Financial flows linked to the production and trafficking of Afghan opiates

Financial flows linked to the production and trafficking of Afghan opiates

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This report aims to raise awareness about the financial flows related to the Afghan opiate trade. Afghanistan is the world leader in the production and trafficking of opiates: generating revenues estimated to be as high as USD 70 billion.  Despite international efforts, the cultivation of opium poppies in Afghanistan continues, and even increased significantly in southern parts of Afghanistan to reach a record high by 2013.

Little information exists about the “business model” of the Afghan opiates trade, but what is known is that globally, only a fraction of drug related funds or assets are confiscated while almost all drug profits are integrated into the world’s legitimate financial system.

This report analyses how the financial transactions related to the Afghan opiates trade are conducted. The report finds that generally, the opiates and the associated financial flows do not follow the same routes. The majority of revenues generated by the trade in Afghan opiates is moved through, and possible stored in, so called “financial centres”, usually involving money or value transfer services (MVTS). This report also identifies other methods used by the opiate traffickers to transfer funds and facilitate distribution of the opiates.

Another finding is that the Afghan Taliban are heavily involved in the opiates trade, either through trafficking or profiting. The growing trade in opiates will soon be one of their leading sources of income, providing them with the financial means to become a major threat to the national security of Afghanistan and the wider region.

This report, and in particular the case studies provided, will assist in the detection of opiate-related financial transactions. It also provides financial centres with information about the factors that make them attractive and vulnerable to financial transactions involving proceeds of drug trade or other crimes.