The United States Special Inspector General for Afghanistan Reconstruction (SIGAR) reported to Congress on the status of the Afghan Fund. The report was in response to a Congressional request for information on the Switzerland-based Afghan Fund that has about $3.5 billion in assets.
Establishment of the Afghan Fund. The Fund was established in September 2022 with the intent to preserve the money for the purpose of critical economic measures. In the short-term, the Fund would promote monetary and macroeconomic stability. In the long-term, the Fund would provide unused monies to be returned to the DAB, to recapitalize the bank. The money came from the central bank reserves of Afghanistan held in U.S. financial institutions which were frozen by the United States by an executive order after the Taliban assumed power in August 2021. The money is not to be used for humanitarian or development assistance.
No Disbursements Yet. The purpose of the fund is to manage the assets for the benefit of the Afghan people; however, thus far, no disbursements have been made. The primary reason for not passing funds to Afghanistan is that the U.S. believes that the Kabul central bank, the Da Afghanistan Bank (DAB), lacks adequate anti-money laundering measures and there is no guarantee that the money would not be used by the Taliban for nefarious purposes. DAB is thought to be under the control of the Taliban regime.
Synopsis of SIGAR Report. In the report to Congress SIGAR states that the Fund currently has “no specific controls in place to ensure funds are not diverted to or misused by the Taliban.” However, it states that a compliance program is currently under development. The SIGAR report discusses whether the Central Bank is ready for recapitalization, vetting process for the Fund’s board of trustees, and due diligence in contracting. SIGAR also states “that certain aspects of the Fund warrant further scrutiny” and recommends several actions for Congress to request from the U.S. Department of State and Department of Treasury.
SIGAR Testimony Before House Foreign Affairs Committee, January 4, 2024, PDF, 55 pages