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2005 * International Narcotics Control Strategy Report

US DEPARTMENT OF STATE
US. DEPARTMENT OF STATEInternational Narcotics Control Strategy Report, 2005

Released by the Bureau for International Narcotics and Law Enforcement Affairs, U.S. Department of State - Washington, DC, March 2006




AFGHANISTAN

Part I: Drug and Chemical Control


Afghanistan

I. Summary

The political and economic situation in Afghanistan is improving, but opium production and the resultant trafficking of opium and its derivatives still accounts for roughly one third of Afghanistan’s total (combined licit and illicit) GDP. Afghanistan’s huge drug trade severely impacts efforts to rebuild the economy, develop a strong democratic government based on rule of law, and threatens regional stability. Dangerous security conditions and corruption constrain government and international efforts to combat the drug trade and provide alternative incomes. However, there was some cause for guarded optimism in 2005. The number of hectares under poppy cultivation dropped 48 percent, from 2004’s record crop of 206,700 to 107,400, according to USG statistics. Opium production, however, dropped only 10 percent because yields rose sharply due to favorable weather. The reduction in planting may be credited to a number of factors, including surplus crop from 2004, public information efforts against poppy cultivation, (including President Karzai’s public statements), promised alternative livelihoods assistance, and the threat of forced eradication and arrest. President Karzai pledged an additional 20 percent reduction in cultivation for 2006. In a significant positive legal development, the GOA extradited a major drug trafficker to the U.S. in October, the first time Afghanistan permitted the extradition of a citizen for drug trafficking. 

The Government of Afghanistan (GOA) continues to pursue an eight pillar counternarcotics (CN) strategy focused on: Public Information, Alternative Livelihoods, Law Enforcement, Criminal Justice, Eradication, Institutional Development, Regional Cooperation and Demand Reduction. In 2005, the GOA adopted the Poppy Elimination Program (PEP), a multi-faceted program working with provincial governments to reduce poppy production in the seven major poppy producing provinces. The GOA also focused on building capacity within its nascent law enforcement and justice sector institutions to increase arrests, prosecutions and convictions of drug traffickers. The international community actively assists the GOA in its CN efforts and to help build its capacity. International counternarcotics activities remain under a multilateral mandate with the UK in the lead. U.S. government assistance focuses on the five pillars of Alternative Livelihoods, Public Information, Criminal Justice (Justice Reform), Law Enforcement, and Eradication in close coordination with the GOA. Although this year saw some encouraging developments, the GOA will need sustained international assistance and political support over many years to achieve its counternarcotics goals. 

II. Status of Country

Afghanistan produces nearly 90 percent of the world’s opium poppy and is also the world’s largest heroin producing and trafficking country. Trafficking activities include refining and traffic in all forms of unrefined (opium), refined (heroin) and semi-refined (morphine base) opiates. The IMF estimated licit GDP for the Afghan fiscal year ending on March 21, 2005 at $5.9 billion. UNODC estimated illicit opium GDP at $2.8 billion for the same period, which indicates that illicit opium GDP accounts for roughly one-third of total GDP. Criminal financiers and narcotics traffickers exploit the government’s weakness and corruption. Reconstruction efforts which began in 2002 are improving Afghanistan’s infrastructure, laying the necessary groundwork to combat the cultivation and trafficking of drugs throughout the country. 

III. Country Actions Against Drugs in 2005

Policy Initiatives. The U.S.—in concert with the UK, designated the international lead-nation on counternarcotics—has worked to ensure that counternarcotics is at the forefront of Afghan policy initiatives. President Karzai has expressed his clear commitment to stemming drug production and trade in Afghanistan and has set the goal of a 20 percent reduction in opium cultivation in 2006. To accomplish this goal the GOA took the following key actions against narcotics in 2005: 

  • Illicit Crop Control. With U.S. and UK support, the GOA established the Poppy Elimination Program (PEP) in May 2005. PEP is designed to reduce poppy cultivation through year-round targeted public information campaigns to dissuade poppy planting, alternative livelihood programs to spur rural development, and governor-led eradication (GLE) of poppy crops. PEP teams have been deployed to the seven key poppy producing provinces. These teams, comprised of public information, alternative livelihoods and monitoring/verification officers, work with the governors to prevent opium planting and support governor-led eradication by providing monitoring and verification of eradication efforts. The GOA reconfigured the Central Poppy Eradication Force (CPEF) into the Afghan Eradication Force (AEF), a more flexible and mobile force with air support that will broaden the central government’s eradication capabilities.

