Is Crypto Legal in Afghanistan?

The 2014 Anti-Money Laundering Law was enacted under the former Islamic Republic of Afghanistan and, while not formally repealed, is no longer reliably enforced or recognized under the current Taliban administration's legal framework.

Law on Combating the Financing of Terrorism (2014): Also from the previous government, this law defined terrorist financing offenses and outlined measures to combat it.

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.

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.

FinTRACA: Responsible for AML/CFT oversight; receives reports from licensed entities. Overview

Da Afghanistan Bank: Oversees licensing and compliance with AML/CFT standards. Licensed Financial Institutions | Da Afghanistan Bank

Licensing Requirement: The Regulation on Licensing and Oversight of Payment and Settlement Systems (PDF) outlines the need for entities handling payment transactions to obtain licenses from the Afghan Central Bank.² Digital asset service providers, including exchanges and wallet operators, may fall under this regulatory purview, necessitating a license to operate legally.

Sanctions Considerations: Recent U.S. sanctions updates indicate that Afghanistan remains subject to certain financial restrictions.³ Entities involved in cryptocurrency transactions must ensure compliance with these sanctions, which may prohibit dealings with specific Afghan institutions or individuals.

AML/KYC Standards: While not explicitly detailed for digital assets, the FATF's recommendations on Virtual Asset Service Providers (VASPs) suggest that Afghanistan should implement robust AML and KYC measures to mitigate money laundering risks.⁴ Entities must comply with international standards, which may include customer identification procedures and transaction monitoring.

Capital Gains: If a cryptocurrency is exchanged or sold at a profit, it may be subject to capital gains tax calculated based on the difference between the acquisition cost and the sale proceeds.⁵

Income Tax: Revenues earned from mining activities or staking rewards might be considered taxable income, subject to applicable Afghan income tax rates.

Regulatory Ambiguity: The absence of specific cryptocurrency legislation creates uncertainty for operators and users alike.

Sanctions Exposure: Continued exposure to international sanctions may restrict permissible transactions and necessitate stringent compliance measures.

Taxation Uncertainty: Lack of clear tax guidance on digital assets could lead to potential audit risks and financial penalties.

Digital Asset Service Providers (DASPs): To operate legally, DASPs must obtain a license from the Afghan Central Bank under the Regulation on Licensing and Oversight of Payment and Settlement Systems.²

Compliance with Sanctions: All licensed entities must adhere to U.S. sanctions regulations affecting Afghanistan, as outlined in recent general license updates.³

Afghanistan has no legal framework for cryptocurrency or digital asset licensing as of 2025–2026; no central bank law, securities regulation, or dedicated statute authorizes or governs virtual asset service providers (VASPs).

The primary financial regulator, Da Afghanistan Bank (DAB), has issued a Bank Licensing and Permitting Regulation covering only traditional banking institutions, with no mention of digital assets or crypto licensing therein. Bank Licensing and Permitting Regulation

The only relevant "licensing" construct is U.S. OFAC General License 20, which authorizes certain transactions involving Afghanistan's governing institutions but explicitly excludes financial transfers to the Taliban, Haqqani Network, and blocked leadership individuals except for narrowly defined payments such as taxes, fees, permits, and utility services.

Practical reality: crypto businesses cannot obtain a domestic license in Afghanistan; they face an environment of international sanctions, no AML/CFT enforcement infrastructure, and the Taliban administration has not enacted any virtual asset law, making any crypto operation legally precarious and operationally unviable. OFAC Issues a New General License and FAQs for Transactions Involving Afghanistan - Global Sanctions and Export Controls Blog

Da Afghanistan Bank (DAB) is the central bank of Afghanistan and the designated authority for bank licensing and permitting; its website is www.dab.gov.af, and it publishes regulations such as the Bank Licensing and Permitting Regulation. Bank Licensing and Permitting Regulation

The U.S. Office of Foreign Assets Control (OFAC) exercises extraterritorial regulatory authority over Afghanistan-related transactions through sanctions programs, including the Afghanistan-Related Sanctions program; OFAC operates under the U.S. Department of the Treasury.

The U.S. Department of the Treasury, through OFAC, is the key external regulator affecting any financial or crypto activity in Afghanistan, given the Taliban and Haqqani Network designations.

The U.S. Department of State has also weighed in on Afghanistan-related general licenses, indicating a whole-of-government approach to sanctions and licensing matters.

