Review found Afghan central bank lacks independence from Taliban - US watchdog

An evaluation funded by the United States into Afghanistan’s central bank has revealed a lack of autonomy from the Taliban administration, as well as inadequate measures to combat money laundering and terrorism financing, according to a report by a U.S. oversight body presented to Congress on Tuesday, Reuters reports.

In a previous report by Reuters, the findings of this assessment, which had not been publicly disclosed at that point, were cited as a factor leading to Washington’s reluctance to support the release of central bank assets held within a $3.5 billion trust fund situated in Switzerland.

The U.S. Special Inspector General for Afghanistan Reconstruction (SIGAR), in its quarterly report to Congress, unveiled that the assessment identified deficiencies in the management of the central bank, also referred to as Da Afghanistan Bank (DAB).

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According to SIGAR, the evaluation underscored that the DAB lacked the necessary independence from the Taliban regime and exhibited weaknesses in its anti-money laundering and counter-terrorism financing mechanisms.

Conducted by an external contractor, the review received funding from the U.S. Agency for International Development.

The specific reference to the DAB’s lack of independence pertains to the bank’s oversight by three Taliban officials who are subject to sanctions imposed by both the U.S. and the United Nations. These concerns, along with worries in various capitals, form the crux of the impasse concerning the Taliban’s request for the release of frozen DAB assets held in foreign countries since their ascent to power following the U.S. troop withdrawal in August 2021.

Approximately half of the approximately $7 billion frozen in the U.S. Federal Reserve Bank of New York was allocated to the Swiss trust fund. The remaining sum is being contested through legal actions against the Taliban, initiated by families of victims of the September 11, 2001 attacks on the United States. Notably, the Taliban harbored members of al Qaeda who were responsible for planning those attacks.

An anonymous U.S. Treasury official informed Reuters last month that Washington would withhold support for the release of assets from the Swiss trust fund to the DAB until the bank could demonstrate its freedom from “political influence and interference.” Additionally, the DAB needs to exhibit “sufficient” measures against money laundering and terrorism financing, the official emphasized.

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