  • Legislation. The U.S. Department of Justice Senior Federal Prosecutors Program in Afghanistan, working with their Afghan counterparts, drafted a counternarcotics law, which was adopted in December 2005. This legislation was the first step in supporting Amendment 7 of the Constitution prohibiting the cultivation and smuggling of narcotic drugs and provides the legal and investigative authority foundations for high-level investigations and prosecutions. The counternarcotics law also codified the use of the 1988 UN Drug Convention as a legal basis for extradition. This comprehensive counternarcotics law will substantially enhance the GOA’s ability to arrest, prosecute and convict drug traffickers.

  • Justice Reform. In 2004, the U.S., U.K. and other donors established the Vertical Prosecution Task Force (VPTF) and in 2005 established the Central Narcotics Tribunal (CNT); the U.S. Department of Justice Prosecutors helped the GOA craft the legal mechanism to establish this court, designed to move expeditiously against narcotics criminals. The VPTF consists of teams of investigators and prosecutors who will work together in developing and prosecuting narcotics cases. The U.K., Norway, and the U.S. have all dispatched mentors to work with the VPTF. The CNT, established by decree, has exclusive national jurisdiction over mid- to high-level narcotics cases in Afghanistan; and the Supreme Court has now authorized automatic transfer of eligible cases from other courts. The Misri Khan trial, which began in November 2005, has been transferred to the CNT and is the first to rely upon Western-style investigative techniques in Afghanistan. The Misri Khan case involves the investigation, arrest and prosecution of mid-level Afghan drug traffickers for conspiracy to export heroin to the United States. 

Once completed, the Counternarcotics Justice Center (CNJC) will provide secure facilities for the VPTF and CNT to operate. It will contain secure courtrooms, and a detention facility to house defendants undergoing trial. The United Nations Office on Drugs and Crime (UNODC) is refurbishing a section of the Pol-e Charkhi prison to securely house convicted narcotics traffickers after they have been prosecuted in the CNT.

Law Enforcement Efforts. Drug law enforcement efforts have been hampered by the continuing insurgency and lack of GOA police and legal capacity. In 2003, the Ministry of Interior (MOI) established a Counter Narcotics Police Department (CNPA), which is divided into three units: investigation, intelligence and interdiction. Development of the CNPA will be the focus of efforts to create an Afghan enforcement institution capable of investigating and developing narcotics cases. Progress has been slow, given the difficulty of the unit’s mission. Developing MOI capacity and capability for the CNPA continues to be a high priority for Afghanistan itself and its major foreign donors. 

To get action on enforcement now, while the longer term effort at creating the CNPA continues, DEA and the Afghan Government created the National Interdiction Unit (NIU) of the CNPA in 2005. This unit is a specially trained group of approximately 110 CNPA police officers who are supported and mentored by the DEA. The NIU conducts interdiction and investigative activities designed to attack the command and control structure of mid-value and high-value drug trafficking organizations (DTOs) in Afghanistan. To develop and support the NIU, the DEA established the Foreign Advisory Support Teams (FAST) in 2005. FAST teams are rotational deployments of specially trained DEA Special Agents and Intelligence Research Specialists who are assigned to Afghanistan for 120 day periods to support the Kabul Country office of the DEA and the NIU in furthering DEA intelligence and law enforcement operations. The NIU also works with the Afghan Special Narcotics Force (ASNF), a trained paramilitary interdiction unit used to attack large, hard targets to create a highly-specialized narcotics interdiction and investigative entity capable of disrupting and dismantling major trafficking organizations. NIU operations began in October 2004. From October 2004—October 2005 NIU seized 42.9 metric tons of opium, 5.5 metric tons of heroin, and 220 kilograms of morphine base from 247 clandestine conversion labs and made 32 arrests. NIU’s activities were severely limited by the lack of dedicated air support, which would permit access to hard targets. 

Efforts to interdict precursor substances and processing equipment also suffer from limited police and judicial capacity. There are currently no registries or legal requirements for tracking, storing or owning precursor substances, although the new drug law requires the Ministry of Counter-Narcotics to develop a modern regulatory system. Progress in this regard depends on passing new laws, establishing a system for distinguishing between licit/potentially illicit uses of dual-use chemicals, and then establishing a specialized police force to enforce the new system. 

