Fall of Afghanistan Leaves US Officials Scrambling Over Taliban Funding Streams

By Valentina Pasquali

The speed with which the Taliban seized control of much of Afghanistan last week took the U.S. military and intelligence apparatus by surprise, and handed the White House the difficult job of rapidly recalibrating their approach to the Islamist militia and its finances.

Global financial institutions already anticipate that the Treasury Department’s Office of Foreign Assets Control, or OFAC, will issue new guidance on how the Taliban’s expected role in leading the new Afghan government may impact any links they have, however remote, to the nation’s central bank, state-owned enterprises and private companies.

Amid fears of an impending humanitarian crisis in Afghanistan, OFAC may also need to clarify what basic exports of food, medicines, vaccines for the novel coronavirus and other aid U.S. firms and their banks should process first, while also implementing new sanctions or blacklisting additional Taliban members and entities under existing programs.

“For whatever components in each of those agencies that have responsibility for Afghanistan these are going to be very busy days trying to get their arms wrapped around what happened,” said Dennis Lormel, who co-founded and led the FBI’s Terrorist Financing and Operations Section following the Sept. 11 attacks.

The Taliban as a group is blacklisted, but only two of its leaders—deputy chief Sirajuddin Haqqani and military commander Mullah Mohammad Yaqoob—are subject to U.S. sanctions through executive orders 13224 and 13268, which ex-President George W. Bush signed in September 2001 and July 2002, respectively.

U.S. sanctions do not target any other high-ranking members of the Taliban or the group’s two most senior leaders: Haibatullah Akhundzada and Abdul Ghani Baradar.

The European Union, United Kingdom, Russia and Switzerland have blacklisted more individual Taliban members than the U.S. pursuant to U.N. Security Council Resolution 1373, a measure that the White House heavily supported after the attacks but never fully implemented, according to an analysis that Castellum, a provider of automated sanctions-screening products, shared with ACAMS

Peter Piatetsky, a former Treasury official who also served as an intelligence analyst with the U.S. Army, attributed the scarcity of American designations against the Taliban to resistance from the White House to blacklist the militia’s leaders during peace negotiations, as well as the view among some U.S. officials that the group’s reliance on informal financial channels would limit the efficacy of additional sanctions.

“In any case, even the existing sanctions mean that right now everything is de-facto blocked from the U.S. government’s perspective,” said Piatetsky, who co-founded Castellum two years ago. “The U.S. will slowly move in the direction of removing sanctions and issuing licenses, or impose more sanctions, depending on policy considerations and the Taliban’s behavior.”

A Taliban spokesperson said Tuesday that the group would grant amnesty to any Afghan national who worked for the U.S. or the U.S.-backed government in Kabul, and respect the rights of women and journalists within the confines of Islam.

But the militia made similar promises after coming to power in 1996, only to brutally oppress the population afterwards and mandate public stoning, hangings and other atrocities.

Piatetsky and other former U.S. officials interviewed by expect that OFAC will move quickly to instruct financial institutions on how to best ensure that humanitarian goods and services continue to flow to their intended recipients in Taliban-controlled Afghanistan.

U.S. officials have already frozen $7 billion in assets that the country’s central bank holds at the Federal Reserve in New York, and canceled bulk shipments of U.S. dollars, the institution’s former acting governor Ajmal Ahmady confirmed on social media Tuesday, two days after he fled Kabul.

Western Union announced a halt on all remittance to Afghanistan on Tuesday, and a spokesperson for the International Monetary Fund separately said Wednesday that the multilateral institution would suspend the already-approved disbursement of nearly $500 million in currency reserves set to arrive in Afghanistan on Aug. 23.


Amid sharp criticism of the U.S. withdrawal and miscalculation over the ability of the Afghan National Security Forces to hold the Taliban at bay, President Joe Biden now has considerable leverage to impose new and reimpose previous trade and financial restrictions on the group on the basis that its reconquest of Afghanistan affects U.S. foreign policy and national security.

Those restrictions may include the renewal of an embargo on U.S. financial services and other exports to Taliban-controlled territory that began in July 1999 under President Bill Clinton. OFAC formally withdrew the rules implementing the executive order in June 2011, nine years after Bush found they no longer reflected the situation on the ground in Afghanistan.

Only two shipping companies, a software firm and a manufacturer of steel-related products triggered penalties for violating the embargo, none of which exceeded $10,000.

Alternatively, the State Department could designate the Taliban as a foreign terrorist organization akin to al-Qaida and the Islamic State group, both of whom conduct operations in Afghanistan.

Such a designation would significantly impact anti-money laundering and sanctions compliance, requiring banks and other financial institutions to identify and block any transaction by a member or agent of the Taliban, said Jeremy Paner, a former OFAC investigator.

“An FTO designation goes beyond the issue of ownership or control: if you act for the Taliban, you are an agent,” said Paner, now a senior associate with Squire Patton Boggs in Washington, D.C. “Right now when banks smell something weird involving Afghanistan they reject the transaction, but with an FTO designation they would need to investigate and block it.”

OFAC could also use the Global Magnitsky Act of 2016 and a related measure, Executive Order 13818, to target Taliban-affiliated individuals and entities involved in human rights violations and the silencing of political opponents.

OFAC employs a relatively low threshold for blacklisting parties under the Global Magnitsky Act, but in eschewing terrorism-related designations could lose the ability to locate and investigate the Taliban’s financial activity through the Terrorist Financing Tracking Program.

But the impact of any U.S. sanctions, whether for counterterrorism purposes or human rights—will be limited by the Taliban’s isolation from the global financial system, as well as a general lack of detailed records for Afghans, many of whom share the same first name, do not have a family name, give only approximate birthdates and claim nonexistent or varying places of birth.

Whether the Taliban choose to build relationships with al-Qaida and the Islamic State or avoid those and other existing or nascent terrorist groups will dominate the agenda of U.S. intelligence and law enforcement agencies in the years ahead, said Lormel, the former FBI official who now heads DML Associates, a consultancy in Virginia.

The FBI’s decision to shutter the Terrorist Financing Operations Section two years ago and fold its staff and resources into its larger counterterrorism division makes accurate assessments of the Taliban’s intentions more difficult to come by, said Lormel.

The bureau did not announce the decision publicly, and declined to provide comment to

“When I was at TFOS, I’d reach out to all my contacts inside banks, especially international banks that might have touch points, to provide them with any intelligence I could to help them identify relevant funding flows,” Lormel said. “This is one of those times that not having a TFOS hurts, because you don’t have the level of financial intelligence you’d otherwise have.”

Contact Valentina Pasquali at

Topics : Counterterrorist Financing , Sanctions , Anti-money laundering
Source: Afghanistan , U.S.: Department of Treasury , U.S.: OFAC , U.S.: Department of State
Document Date: August 18, 2021