U.S. officials have given banks informal approval to handle payments for exports of food, medicine and other goods to Afghanistan after the Taliban’s conquest, but an absence of U.S. currency has complicated those efforts, sources told ACAMS moneylaundering.com.
The withdrawal of U.S. and western forces from Afghanistan left the country’s formal financial system in a state of paralysis long before the last military aircraft departed Kabul’s Hamid Karzai International Airport on Monday, by which point U.S. officials had already frozen $7 billion of the Afghan central bank’s assets in New York and canceled U.S. dollar shipments to the country.
Future transfers to and from Afghanistan face another obstacle: the U.S.-blacklisted Taliban’s control of Afghan government ministries, population centers and infrastructure probably places the country’s state-owned enterprises off limits to U.S. and western financial institutions, nonprofit organizations and other companies as well.
Amid the quagmire of sanctions-related risks, Treasury’s Office of Foreign Assets Control has privately, informally taken a “non-enforcement posture” towards humanitarian-related transactions, John Smith, who led the agency from 2015 to 2018, told attendees of an ACAMS-hosted webinar Tuesday, confirming earlier reporting by The Wall Street Journal.
Those transactions include payments related to evacuation efforts, humanitarian aid, critical infrastructure and even personal remittances, said Smith, now an attorney with the Morrison & Foerster law firm in Washington, D.C.
Specific transactions that OFAC has reviewed beforehand and allowed to proceed include food and medicine-related payments, payments to U.N.-supported organizations and funds transfers related to the operations of Kabul’s airport and Afghanistan’s state-run electricity provider.
Transactions that steer clear of Taliban members or government entities remain legal, as usual, said Smith.
“There is no jurisdictional prohibition on doing business with Afghanistan,” Smith said. “That is one of the great uncertainties that I think people have had about the current situation.”
OFAC has yet to release formal guidance on Afghanistan-related transactions since the Taliban takeover. According to Smith, the agency likely avoided making any public statements because of the precarious political relations between the U.S. and Taliban, who may still play a role in evacuating additional U.S. citizens.
“The situation, obviously, is fragile,” he said. “There are lives at stake.”
An OFAC spokesman did not respond to a request for comment by press time.
OFAC’s private assurances may amount to little, however, if Afghanistan’s financial system remains paralyzed amid a shortage of U.S. dollars.
Afghan financial institutions have run out of U.S. currency amid a freeze in bulk shipments by the International Monetary Fund and other institutions, Nilofar Ghazanfar, an Emirates-based project coordinator for the Ghazanfar Group, a conglomerate that owns Ghazanfar Bank and its 20 branches in Afghanistan, told attendees of the webinar Tuesday.
U.S. dollars are the currency of choice in Afghanistan, where, according to the World Bank, roughly 85 percent of adults do not have a bank account, Ghazanfar said.
The Society for Worldwide Interbank Financial Telecommunication, or Swift, also stopped processing financial instructions for transactions to and from Afghanistan, said Ghazanfar, and the country’s central bank has yet to indicate when it will reopen.
Ghazanfar Bank’s branches in Afghanistan now rely on security from an unlikely source: the Taliban, which at the moment seems intent on establishing order and preventing looting.
Even after Afghanistan-linked payments resume in earnest, global financial institutions will have a difficult time identifying the Afghan government’s involvement in individual transactions, Ghazanfar said.
“We all have some kind of connection to the government, because that’s how small the economy was,” Ghazanfar said. “It’s going to be hard to sit down from miles away and prove that you had or did not have a link with the government.”
Contact Daniel Bethencourt at firstname.lastname@example.org
|Topics :||Counterterrorist Financing , Sanctions|
|Source:||U.S.: OFAC , Afghanistan , U.S.: Department of Treasury|
|Document Date:||August 31, 2021|