Corruption. Drug-related corruption is a problem at all levels of government and remains pervasive at the provincial and district levels. Corruption ranges from facilitating drug activities to benefiting from revenue streams generated by the drug trade. The national government officially condemns the drug trade, but lacks the capability to control it at the local level. In 2005, President Karzai removed from office a few police and provincial officials whom he deemed corrupt. His ability to move vigorously against corruption in provincial governments and in the central government is severely constrained by the practical political considerations of a nascent central government. The GOA realizes it must take more meaningful action against corruption in 2006 to facilitate good governance and assist in implementing its National Drug Control Strategy (NDCS). 

Agreements and Treaties. Afghanistan is a party to the 1961 UN Single Convention, the 1971 UN Convention on Psychotropic Substances and the 1988 UN Drug Convention. The GOA has no formal extradition or legal assistance arrangements with the U.S., although drug offenders may now be extradited under the 1988 UN Drug Convention based on recent Afghan counternarcotics legislation. In close cooperation with U.S. Department of Justice Senior Federal Prosecutors, a major drug trafficker was extradited to the U.S. in October 2005 under the 1988 UN Drug Convention to stand trial on narcotics charges. This marked the first time Afghanistan permitted the extradition of one of its citizens for drug trafficking to a foreign country. Afghanistan is not a party to any bilateral treaties that provide mutual legal assistance with any nation, including the U.S. Afghanistan is a party to the UN Convention against Transnational Organized Crime. Afghanistan has signed, but has not yet ratified, the UN Convention Against Corruption. 

Illicit Cultivation/Production. The number of hectares under poppy cultivation dropped 48 percent, from 2004’s record crop of 206,700 to 107,000 in 2005. Afghanistan still remains the largest cultivator of illicit opium poppy in the world, accounting for approximately 87 percent of illicit opium worldwide, according to the UNODC. Despite the sharp decrease in hectares planted, opium production fell by only 10 percent (4,475 metric tons in 2005 from 4,950 metric tons in 2004) because favorable weather increased yield per hectare. Poppy is grown at varying levels of intensity in all of Afghanistan’s 34 provinces, comprising 2.3 percent of all arable land and, up to 10 percent in poppy growing villages. Poppy cultivation provides regular employment for some 8.7 percent of the population and a much larger proportion benefits from linkages to the drug trade. As noted previously, poppy production amounts to one-third of GDP in Afghanistan. It is the principal source of livelihood in several areas, as the decision to plant poppy determines access to land and credit. There are strong linkages to all aspects of Afghanistan’s still profoundly underdeveloped economy. Because of the limited reach of law enforcement, corruption, some lack of government will, and weak judicial institutions, the GOA has not been able to enforce its decree banning opium production. The GOA will not likely have the capacity to enforce the decree for some years. 

The 48 percent decrease in hectares planted in 2005 is encouraging, though it was not consistent across the country. Some 55 percent of the total reduction took place in only two provinces, Nangarhar and Helmand, where provincial governments were willing to crack down on growers. In some provinces reductions were more modest and in others planting increased from 2004. Factors influencing farmers’ decisions not to plant poppy likely included market forces following 2004’s record crop, appeals from President Karzai and other public information efforts, the threat of eradication and arrest, and promised alternative livelihood assistance. In 2005, the ANP and provincial government forces conducted limited eradication. The CPEF was able to eradicate only a little over 200 hectares because of local resistance, obstruction by local officials and lack of needed GOA support. 200 hectares represents less than two-tenths (.002 percent) of one percent of the area planted to opium. 

Understanding from 2005 experience that cooperation from provincial governments is critical to poppy elimination, President Karzai called for increased engagement by local leaders in 2006. PEP was created to focus elimination/eradication efforts at the provincial level. CPEF has been reshaped into the Afghan Eradication Force (AEF), a more nimble ready-response eradication force with air support comprised of four eradication teams that will be deployed to conduct eradication in the various provinces of Afghanistan. The Afghan Ministry of Interior has committed 1,300 policemen to support governor-led eradication. 

In addition to improved law enforcement, rebuilding the rural economy to provide viable alternatives to poppy growing is critical to reducing opium poppy cultivation. USAID developed a comprehensive alternative livelihoods (AL) program that allocated and obligated some $175 million dollars to AL projects in the major opium cultivation areas of Afghanistan. These projects are focused on accelerating economic growth in rural areas to create long-term sustainable jobs. However, the full effects of these projects are realized over years and are not likely to result in a massive shift away from poppy cultivation in the near term. 