Executive Order 13224, "Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten To Commit, or Support Terrorism," effective September 24, 2001, is a foundational legal authority for Afghanistan-related sanctions, designating the Taliban and Haqqani Network as Specially Designated Global Terrorists.

Executive Order 13268, issued July 2, 2002, terminated the emergency with respect to the Taliban and amended Executive Order 13224, refining the scope of sanctions.

Executive Order 14064, "Protecting Certain Property of Da Afghanistan Bank for the Benefit of the People of Afghanistan," issued February 11, 2022, blocks certain DAB property held in the U.S., affecting the financial landscape but not creating any crypto licensing regime.

The International Emergency Economic Powers Act (IEEPA), 50 U.S.C. §§ 1701-1706, and the National Emergencies Act (NEA), 50 U.S.C. §§ 1601-1651, are the statutory bases for OFAC's Afghanistan sanctions authorities.

Afghanistan is subject to the Financial Action Task Force (FATF) monitoring process, but no FATF or Moneyval evaluation specific to Afghanistan's virtual asset regime has been released in the provided sources; no mutual evaluation report or follow-up report is cited. Bank Licensing and Permitting Regulation

The United Nations Security Council Resolution (UNSCR) 2615, adopted in December 2021, is referenced by the U.S. Treasury as the international basis for humanitarian exemptions, but it does not address crypto regulation.

Afghanistan's international standing is defined more by sanctions and humanitarian exemptions than by any affirmative digital asset regulatory engagement; the IMF estimates an economic contraction of up to 30 percent, underscoring the limited capacity for regulatory development.

Under the Bank Licensing and Permitting Regulation issued by Da Afghanistan Bank, only banking institutions—defined as entities engaging in deposit-taking, lending, and related financial intermediation—are subject to licensing; cryptocurrency exchanges, digital asset custodians, wallet providers, and other VASPs are not mentioned anywhere in the regulation and therefore face no domestic licensing obligation—but also no lawful pathway to operate. Bank Licensing and Permitting Regulation

No Afghan statute or regulation requires a license specifically for crypto-related activities, because no such legal instrument exists; the Bank Licensing and Permitting Regulation covers "banking business" only, defined through traditional financial activities such as accepting deposits and granting credits. Bank Licensing and Permitting Regulation

International actors involved in crypto transactions touching Afghanistan must consider OFAC's licensing regime; OFAC General License 20 authorizes certain transactions involving Afghanistan or its governing institutions, but this is not a crypto license—it is a sanctions exemption that does not permit financial transfers to designated persons like the Taliban or Haqqani Network except for narrow payments.

For crypto businesses, the only "licensing" requirement is the need to obtain an OFAC specific license if they wish to engage in transactions otherwise prohibited by the Afghanistan-related sanctions program; OFAC considers license requests on a case-by-case basis, prioritizing humanitarian-related applications.

Under GL 20, transactions involving Afghanistan's governing institutions are authorized to the extent required, but financial transfers to the Taliban, Haqqani Network, or their 50%-or-more owned entities are prohibited unless for taxes, fees, import duties, permits, licenses, or public utility services, and only if unrelated to luxury items. OFAC Issues a New General License and FAQs for Transactions Involving Afghanistan - Global Sanctions and Export Controls Blog

The provided text of the Bank Licensing and Permitting Regulation does not include specific capital thresholds, minimum capital figures, or monetary amounts in Afghan Afghani, USD, or EUR; no capital requirement figures are available from the sources supplied. Bank Licensing and Permitting Regulation

No capital requirements exist for crypto businesses in Afghanistan because no crypto licensing framework exists; any attempt to apply banking capital rules to a VASP would be speculative and unsupported by the current law. Bank Licensing and Permitting Regulation

The U.S. Treasury notes that Afghanistan's financial sector was underdeveloped pre-Taliban, with a loan-to-GDP ratio of approximately 3 percent, the lowest in the world, and only 10–20 percent of Afghan adults having bank accounts, indicating that any capital requirements for financial activities in-country would face severe practical constraints.

For OFAC licensing, any U.S. person or entity seeking to engage in crypto-related transactions touching Afghanistan must apply through OFAC's online licensing portal, describing the transaction and justifying why it falls within or merits an exception to the sanctions regime; there is no stated timeline for OFAC's decision in the provided sources.

No specific timeline for domestic banking license processing is provided in the Bank Licensing and Permitting Regulation text supplied, and no timeline exists for crypto licensing because no such regime exists. Bank Licensing and Permitting Regulation

OFAC's GL 20 was issued on February 25, 2022, providing immediate authorization for covered transactions upon issuance; FAQs 991 through 997 were published simultaneously to clarify scope.

