Taliban-controlled central bank fails to meet criteria for return of assets

The co-chair of the Afghan Trust Fund in Switzerland has reiterated his team’s commitment to the ultimate goal of returning nearly $3.5 billion of Afghanistan’s frozen assets to the country’s central bank. However, so far this has not happened due to the Taliban-controlled bank’s failure to meet certain conditions.

Shah Mehrabi, the co-chair of the Swiss-based trust, says the bank has no access to its reserved assets.

He said that an auditing firm funded by USAID conducted a comprehensive audit of Da Afghanistan Bank, DAB, or the central bank, over the course of three to four months to evaluate compliance with respect to the conditions on getting the foreign reserves returned.

“While the audit report was completed in March, it has not been made public yet. Once released, the findings will be thoroughly examined,” Mehrabi said.

Mehrabi, in his role as a trustee, emphasized his commitment to protecting and preserving the funds, along with any interest generated, with the ultimate objective of recapitalizing the central bank.

The recent audit failed to secure Washington’s support for releasing bank assets from the $3.5 billion Swiss-based trust fund, as reported by Reuters on July 21.

The audit’s results have not altered the US Treasury’s stance, which asserts that the bank must implement reforms before the department can endorse disbursements from the Afghan Fund to Da Afghanistan Bank (DAB), the central bank.

According to a US Treasury official, who asked to remain anonymous, DAB must demonstrate independence from political influence and interference, necessitating the replacement of the three Taliban officials currently overseeing the bank, all of whom are under US and UN sanctions.

Moreover, DAB must establish “adequate” controls against money laundering and terrorism financing and appoint a “reputable” independent monitor, as demanded by the Treasury official.

Over the past year, Afghanistan’s assets in the Bank of International Settlements in Switzerland has earned more than $30 million in interest.

As per conditions, the Afghan Trust Fund, governed by the four-member board, must secure unanimous approval for any payments, with the support of the US representative also being crucial.

Recent appointments have seen Anwar-ul-Haq Ahadi and Shah Mohammad Mehrabi selected as co-chairmen of the fund.

Experts and analysts view the return of $3.5 billion of Afghanistan’s assets to the central bank as a critical step to alleviate the country’s ongoing financial crisis. However, the challenging circumstances and requirements set by the US Treasury have created complexities in achieving this goal.