Drug Flow/Transit. Drug cultivation in Afghanistan is facilitated by traffickers who lend money to Afghan farmers, and subsequently buy their crop at previously set prices, or accept repayment of loans with deliveries of raw opium. In many provinces opium markets exist. Under the control of regional gangsters (frequently warlords who also control the illicit arms trade and trafficking in persons) opium is traded freely to the highest bidder and is subject to taxation by the gangster. An increasingly large portion of Afghanistan’s raw opium crop is processed into heroin and morphine base by drug labs inside Afghanistan, reducing its bulk by a factor of 10 to 1, and thereby facilitating its movement to markets in Europe, Asia and the Middle East through Iran, Pakistan, and Central Asia. In the South, Southeast and Northeast border regions, Pakistani nationals play a prominent role in all aspects of the drug trade. Distribution networks frequently are organized along regional and ethnic lines and other organized criminal groups are believed to be involved in transportation onwards to Turkey, Russia and the rest of Europe. 

Demand Reduction/Domestic Programs. The GOA recognizes that it has a growing domestic drug use problem, particularly with opium and increasingly with heroin. In 2005, the GOA conducted its first nationwide survey on drug use. The survey conducted by the Afghan ministries of health and counternarcotics revealed there were 920,000 drug users in Afghanistan, including an estimated 150,000 users of opium and 50,000 heroin addicts. 

The Afghan National Drug Control Strategy includes demand reduction and rehabilitation programs for existing and potential drug abusers. However, Afghanistan has a shortage of general medical services and only limited GOA resources are being directed to these programs. The UK, Germany and —to a lesser degree—the U.S. have funded specific demand reduction and rehabilitation programs. 

IV. U.S. Policy Initiatives and Programs

Bilateral Cooperation. The United Kingdom was designated as the international lead nation on counternarcotics activities in Afghanistan in 2002. As the drug problem grew out of control and evidence mounted that drug proceeds were supporting Taliban remnants and terrorist groups, the U.S. expanded its counternarcotics programs. Counternarcotics activities remains among the U.S.’s top priorities for Afghanistan, as solving the narcotics problem is critical to reconstruction, effective governance and rule of law in Afghanistan. The U.S., in coordination with the GOA and the UK, has crafted a comprehensive and integrated strategy and is providing substantial resources to achieve the following aims:

  • Win popular support for the government’s CN program through a broad public affairs campaign.

  • Develop alternative sources of income to poppy in rural areas. 

  • Enhance the GOA’s capacity to arrest, prosecute and incarcerate drug offenders.

  • Destroy drug labs and stockpiles.

  • Dismantle the drug trafficking/refining networks.

  • Enforce the poppy ban through a strong eradication campaign.
The Road Ahead. Afghanistan’s difficult security and economic environment and political fragility limit the GOA’s ability to counternarcotics production and trade. The 48 percent reduction in the poppy crop in 2005 and the GOA’s commitment to reducing cultivation by an additional 20 percent in 2006 are encouraging developments. However, sustained progress against the drug trade will require continued commitment to the comprehensive counternarcotics implementation plan by the GOA and its international partners over years. Until Afghanistan has a stable security environment with a rebounding rural sector, and its law enforcement capacity is strengthened, drug production and trafficking will continue. Sustained assistance and political support by the international community, over many years, will be necessary to ensure that the Afghan Government can achieve its objectives. 



Part II: Money Laundering and Financial Crimes

Afghanistan

Afghanistan

Afghanistan

While Afghanistan is not a regional financial or banking center, its informal financial system is extremely large in scope and scale. Afghanistan is a major drug trafficking and drug producing country. Afghanistan passed anti-money laundering and terrorist financing legislation in late 2004, and efforts are being made to strengthen police and customs forces. However, there remain few resources and little expertise to combat financial crimes, or to produce meaningful financial intelligence. The most fundamental obstacles continue to be legal, cultural and historical factors that conflict with more Western-style proposed reforms to the financial sector.

