The Afghan central bank, also known as Da Afghanistan Bank (DAB), lacks independence from the Taliban administration and fails to meet anti-money laundering and counter-terrorism financing standards, according to a U.S.-funded assessment. The assessment, which was disclosed by the U.S. Special Inspector General for Afghanistan Reconstruction (SIGAR) in a quarterly report to Congress, highlighted flaws in the management of the central bank.
This assessment comes amidst a standoff between the Taliban and the international community over the return of DAB cash frozen in other countries since their takeover. While half of the frozen funds were placed in a $3.5 billion Swiss-based trust fund, the remaining funds are being sought in lawsuits against the Taliban brought by families of the victims of the 9/11 attacks. These frozen assets will not be returned until DAB demonstrates independence from political influence, adequate controls against money laundering, and terrorism financing.
The lack of independence from the Taliban regime may be attributed to the presence of three Taliban officials overseeing the central bank, who are already under U.S. and U.N. sanctions. The concerns over the bank’s leadership and anti-money laundering safeguards have prevented Washington from supporting the return of the assets held in the Swiss-based trust fund.
The U.S. Agency for International Development funded the assessment by an external contractor, emphasizing the importance placed on securing a robust and independent central bank. The need for strong safeguards against money laundering and terrorism financing is crucial for the international community to engage effectively with the Taliban administration and ensure the legitimacy of financial transactions.
The deadlock over the frozen assets underscores the challenges faced by Afghanistan in establishing economic stability and regaining trust from the global financial system. With concerns over the Taliban’s administration of the central bank, it is essential for DAB to address these shortcomings and demonstrate a commitment to financial transparency and compliance with international standards.
While the assessment’s findings are concerning, it is important to note that efforts are being made by both the international community and organizations such as SIGAR to evaluate and address these issues. The disclosure of the assessment’s results to Congress highlights the transparency and accountability of the assessment process, providing an opportunity for oversight and corrective measures to be taken.
As Afghanistan navigates its path forward, the independence and effectiveness of its central bank will play a crucial role in rebuilding its economy and restoring global confidence. The international community will closely monitor the steps taken by DAB to rectify the identified deficiencies and ensure that the banking system is free from political interference, adequately guards against money laundering, and effectively combats terrorism financing.
In conclusion, the U.S.-funded assessment has revealed significant shortcomings in the independence and anti-money laundering safeguards of Afghanistan’s central bank. The lack of adequate controls poses challenges for the return of frozen assets and underscores the importance of financial transparency and compliance with international standards. The international community will closely monitor progress in addressing these issues and supporting Afghanistan’s efforts to establish an effective and independent central bank.