OFAC issued GL 14 through GL 19 between September 24, 2021, and December 22, 2021, showing the phased rollout of humanitarian and administrative authorizations; these general licenses operate without a per-application timeline, but specific licenses are reviewed case-by-case.

GL 20 imposes structural restrictions on authorized transactions: financial transfers to the Taliban, Haqqani Network, or blocked individuals in leadership roles of governing institutions are prohibited except for payments of taxes, fees, import duties, permits, licenses, or public utility services, provided such payments do not relate to luxury items. OFAC Issues a New General License and FAQs for Transactions Involving Afghanistan - Global Sanctions and Export Controls Blog

GL 20 does not lift sanctions on the Taliban or Haqqani Network; they remain designated as Specially Designated Global Terrorists under Executive Order 13224, meaning any crypto business engaging with these entities faces ongoing sanctions risk. OFAC Issues a New General License and FAQs for Transactions Involving Afghanistan - Global Sanctions and Export Controls Blog

Zero entities have been licensed for cryptocurrency or digital asset activities in Afghanistan; no VASP, crypto exchange, or digital asset custodian has received a license from Da Afghanistan Bank or any other Afghan authority. Bank Licensing and Permitting Regulation

The provided sources contain no record, announcement, or report of any Afghan-licensed crypto business, and the Bank Licensing and Permitting Regulation—the only licensing instrument—does not even contemplate digital assets as a licensable category. Bank Licensing and Permitting Regulation

No Afghan law or regulation imposes AML/KYC obligations on crypto businesses because no crypto licensing or registration regime exists; VASPs operating in Afghanistan do so without any statutory basis for AML/CFT compliance. Bank Licensing and Permitting Regulation

The U.S. Treasury, in connection with GL 20, explicitly expects NGOs and private sector actors to implement "appropriate due diligence measures and AML/CFT controls to ensure funds are not diverted for illicit purposes," signaling that even authorized transactions require robust AML/KYC in practice, though this is a U.S. expectation, not an Afghan legal mandate.

OFAC's FAQs 957 through 963 clarify that certain humanitarian transactions are authorized provided conditions are met, implicitly requiring U.S. persons to screen counterparties against OFAC's Specially Designated Nationals (SDN) list, but this pertains to sanctions compliance, not Afghan statutory AML law. OFAC Issues a New General License and FAQs for Transactions Involving Afghanistan - Global Sanctions and Export Controls Blog

The Quds Force and Haqqani Network designations, alongside the Taliban's listing as SDGTs, create a PEP and sanctions screening burden for any financial actor, including crypto businesses, touching Afghanistan; screening against OFAC's SDN list is a practical requirement, but this derives from U.S. law, not Afghan regulations.

No enforcement actions against cryptocurrency or digital asset businesses in Afghanistan are reported in the provided sources. Bank Licensing and Permitting Regulation

The U.S. Treasury has taken enforcement actions against the Taliban and Haqqani Network through continued sanctions designation, but these are sanctions designations, not crypto-specific enforcement cases; the Treasury press release emphasizes that sanctions on the Taliban and Haqqani Network remain in force and are not lifted by GL 20.

OFAC FAQ 997 explicitly states that the United States has not lifted sanctions on the Taliban or the Haqqani Network, and both remain designated as SDGTs under Executive Order 13224, but no forfeiture, fine, or penalty against a crypto entity is recorded in the sources. OFAC Issues a New General License and FAQs for Transactions Involving Afghanistan - Global Sanctions and Export Controls Blog

The U.S. Treasury warned that it "will continue to apply rigorous sanctions to the Taliban, the Haqqani Network, and their collaborators until they halt their repressive actions," signaling potential future enforcement, but no specific crypto enforcement action is documented.

No Afghan court, DAB directive, or administrative penalty against a crypto firm is mentioned anywhere in the provided source material, reflecting the absence of a crypto regulatory framework and corresponding enforcement machinery. Bank Licensing and Permitting Regulation

No tax guidance has been issued for virtual assets by Afghanistan's Ministry of Finance, Da Afghanistan Bank, or any other Afghan authority; the provided sources contain no mention of income tax, capital gains tax, VAT, or any other tax treatment for cryptocurrency or digital asset transactions in Afghanistan. Bank Licensing and Permitting Regulation

The U.S. Treasury's discussion of Afghanistan's economy—including the pre-Taliban dependence on approximately $8.5 billion in annual grants financing 75 percent of public expenditures—highlights the lack of a functioning tax administration system capable of assessing or collecting taxes on digital assets.