The majority of the money laundering in Afghanistan is linked to the illicit narcotics trade. Afghanistan accounts for a large majority of the world’s opium production, and in 2004 and 2005 its internal production of opium increased. Opium gum itself is often used as a currency, especially by rural farmers, and it is used as a store of value in prime production areas. It is estimated that one third of Afghanistan’s (licit plus illicit) GDP is derived directly from narcotics activities, and proceeds generated from the drug trade have reportedly fueled a growing real estate boom in Kabul, as well as a sharp increase in capital investment in rural poppy growing areas.

Afghan opium is refined into heroin by production labs, more of which are being established within Afghanistan’s borders. The heroin is then often broken into small shipments and smuggled across porous borders for resale abroad. Payment for the narcotics outside the country is facilitated through a variety of means, including through conventional trade and the hawala system (money dealers). The narcotics themselves are often used as tradable goods and as a means of exchange for foodstuffs, vegetable oils, electronics, and other goods between Afghanistan and neighboring Pakistan. Many of these goods are smuggled into Afghanistan from neighboring countries or enter through the Afghan Transit Trade without payment of customs duties or tariffs. Invoice fraud, corruption, indigenous smuggling networks, and legitimate commerce are all intertwined.

Afghanistan is widely served by the hawala system, which provides a range of financial and non-financial business services in local, regional, and international markets. Financial activities include foreign exchange transactions, funds transfers, micro and trade finance, as well as some deposit-taking activities. While the hawala network may not provide financial intermediation of the same type as the formal banking system (i.e., deposit-taking for lending and investing purposes based on the assessment, underwriting, and pricing of risk(s)), it is deeply entrenched and widely used throughout Afghanistan.

There are over 330 known hawala dealers in Kabul, with 100-300 additional dealers in each province. These dealers are organized into unions in each province and maintain a number of agent-principal and partnership relationships with other dealers throughout the country and internationally. Their record keeping and accounting practices are quite robust, extremely efficient, and take note of currencies traded, international pricing, deposit balances, debits and credits with other dealers, lending, cash on hand, etc. Hawaladars are supposed to be registered. However, consistent standards for record keeping and accounting do not exist among these dealers, further complicating the regulatory task.

In early 2004, the Central Bank of Afghanistan, Da Afghanistan Bank (DAB), worked in collaboration with the International Monetary Fund (IMF) and the United Nations Office on Drugs and Crime (UNODC) to establish the legislative framework for anti-money laundering and the suppression of the financing of terrorism. Although Afghanistan was unable to meet its initial commitment to enact both pieces of legislation by September 30, 2004, they were both finalized and signed into law by late October 2004.

The Central Bank claims that both the Anti-Money Laundering (AML) and Proceeds of Crime and Combating the Financing of Terrorism (CFT) laws incorporate provisions that are designed to meet the recommendations of the Financial Action Task Force (FATF) and address the criminalization of money laundering and the financing of terrorism, customer due diligence, the establishment of a Financial Intelligence Unit (FIU), international cooperation, extradition, and the freezing and confiscation of funds. In fact, the AML law also includes provisions to address cross-border currency reporting, and establishes authorities to seize and confiscate monies found to be undeclared or falsely declared, or determined to be transferred for illicit purposes. However, the capability to enforce these provisions is nearly non-existent, and furthermore, these provisions are largely unknown in many parts of the country.

Under the new AML law, an FIU has been established and will function as a semi-autonomous unit within DAB. Additionally, banks are required to report suspicious transactions and all cash transactions as prescribed by DAB to the FIU, which has the legal authority to freeze assets for up to 7 days. The FIU will refer cases to the Attorney General’s office which will assign it to the appropriate court. The FIU, originally set to be established in January 2005, was actually initiated in October 2005 with assignment of a General Director, office space, and other resources. However, a number of key organizational issues remain to be resolved before the FIU can be considered fully operational.

At present the formal banking sector consists of three recently re-licensed state-owned banks, five branches of foreign banks, and four additional domestic banks. With the possible exception of the foreign bank branches, these banks are equipped with only limited knowledge or technical capacity to produce financial intelligence. Many are looking to both the Central Bank and to the Ministry of Finance to provide training on requirements set forth by anti-money laundering legislation, including customer due diligence and "know your customer" provisions (KYC), record keeping, currency transaction reporting (CTRs), suspicious transaction reporting (STRs), and the establishment of internal AML/CFT controls. The DAB is working to meet these bank demands by developing its anti-money laundering regulatory regime and supporting training curricula. The DAB is not yet fully aware of the compliance capabilities of banks other than those that are state-owned.

