The Taliban’s swift takeover of Afghanistan casts a long shadow over the country’s financial system and imperils the flow of humanitarian aid to the besieged nation, sources told ACAMS moneylaundering.com.
After nearly 20 years of U.S. occupation, the Islamist militia took less than a week to wrest control of 33 of 34 provinces from Afghan security forces and march into Kabul, the nation’s capital, on Sunday. By that point, many senior leaders of the democratically elected Afghan government, including President Ashraf Ghani, had already fled the country.
The chaotic transition and power vacuum will prompt financial institutions in the U.S. and around the world to reassess any links they may have to public or private entities in Afghanistan, and further restrict such dealings while awaiting new guidance or sanctions designations from the U.S. Treasury Department or the U.N.
As a result of their conquest, the Taliban now control a $20 billion, largely cash-based economy dependent on agriculture, mining, construction, foreign aid and the illegal opium trade, said Joshua Potter, a veteran of Iraq, Syria and Afghanistan who led the Transnational Threats Division at the U.S. Special Operations Command in Tampa, Florida.
“The Taliban have access to the full complements of the economy: the banking system, credit cards, remittance payments,” Potter, now deputy executive director of the International Coalition Against Illicit Economies in Washington, D.C., said. “Without a doubt, every financial institution arrived at work on Monday morning with orders to determine their exposure.”
Since 1999, when the White House labeled Taliban-controlled Afghanistan uncooperative with counterterrorism efforts, the U.S. and U.N. have imposed several rounds of sanctions against the group and its leaders, including in neighboring Pakistan.
But the militia has thus far avoided inclusion on the State Department’s list of foreign terrorist organizations, or FTOs, which currently comprises Nigeria’s Boko Haram, Iran’s Islamic Revolutionary Guard Corps among dozens of other groups around the world.
Nevertheless, when ex-President Donald Trump pledged to seek the lifting of U.N. sanctions on the Taliban in February 2020 and withdraw U.S. troops from Afghanistan by May of this year, analysts told moneylaundering.com that banks would still refrain from engaging with the militia because of its ties to al-Qaida, the Islamic State group and other designated organizations.
Their reticence and caution may now extend to all government entities and state-owned enterprises in Afghanistan, including the central bank, or Da Afghanistan Bank, now that the Taliban are slated to control them, said Brian O’Toole, a former senior official with Treasury’s Office of Foreign Assets Control.
“U.S. banks are going to be stuck in a weird place until they get more clarification from Treasury on whether the Taliban running the government essentially means they ‘own’ public entities,” said O’Toole, now with the Atlantic Council in Washington, D.C. “In the interim, and pending new guidance, banks might just default to the safer approach and treat them as blocked.”
A U.S. official told AFP on Monday that Da Afghanistan Bank would no longer have access to any assets held in the United States.
Depending on how the Taliban structure their government and economy and whether U.S. officials impose new financial restrictions on the group, payments to and from private companies and individuals in Afghanistan may also face new barriers, O’Toole said.
The U.N. lifted sanctions on the Agricultural Development Bank of Afghanistan, Bank Millie Afghan, Afghan National Bank and the Export Promotion Bank of Afghanistan, along with the central bank, in January 2002, after U.S. forces overthrew the Taliban in response to the Sept. 11 terrorist attacks and the group’s support of al-Qaida.
Several private lenders such as Afghanistan International Bank, Azizi Bank and Maiwand Bank, have also emerged over the past two decades.
A senior compliance officer for an Asian bank’s affiliate in New York said their institution already views Afghanistan as highly vulnerable to illicit finance and subjects transactions to and from the country to enhanced scrutiny.
“I do think it’s likely that comprehensive U.S. sanctions on Afghanistan are on the table, so we are bracing for that,” the compliance officer said on condition of anonymity.
The possibility that foreign banks will rapidly withdraw from Afghanistan in the wake of the Taliban’s conquest may also impact the continued flow of humanitarian goods and financial assistance to the nation, just as it is now entering a potentially indefinite period of economic, political and social uncertainty.
To prevent a humanitarian disaster, payment networks, money transmitters and banks should adopt a “tiered approach” and continue processing aid-related transactions, at least in the near term, said Sarah Beth Felix, chief executive of Palmera Consulting in Austin, Texas.
“While the central bank is now presumptively under the control of Taliban leaders, I don’t think that all of the rights can be turned over that quickly to them,” Felix said. “Barring any immediate restrictions announced by the U.S. and U.N., I hope that the next week will see humanitarian aid flow through.”
Daniel Bethencourt contributed to this story.
Contact Valentina Pasquali at email@example.com and Daniel Bethencourt at firstname.lastname@example.org
|Topics :||Counterterrorist Financing , Sanctions|
|Source:||Afghanistan , U.S.: Department of Treasury|
|Document Date:||August 16, 2021|