The Imran Khan government's recent bid to raise funds for the new rulers in Kabul has been shot down by the State Bank of Pakistan (SBP) amid fears that financing of the Taliban regime could invite international sanctions, according to a media report.
Pakistan's Finance Ministry has been advised by the SBP against domestic and foreign donations to the government of Afghanistan Relief Fund that funnelling funds to the Afghan government without involving "international organizations of repute" could result in sanctions from the Financial Action Task Force (FATF), an international anti-money laundering and terror finance watchdog, reported Asia Times.
FATF is set to review Pakistan's performance on various metrics next month. Notably, Pakistan has been on the Paris-based watchdog's "grey list" since June 2018. So far, two key FATF action items have not been met by Pakistan which are necessary to get the country removed from the grey list. It includes the prosecution and confiscation of assets of UN-designated terrorists.
This is the first time that Pakistan's autonomous central bank SBP has stood against the government's relief fund plan since legislation was tabled towards making it more independent, said Asia Times.
Pakistan's central bank is undergoing some autonomy-enhancing reforms under a deal with the International Monetary Fund (IMF) for a $6 billion extended fund facility.
The SBP in late December was approached by the Pakistan government through its finance division to open a collection account for its Afghanistan Relief Fund. It proposed that disbursements from the new fund to the Taliban could be made through banking channels.
However, the SBP countered that the transfer of funds directly to Afghanistan "through banking channels could be challenging". The central bank proposed that instead of that disbursement from the fund could be made through international relief organizations or extended by the government as "in-kind" support to help Afghans who now face acute food shortages, according to Asia Times.
The SBP also conveyed to the government that opening fund accounts at overseas bank branches would require the authorization of foreign regulatory bodies, a time-consuming and cumbersome process - particularly in light of Pakistan's FATF "grey list" designation.
The Imran Khan government has continuously tried to soften the world's stance on the Taliban and has urged countries to recognise the new government in Kabul. But the countries have declined to give formal recognition.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)