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Tajikistan has adopted new legislation setting criminal penalties for money laundering. The long-awaited move comes in the wake of a report naming the country as one of the world's most at risk for illegal money flows and terrorist financing.

Several new laws aimed at protecting the somoni and preventing money laundering were passed by the upper house of parliament on June 12, and signed by President Emomali Rakhmon the following day. The legislation amends the existing penal code to criminalise money laundering and terrorism financing central bank Chairman Abdujabbor Shirinov told the upper house of parliament, according to CA-News.

Along with the law on money laundering and terrorist financing the Tajik parliament has also passed a law to allow the government to restrict the circulation of foreign currency. The powers can be employed in case of economic threats such as a sudden fall in the somoni's exchange rate. Restrictions will be allowed for a period of up to six months.

The new legislation follows the release of the 2013 Basel Anti-Money Laundering (AML) Index by the Basel Institute on Governance. The survey ranks Tajikistan fourth from the bottom in the world. Only Afghanistan, Iran and Cambodia perform worse on the index of 149 countries.

The index ranks countries on their vulnerability to money laundering and terrorism financing looking at indicators including AML and Counter-Terrorist Financing (CTF) frameworks as well as rule of law, financial standards and public transparency. Criminalising money laundering was one of the key tasks set for Dushanbe by the Financial Action Task Force (FATF).

At a parliament session in May, Shirinov, said the legislation had been drawn up following that international assessment delivered in 2007. The report criticised the situation in Tajikistan, and the country was placed under a monitoring regime by the G7 initiative, but Dushanbe has been slow to move.

In February, the FATF criticised Tajikistan for its lack of progress. "Despite Tajikistan's high-level political commitment to work with the FATF and EAG [Eurasian Group] to address its strategic AML/CFT [Anti-Money Laundering and Countering Financing of Terrorism] deficiencies, the FATF is not yet satisfied that Tajikistan has made sufficient progress in implementing its action plan, and certain strategic AML/CFT deficiencies remain," the report said.