The Supervision Department within the DAB was formed at the end of 2003, and is divided into four divisions: Licensing, General Supervision (which includes on-site and off-site supervision), Special Supervision (which deals with special cases of problem banks), and Regulation. The Department remains poorly staffed and struggles to find the appropriate talent. The Department is charged with administering the AML and CFT legislation, conducting examinations, licensing new institutions, overseeing money service providers, and liaising with the commercial banking sector generally. In 2005, two members of the Supervision Department traveled to the U.S. to receive comprehensive AML training. Three more members are scheduled to receive similar training in 2006.

In April 2004, Afghanistan issued new regulations for the licensing of foreign exchange dealers, hawaladars and other money service providers, and required them to submit quarterly transaction reports. Regulations differ for foreign exchange dealers and money service providers, with more stringent requirements placed on the latter. The regulations also require foreign exchange dealers and money service providers to take appropriate measures to prevent money laundering and terrorist financing, including the submission of suspicious transaction reports to the FIU. DAB branch managers have been trained on the licensing requirements, but to date only one entity-Western Union-has received a license. The DAB is phasing in its regulations and has little communication with the foreign exchange dealers and money service providers themselves, many of whom see the regulations as overly strict, requiring burdensome capital requirements and fees for agents in each province. The DAB is struggling with administering the regulations and lacks the support of enforcement authorities from the Ministry of Interior, among others.

The Ministry of Interior and the Attorney General’s Office are the primary financial enforcement authorities, although neither is able to conduct financial investigations, and both lack the training necessary to follow potential leads generated by an FIU, whether within Afghanistan or from international sources. Pursuant to the Central Bank law, a Financial Services Tribunal will be established to review certain decisions and orders of Da Afghanistan Bank (DAB), although there is a need for significant training for judges and administrative staff before this Tribunal can be effectively stood up. The Tribunal will review supervisory actions of DAB, but not prosecute cases of financial crime. At present, all financial crime cases are being forwarded to the Kabul Provincial Court, where there has been little or no activity in the last three years. The process to prosecute and adjudicate cases is long and cumbersome, and significantly underdeveloped. The U.S., along with other countries, is helping to develop these mechanisms and to train prosecutors and judges.

Border security continues to be a major issue throughout Afghanistan. At present there are 21 border crossings that have come under federal control, utilizing international donor assistance as well as local and international forces. However, many of the border areas continue to be un-policed and therefore susceptible to illicit cross-border trafficking and trade-based money laundering. Many regional warlords also continue to control the international borders in their provincial areas, causing major security risks. Customs authorities, with the help of outside assistance, have made significant strides, but much work remains to be done. Customs collection has also dramatically improved, but there continues to be significant leakage and corruption, as well as trade-based fraud, including false invoicing and under-invoicing. Thorough cargo inspections are currently not conducted at any gateway.

Under the Law on Combating the Financing of Terrorism, any nonprofit organization that wishes to collect, receive, grant, or transfer funds and property must be entered in the registry with the Ministry of Auqaf (Islamic Affairs). All non-profit organizations are subject to a due diligence process which includes an assessment of accounting, record keeping, and other activities. However, the capacity of the Ministry to conduct such examinations is nearly non-existent, and the reality is that any organization applying for a registration is granted one. Furthermore, because no adequate enforcement authority exists, many organizations operating under a "tax-exempt" non-profit status in Afghanistan go completely unregistered and illicit activities are suspected on the part of a number of organizations.

The Government of Afghanistan (GOA) has now become a party to 12 of the UN conventions and protocols against terrorism and is a signatory to the International Convention for the Suppression of Acts of Nuclear Terrorism. Afghanistan is a party to the 1988 UN Drug Convention, the UN International Convention for the Suppression of the Financing of Terrorism, and the UN Convention against Transnational Organized Crime.

While the Government of Afghanistan has made strides in strengthening its overall AML/CFT regime, much work remains to be done: overseeing the informal hawala system through effective regulation; enabling bank and non-bank financial institutions to produce adequate financial intelligence; developing a fully operational and effective FIU; bolstering financial investigative capabilities; and, training prosecutors and judges on money laundering and other financial crimes. These efforts must be conducted in tandem, while at the same time combating the overwhelming narcotics trade. A concerted effort on the part of international donors and Afghan authorities is needed to empower rural farmers through effective alternative livelihoods programs and to dismantle the logistical and financial infrastructure that facilitates the opium economy generally.