that Kabul should make progress on implementing the laws before the group's next meeting in October. -- Although FATF doesn't have the power to sanction banks, a black mark from the organization essentially has the same effect, as most international banks won't work with countries on the list. Losing the few global financial institutions still willing to work with Afghan banks would have been a major blow to the shaky Afghan economy as it weans itself from the foreign aid that has sustained the country for the last 13 years. -- In February, FATF, which sets standards for financial-crimes law, moved Afghanistan to the gray list of countries "not making sufficient progress." FATF threatened to move Afghanistan to the blacklist if it didn't criminalize money laundering, establish a system to trace terrorist money, and track the cash flowing back and forth across the country's porous borders. Outgoing President Hamid Karzai, who opposed those measures, reversed course at the last minute and signed a package of anti-money-laundering laws Wednesday. Although it forestalled harsher FATF action, the organization said it hasn't evaluated the legislation yet. -- The rampant corruption of and interconnectedness of the Afghan government and financial system complicated U.S. efforts in the Afghanistan war. The collapse of Kabul Bank in 2010 forced the United States to make a tough call between upholding law and order and accomplishing its military mission. - More, Foreign Policy, http://www.foreignpolicy.com/articles/2014/06/27/afghanistan_escapes_blacklist