U.K. lenders are exercising great caution in processing humanitarian payments to Afghanistan amid a lack of guidance and uncertainty around the composition of the country’s new Taliban-led government and its future relationship with the international community.
On Tuesday, the U.K. Office of Financial Sanctions Implementation, or OFSI, warned that financial institutions considering facilitating transactions to Afghanistan should conduct deep checks on Afghan-based counterparties to ensure funds do not end up in the hands of blacklisted members of or entities linked to the Taliban, the Islamist group that took control of the country after the withdrawal of U.S. and western troops last month.
“The context in Afghanistan is changing,” the agency posted on social media. “There remains uncertainty over the form of a future government, but the Taliban has a number of sanctioned individuals in positions of authority within the organisation.”
Hours earlier, the U.K. Financial Conduct Authority warned in a statement that while Afghanistan is not officially considered a high-risk jurisdiction for financial crime by Britain, the chaotic Taliban takeover and resulting power vacuum should prompt firms to reassess their risk exposure to the country and scrutinize transactions to and from it.
“The near collapse of the domestic banking system along with the complex legal framework in respect of counterterrorism and sanctions in relation to Afghanistan is making it hard for [NGOs] to get money into the country to support the humanitarian response,” Rowan Popplewell, a policy manager at Bond, a U.K. network for organizations working in international development, wrote in an email to ACAMS moneylaundering.com.
Bond’s network alone counts 30 organizations that assist or have recently supported Afghan civic society groups working to promote women’s rights, media freedom and other issues.
NGOs with ties to Afghanistan will also face “lots of follow-up questions” from banks who will need to conduct new risk assessments to ascertain, for example, the distribution channels they have on the ground, Zia Ullah, head of corporate crime and investigations at Eversheds Sutherland in London, told moneylaundering.com.
“Once you’ve got over the battle of persuading a bank to maintain accounts for an NGO, the next question is who do any funds it raises actually go to?” said Ullah. “At the moment it’s not altogether clear what the [Taliban] regime will look like and to what extent they will seek to interfere in the activities of NGOs.”
A prolonged drought, rising food prices and the paralysis of the country’s formal financial system following the withdrawal of western forces have created a perfect storm for Afghans that has made the continued delivery of humanitarian aid to the country paramount.
As a result, Afghanistan has risen to the top of the agenda of a U.K. Home Office-led working group that brings together NGOs, financial institutions and government officials to address the hurdles humanitarian organizations face when sending aid-related payments to regions where legitimate funds are often diverted to terrorists and other blacklisted parties.
OFSI said Tuesday that it recognized the challenges that NGOs and financial institutions are facing in sending aid to Afghanistan.
“The U.K. will continue to uphold its international obligations, ensuring that our efforts do not unnecessarily disrupt, delay or discourage legitimate humanitarian activity,” the agency said.
But NGOs want the British government to go further.
Officials need to act “swiftly” by working with charities and banks to facilitate continued aid-related payments to Afghanistan, Popplewell said, including by issuing general or specific Afghanistan-related licenses to give U.K. firms greater comfort in providing humanitarian assistance to the country.
An OFSI spokesperson wrote in an email to moneylaundering.com that since the U.K. sanctions regime against the Taliban derives from the UN framework, OFSI would not be able to issue a general licence. Current UN Afghanistan regulations also do not contain a carve-out for humanitarian assistance, she said.
In any event, an OFSI license would only protect firms from potential U.K. enforcement. British lenders are far more worried about falling foul of U.S. sanctions against the Taliban, and several have already reached out to OFAC for further guidance on Afghan transactions, a source told moneylaundering.com on condition of anonymity.
John Smith, the former chief of the U.S. Treasury’s Office of Foreign Assets Control, or OFAC, told a webinar hosted by ACAMS Tuesday that OFAC has informally taken a “non-enforcement posture” towards humanitarian-related transactions to the country.
Treasury’s nod covers payments related to evacuation efforts, humanitarian aid, critical infrastructure and even remittances, said Smith, now an attorney with Morrison & Foerster in Washington, D.C.
On Wednesday, Reuters reported that the U.S. Treasury on Aug. 25 issued a license authorizing the U.S. government and its contractors to support humanitarian assistance to people in Afghanistan, including the delivery of food and medicine, despite U.S. sanctions on the Taliban.
Neil Whiley, director of sanctions at industry body UK Finance, pointed out that U.S. sanctions programs contain carve-outs for humanitarian-related transactions.
“From a U.K. sanctions perspective, nothing fundamentally has changed – you can still deliver humanitarian aid,” Whiley told moneylaundering.com. “Charities and NGOs need to be confident [that they can deliver aid and process related transactions] and that means that messaging from all governments needs to be really clear and concise.”
Both OFAC and OFSI have yet to release formal guidance on Afghanistan-related transactions since the Taliban seized power.
Contact Koos Couvée at email@example.com
|Topics :||Anti-money laundering , Sanctions , Counterterrorist Financing|
|Document Date:||September 2, 2021|