The Special Inspector General for Afghanistan Reconstruction (SIGAR) issued a report warning about the Taliban’s interference in the affairs of Da Afghanistan Bank (DAB). According to SIGAR, the Taliban’s nullification of Afghanistan’s constitution has resulted in the abolition of the banking law and the central bank’s legal independence. The U.S. Special Inspector pointed out that two Taliban officials, who are on the United Nations sanctions list, now head the central bank. This move has jeopardized the assets of Afghanistan’s Swiss-based Trust Fund, with concerns about their recovery.
SIGAR emphasized that the United States will withhold support for the return of financial assets from the Swiss-based Trust Fund to the central bank of Afghanistan until sufficient evidence is provided to prove the absence of Taliban interference and infiltration, ensuring the prevention of money laundering and financing of terrorist groups. Previously, the United States deemed the situation unacceptable when attempting to access the central bank, now controlled by the Taliban, to release $3.5 billion in assets from the Trust Fund.
The U.S. Special Inspector General for Afghanistan Reconstruction (SIGAR) has issued a warning through a published report about the Taliban’s intervention in Da Afghanistan Bank (DAB) affairs. SIGAR stated that the Taliban’s actions have undermined Afghanistan’s constitution, which previously safeguarded the banking law and the central bank’s legal independence. The U.S. Special Inspector further added that the Taliban have appointed two of its officials to lead the central bank, both of whom are on the United Nations sanctions list. This move, as mentioned in the report, raises concerns about the independence of the bank and increases worries about money laundering and financing terrorist groups.
SIGAR also emphasized that the Taliban’s interference in the central bank’s operations has put the assets belonging to Afghanistan’s Swiss-based Trust Fund at risk. The report highlights the potential risks to Afghanistan’s economy and the assets of Afghanistan’s Swiss-based Trust Fund if they are eventually returned.
The U.S. Special Inspector, in its report, emphasizes that the long-term goal of Afghanistan’s Swiss-based Trust Fund is the return of $3.5 billion from the assets of Da Afghanistan Bank (DAB). However, the Taliban’s nullification of Afghanistan’s constitutional law has raised concerns about the banking law and the independence of the central bank, and the appointment of two individuals with a dual military-civilian role at the helm of the Da Afghanistan Bank (DAB) poses a risk to the funds not being returned to the central bank.
In the SIGAR report, it is stated that if specific criteria, including sufficient evidence of non-interference and political influence by the Taliban in controlling and overseeing to prevent of money laundering and financing terrorist groups, are not met, the United States, especially the Department of the Treasury, will not support the return of Afghanistan’s Swiss-based Trust Fund to the country’s central bank.
The U.S. Special Inspector, citing Deputy Secretary of the Treasury, Wally Adeyemo, mentioned in the report that the Taliban’s mismanagement of the economy has exacerbated Afghanistan’s long-term economic challenges. The report highlights that “Taliban’s repression and economic mismanagement have reduced the capacity of key economic institutions in Afghanistan and made the return of these financial resources to Afghanistan indefensible.”
In this recent report, SIGAR emphasizes that international supervision of Da Afghanistan Bank (DAB)’s operations is crucial and will be instrumental in building international confidence for the return of $3.5 billion from the Trust Fund in the long term. According to SIGAR, this will be achieved when the Taliban commit to appointing two impartial and non-political technical experts instead of their two officials to ensure the revival of the capacity and independence of Da Afghanistan Bank (DAB), which is necessary for the return of the Trust Fund assets.
The U.S. Special Inspector, citing an unnamed official from the U.S., stated that at the time of establishing Afghanistan’s Swiss-based Trust Fund, the Taliban did not provide any assurance that the financial amounts would not be diverted for “nefarious or malicious purposes.” The report issues a warning that even if the Taliban adhere to U.S. criteria for transferring financial funds to the central bank, significant risks will remain in ensuring the intended use of the transferred money by the Taliban.
In the 52-page report published by SIGAR on Afghanistan, it is mentioned that the absence of an official U.S. presence in Afghanistan has made effective oversight of the country’s central bank more challenging. Based on the report, in such a situation, even monitoring the activities of the Swiss-based Trust Fund will be difficult.
John Sopko, the head of the U.S. Special Inspector General for Afghanistan Reconstruction (SIGAR), questions in this report how Afghanistan’s Swiss-based Trust Fund’s board operates, and what type of information they will provide. He also inquires about the decisions made by the board and the criteria for gathering and verifying this information from the central bank, which is now under the control and influence of the Taliban.
The report also mentions the collapse of Kabul Bank in 2010 and how it has highlighted challenges in banking oversight in Afghanistan, with its repercussions still affecting the country’s banking system.
SIGAR adds that the foreign Trust Fund, which creates a parallel functioning of the central bank, may be the only option for the desired economic management. According to the institution, there will be no progress in returning the $3.5 billion in the Trust Fund to the Central Bank of Afghanistan until the Taliban assure that they will use this Trust Fund as intended by the United States.
This comes as the U.S. Department of the Treasury had previously announced its refusal to accept the audit of the central bank under Taliban control for the release of $3.5 billion in assets from the Trust Fund. The institution emphasized that the central bank under Taliban control has failed to provide the necessary transparency.
It is worth noting that Afghanistan’s Swiss-based Trust Fund was established last year with the purpose of safeguarding $3.5 billion of the currency reserves. However, the continued operation of this Trust Fund and the oversight, data collection, and assurance of the observers regarding the central bank are still subjects of suspicion and questioning by the United States. Currently, this Trust Fund is supervised by a board consisting of representatives from the United States, Switzerland, and two former Afghan government officials. The fund, based in Geneva, Switzerland, is responsible for all financial transactions and banking activities, payment of Afghanistan’s international debts, import duties on electricity, and also meeting the future printing needs of currency, which has been referred to by some as a parallel central bank too.