US-funded audit of Da Afghanistan Bank fails to win approval for return of frozen assets

A US-funded audit of the Taliban-controlled Central Bank of Afghanistan (DAB) did not win approval from Washington for the return of bank assets from a $3.5 billion Swiss-based Afghan fund, Reuters reports.

The Swiss-based Afghan Fund, established last year with half of the frozen $7 billion in central bank funds, was intended to help Afghanistan through the financial crisis. However, the US Treasury maintains that DAB must undertake reforms before supporting disbursements from the fund.

According to Reuters, the audit, funded by USAID and conducted by an external contractor, examined DAB’s controls against money laundering and terrorism financing, as well as its banking oversight and payments departments. The final results of the audit are still pending, and a more comprehensive assessment is needed.

“Da Afghanistan Bank must show that it is free from political influence and interference,” a US Treasury official told Reuters, referring to the need to replace the three Taliban officials who oversee the bank with professional bankers who are not under US or UN sanctions.

The official also stressed that the Taliban must prove that they have “adequate” controls against money laundering and terrorist financing and install a “reputable” independent monitor.

According to Reuters, among the concerns in Washington and other capitals is the leadership of the bank and its anti-money laundering measures. The Taliban’s demand for the return of DAB cash frozen in the US and other countries has been a point of contention.

The Taliban has not commented.

Following the Taliban’s takeover of Afghanistan, The US government froze US$7 billion in Afghan central bank assets that were held in reserve. Later, this amount was divided in half. US$3.5 billion was transferred to a trust fund in Switzerland, while the other half is currently subject to a legal claim by victims of the 9/11 attacks.