On 1 November 2021, the UK Office of Financial Sanctions Implementation (“OFSI“) published an updated Charity Sector Guidance and a blog post in response to Afghanistan’s Taliban takeover in August. A copy of the Guidance is available here.
The Afghanistan (Sanctions) (EU Exit) Regulations 2020 put in place sanctions measures to ensure the UK continues to meet its obligations under the United Nations sanctions regime. While the UK has enforced financial sanctions relating to Afghanistan since 1999, OFSI notes that it has not implemented sanctions against the Taliban as an entity but has designated a number of Taliban members, and the UK is unable to grant a humanitarian licence for dealings with such sanctioned persons in the absence of an applicable derogation in the relevant UN resolution.
The updated Guidance also includes information on due diligence when using Informal Value Transfer Systems (“IVTS“) such as Hawala systems that widely operate in Afghanistan. If charities or NGOs use IVTS to transfer and move funds, charity trustees must be able to show that this is a reasonable decision in the circumstances, and the risks have been appropriately managed. If the only option is to facilitate a payment through Hawala banking, OFSI advises that charities and NGOs should:
- obtain as much information as possible about the Hawala provider and the parties involved prior to making the transaction; and
- discuss the payment route with their bank in advance.
OFSI will soon organise a webinar with the Charity Commission of England and Wales targeted at charities operating in high-risk jurisdictions, including Afghanistan, to provide further guidance on these issues.