Afghanistan Escapes Blacklisting Over Standards to Fight Money Laundering --- Financial Action Task Force Warns of Possible Blacklisting in October --- KABUL—Afghanistan's fragile financial system won a reprieve this week after an intergovernmental body said it wouldn't blacklist the country for failing to meet standards to combat money laundering and terrorist financing. -- The Financial Action Task Force, a global body that develops anti-money-laundering guidelines, said in a statement Friday that Afghanistan had "taken steps" toward meeting international standards, but warned that the country needed to bring measures into force to avoid landing on its blacklist in October. -- While such a move wouldn't automatically trigger sanctions, the few international banks still doing business with Afghan financial institutions would come under serious pressure to sever those links, Western officials say. -- The FATF said it wasn't clear whether the Afghan government had enacted appropriate legislation for combating the financing of terrorism, and whether a newly signed anti-money-laundering law went far enough to comply with standards. -- "If Afghanistan does not bring into force CFT [combating financing of terrorism] legislation and issue the necessary regulations compliant with the international standards by the October 2014 FATF meetings, the FATF will call upon its members and other jurisdictions to consider the ML/TF [money laundering/terrorism financing] risks arising from the deficiencies in Afghanistan," the statement read. -- The Afghan government said late Wednesday that Afghan President Hamid Karzai had signed the anti-money-laundering law. But an international official familiar with the situation said it wasn't clear whether Mr. Karzai had signed a related piece of legislation on combating terrorism financing, as noted by FATF. -- "Our team this morning is running around trying to find out from the government if that has been done," the official said. "We're still awaiting some kind of confirmation that it's been signed. We're still trying to run that down." -- The FATF met this week to review Afghanistan's progress on improving its measures to halt money laundering and terrorism financing. Afghan and international officials were worried that a blacklisting would deal a major blow to the country's already-vulnerable financial system, further isolating Afghan financial institutions from international counterparts. -- Last year, Frankfurt-based Commerzbank AG CBK.XE +0.78% Commerzbank AG Germany: Xetra €11.65 +0.09 +0.78% June 27, 2014 5:35 pm Volume : 6.67M P/E Ratio 29.87 Market Cap €13.26 Billion Dividend Yield N/A Rev. per Employee €347,653 06/28/14 Afghanistan Escapes Blacklisti... 06/27/14 Oil Futures Post Weekly Losses 06/27/14 Hungary Wants Banks to Compens... More quote details and news » CBK.XE in Your Value Your Change Short position , one of the world's major clearing banks, decided to sharply curtail its U.S.-dollar business in Afghanistan. Afghan bankers say that move has already made it more difficult for Afghan importers and investors to conduct transactions. -- "Being blacklisted will have major tangible and psychological implications for the private sector, doing business, and investment climate in Afghanistan," said Harakat, a civic organization that promotes economic development in Afghanistan, in a news release urging passage of the legislation. "The tangible implications will consist of extra costs and more steps in financial transactions." -- Afghanistan International Bank, a private lender, has said it has been assured by Commerzbank and Standard Chartered STAN.LN -0.87% Standard Chartered PLC U.K.: London GBp1192.50 -10.50 -0.87% June 27, 2014 5:07 pm Volume : 7.59M P/E Ratio 0.11 Market Cap GBp29.44 Billion Dividend Yield 5.69% Rev. per Employee GBp188,767 06/28/14 Afghanistan Escapes Blacklisti... 06/26/14 China Flags 'Improper' Gold-Ba... 06/26/14 Shares in Barclays, Standard C... More quote details and news » STAN.LN in Your Value Your Change Short position PLC that they will maintain correspondent relations with AIB. -- The Afghan presidential palace didn't immediately respond to a request for comment on whether the law combating terrorism financing had in fact been signed. The U.S. Embassy in Kabul declined to comment and referred questions to the FATF. - More, WSJ, http://online.wsj.com/articles/afghanistan-escapes-blacklisting-over-standards-to-fight-money-laundering-1403960033