2023-Public-Sector-Perspectives

Afghanistan: Finding a compliant way to fund programs The withdrawal of US armed forces from Afghanistan in August 2021 and the return to power of the Taliban led to the widespread failure of electricity supplies, road networks and other infrastructure across the country. Afghanistan was already facing acute challenges but the extent of its health and food crises in particular has deepened dramatically. There have been outbreaks of measles, diarrhea, polio and other preventable diseases as health services have been disrupted. Drought and economic collapse mean that around six million Afghans are on the brink of famine while 18 million are acutely food-insecure. 2 NGOs and multilateral humanitarian agencies had long operated in the country but in response to these new humanitarian challenges sought to intensify their efforts to support local people through various programs and aid initiatives. In doing so, they faced a critical challenge, however. When the Taliban took over, there was an immediate imposition of international sanctions on Afghanistan. Humanitarian organizations needed to find legal and compliant ways to fund their programs and overcome sanctions and logistical challenges. While the Taliban took direct control of many economic entities across the country, a handful of banks were allowed to retain some independence, in tacit acknowledgement of Afghanistan’s continuing dependence on aid and therefore the need for international organizations to access the country’s banking infrastructure. Working with its humanitarian sector clients, Citi identified the most suitable channel for the distribution of funds within Afghanistan while ensuring compliance with both internal and regulatory requirements. Citi was able to implement a secure channel into the country by leveraging a relationship with an existing correspondent banking partner that specializes in emerging and frontier markets and leveraging that bank’s connectivity to a selected local bank. To implement this channel, Citi followed an enhanced due diligence process to ensure compliance with Citi’s risk and control framework as well as OFAC requirements. The solution put in place enables humanitarian sector clients to fund into local accounts in Afghanistan so that aid, wages and payment for local services and operations would continue to flow. 2 https://www.wfp.org/stories/afghanistan-risks-winter-famine-after-devastating-year# 6 Responding to Humanitarian Crises: Navigating Through Ongoing Uncertainty