US sets up fund that could transfer frozen assets to Afghanistan

Washington is to set up a new fund that could eventually serve as a mechanism to free up Afghanistan’s frozen assets in order to promote economic stability in the country, senior US officials told CNN.

According to the officials, the Biden administration has worked with Switzerland and Afghan economists to set up this fund.

The US is moving $3.5 billion to the new “Afghan Fund,” but officials said they won’t release the money imminently because there is no trusted institution in Afghanistan to guarantee the funds will benefit the Afghan people, CNN reported.

Afghanistan’s central bank, Da Afghanistan Bank, issued a statement on Wednesday stating that it “deems any decision on allocation, using and transferring of the assets for irrelevant purposes unacceptable and wants it to be reconsidered.”

The statement notes that the assets are for the stability of currency, strengthening of the financial system and facilitating trade.

According to Turkey’s TRT news outlets, the funds will be transferred to the Bank of International Settlements in Basel, Switzerland, and the U.S. will set up a trusteeship to oversee the disbursement of the money for the purposes of both monetary policy and humanitarian aid.

“The [Da Afghanistan Bank] funds belong to DAB and should be returned to Afghanistan,” said Suhail Shaheen, a spokesperson for the IEA who serves as head of the political office.

“In this critical time when 99% of Afghans are living under the poverty line, it is direly needed that the reserve[s] return to the country.”

However, a US official told CNN that transferring these funds to the Afghan central bank will depend on two key factors: responsible management of the bank and assurances that the funds will not be diverted to terrorists or criminals.

“We do not have that confidence today,” said a senior US official. At minimum the Afghan central bank will need to “demonstrate its independence from political influence and interference.”

The officials also said DAB will also need to demonstrate it has “instituted adequate anti-money laundering and countering the financing of terrorism controls” and “complete a third party needs assessment and onboard a reputable third party monitoring,” the official explained.

CNN reported that it reviewed a letter sent to DAB this week from the US deputy secretary of the Treasury, which mapped out steps DAB needed to take. The letter cites the need for DAB to demonstrate independence from IEA influence and interference, among other expectations, CNN reported.

Earlier this year President Joe Biden signed an executive order allowing for the $7 billion in frozen assets from Afghanistan’s central bank to eventually be distributed inside the country and to potentially fund litigation brought by families of victims of the September 11, 2001, terror attacks.

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