Afghanistan lacks any dedicated cryptocurrency or digital asset law, meaning there is no definition of a virtual asset, no VASP registration requirement, no consumer protection framework, and no supervisory authority for crypto activities. Bank Licensing and Permitting Regulation

The Bank Licensing and Permitting Regulation, while comprehensive for traditional banking, does not address digital assets at all, leaving a complete regulatory vacuum for crypto businesses. Bank Licensing and Permitting Regulation

The FATF's Recommendation 15 (new technologies) and its updated guidance on virtual assets and VASPs are not implemented in Afghanistan; no law mandates AML/CFT compliance for VASPs, and no authority has been designated as the supervisor for the virtual asset sector. Bank Licensing and Permitting Regulation

Sanctions risk is the dominant operational threat: the Taliban and Haqqani Network are designated as SDGTs under Executive Order 13224, and any crypto business dealing with them, their owned entities (50% or more interest), or blocked leadership individuals faces U.S. enforcement, including asset freezes and penalties.

GL 20 provides limited cover but explicitly prohibits financial transfers to the Taliban or Haqqani Network, meaning a crypto exchange settling transactions with Afghan parties could inadvertently run afoul of these restrictions; the prohibition covers transfers to entities in which the Taliban or Haqqani Network own 50% or more, and any blocked individual in a leadership role of governing institutions, except for taxes, fees, import duties, permits, licenses, or public utilities not involving luxury items. OFAC Issues a New General License and FAQs for Transactions Involving Afghanistan - Global Sanctions and Export Controls Blog

The definition of "luxury items and services" under FAQ 994 creates interpretive risk for crypto businesses, as payments for permits, licenses, or utility services are only allowed if they do not relate to luxury items, adding complexity to compliance. OFAC Issues a New General License and FAQs for Transactions Involving Afghanistan - Global Sanctions and Export Controls Blog

Afghanistan's economic collapse—with the IMF estimating contraction of up to 30 percent, a poverty rate near 50 percent, and a loan-to-GDP ratio around 3 percent—makes establishing any financial business, including crypto, practically impossible due to the absence of banking infrastructure, reliable electricity, internet connectivity, and a functional legal system.

Even if a crypto business sought to comply with Afghan law, there is no designated authority to receive applications, no registration portal, no fee schedule, and no process for obtaining a domestic VASP license. Bank Licensing and Permitting Regulation

The U.S. Treasury's expectation that private sector actors "continue to implement appropriate due diligence measures and AML/CFT controls" is aspirational, but Afghanistan has no AML/CFT law applicable to VASPs and no FIU (Financial Intelligence Unit) structured to receive suspicious transaction reports from crypto businesses, making compliance impossible in practice.

Da Afghanistan Bank's property is itself blocked under Executive Order 14064, undermining the central bank's capacity to function as a regulator or supervisor for any financial sector, including crypto.

No roadmap, draft law, or public consultation on crypto regulation from Afghan authorities appears in the provided sources, and the Taliban administration has not signaled any intention to legalize digital assets. Bank Licensing and Permitting Regulation

The international community's focus, as expressed through UNSCR 2615 and OFAC GL 20, is on humanitarian relief and basic human needs—not financial innovation or digital asset market development.

Any crypto business seeking to enter Afghanistan would need to navigate both the absence of domestic law and the presence of extraterritorial U.S. sanctions, making the jurisdiction unviable for legitimate digital asset operations in the foreseeable future.

Bank Licensing and Permitting Regulation

OFAC Issues a New General License and FAQs for Transactions Involving Afghanistan - Global Sanctions and Export Controls Blog

Customer Identification Program (CIP): Entities must implement procedures to verify the identity of their customers, including collecting personal information and verifying documentation.⁴

Ongoing transaction monitoring for VASPs is not required for Afghanistan under FATF recommendations.

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.

TOLOnews (Afghan News Agency): While difficult to find a direct URL for a specific government decree, TOLOnews and other local media have reported on the crackdown. For example, reports from August 2022 mentioned arrests related to forex and crypto trading.

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

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.

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.

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.

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.

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.

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

Penalties for Non-Compliance: Failure to secure the necessary licenses or adhere to AML/KYC and sanctions requirements may result in fines, suspension of operations, or criminal prosecution.²

Audit and Reporting: Regulatory bodies may conduct audits to ensure compliance with licensing and AML/KYC standards, requiring regular reporting of transaction data.