The repercussions of the Biden administration’s hasty and poorly
the planned removal of troops from Afghanistan has sent shockwaves
throughout the region and the rest of the world. The oppressive Taliban
regime quickly and forcefully took a stranglehold over the country resulting
in a massive humanitarian crisis and posing significant national security
concerns for the United States and many of its respective allies. With the
Taliban’s reign of terror once again hitting the greater Middle East,
intelligence officials fear Afghanistan will once again become a haven for
Islamic extremism and terrorism. Aside from the immediate risks posed by
these developments, many have also begun to speculate as to just how
significant the effects of these transgressions may be on the global financial
system.
As most individuals familiar with the U.S. financial sector might
remember, the terrorist attacks of September 11th 2001 became the primary
catalyst behind the growth of America’s stringent anti-money laundering
and counter-terrorism financing regulations evolving into what they are
today. The bulk of these regulations were designed primarily to prevent
organized criminal and terror organizations from successfully laundering ill-
gotten funds to back their oft-destabilizing activities. Now with Afghanistan
returning to a similar state, will we see current regulations become even
more rigorous? Many believe so. Thus far there remains a fair amount of
uncertainty/confusion on the issue of sanctions with respect to Afghanistan.
Previous guidance provided by top international anti-money laundering
watchdog, the Financial Action Task Force (FATF), warned its constituents
that they must freeze the assets of the Taliban with no questions asked
given the group’s designation as a foreign terrorist organization by multiple
world powers. Where things become complicated however is when one
considers the fact that given that the Taliban is now in power in
Afghanistan, should these two entities be considered one in the same?
Financial institutions have effectively been left in the dark as well in
this regard, unable to proceed with processing certain transactions and
unsure as to whether maintaining relationships with clients based in the
Middle East will now be called into question out of fear of receipt of
sanctions or financial penalties in their own right. Additionally, this
uncertainty is also likely to affect the channeling of much needed
humanitarian aid to the citizens of the Middle Eastern country struggling in wake of the takeover. To date, two U.S. money-transfer services – Western
Union and MoneyGram International – have suspended payments into
Afghanistan indefinitely. American financial firms in general have also
begun to inspect transactions related to their Afghan affiliates far more
carefully as they continue to await much needed clarity and leadership on
the Biden administration’s behalf. The greater U.S. financial industry has
also sought answers from the Treasury Department’s Office of Foreign
Assets Control (OFAC), but has thus far been unsuccessful. Giving his take
on the current state of affairs from a banking perspective, former top
official at the U.S. Office of the Comptroller of the Currency Dan Stipano
stated “nobody wants to be in a position where they’re in the role of
facilitating payments to terrorists, for obvious reasons, and nobody wants to
have a sanctions violation.”1
In the meantime all banks can do is monitor and scrutinize Afghan-
related entities and transactions while they are stuck in this indeterminate
limbo – especially since the Taliban has been forced to get creative with
fundraising through off-the-grid banking systems that are often difficult for
U.S. forces to counter. The United States government is in the process of
figuring out how to further constrict funds being funneled to the Taliban
despite its increasingly complex channels of funding, which is a rather tall
task. Bloomberg writes that over the past month or so, the U.S. has frozen
roughly $9 billion in assets belonging to Da Afghan Bank (DAB), the nation’s
central bank, with roughly $7 billion of that now in the hands of the Federal
Reserve Bank of New York.2 American authorities have also targeted hawala
networks attempting to assist terrorists in moving money. Overall however,
it appears the Biden administration is employing a “wait and see” approach
before making any additional decisions with respect to the Taliban. For
now, all banks can do is their best to be on alert with anything remotely tied
to Afghanistan.
Citations
1. Mohsin, Saleha. “Bank-Averse Taliban Leave U.S. Struggling for
Financial Edge.” Bloomberg.com, Bloomberg, 18 Aug. 2021. 
2. RockemanMarch, Olivia, and Reade Pickert. “The U.S. Unemployment
System Is Plagued by $63 Billion in Fraud and
Dysfunction.” Bloomberg.com, Bloomberg, 23 Mar. 2021. 

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3U.S. Military Debacle in Afghanistan Leaves Financial
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