Afghanistan Cash Flow Pouring Out, Hawala Regulation Looms To Combat Money Laundering

A new proposal by Afghanistan's Central Bank aims to stem the flow of billions of dollars streaming out of the cash-strapped country, according to a Wall Street Journal report.

In a move that targets the traditional hawala banking system, Afghanistan's central bank governor Noorullah Delawari has proposed legislation to limit the amount of money that can be taken outside the country to $20,000 in a single trip.

TIME explains that hawala is an underground banking system, off the ledger, where a lack of contracts, bank statements and record-keeping allows vast sums of money to move across international borders in just a few hours. Hawala can refer to financial transfers in the formal banking sector, but it generally refers to "money transfers that occur in the absence of, or are parallel to, formal banking sector channels," according to the International Monetary Fund. Though legal by definition, the system has been used by terrorists and drug traffickers to transfer massive amounts of money without leaving a paper trail.

At present, there are no restrictions on how much cash can be transfered through Kabul's airport. An estimated $4.6 billion in cash -- more than the country's government budget -- left Afghanistan in 2011, though the actual figure is likely higher, according to the Wall Street Journal.

The U.S. has pressured Afghanistan to curb money laundering and terrorist financing. Afghanistan is highly dependent on foreign aid, as the CIA Factbook notes, yet aid money is often misused or stolen.

Furthermore, the Associated Press reports that the U.S. and Afghanistan have been in discussions for nearly a year about a partnership past 2014, when the Afghan government is expected to control the nation's security. U.S. forces are already transitioning out of a combat role.

According to the UN, Afghanistan is responsible for about 90 percent of the world's opium production.