US allows personal remittances to flow into Afghanistan by Reuters

© Reuters. FILE PHOTO: A sign at the US Treasury headquarters in Washington, DC, US, August 29, 2020. (Reuters) / Andrew Kelly / File Photo

By Andrea Shalal

WASHINGTON (Reuters) – The United States has notified financial institutions that they may process personal transfers To Afghanistan, a Treasury spokesperson said Thursday, is a step taken along with steps to ensure the continued flow of humanitarian aid.

The decision to allow the transfer of funds may provide some relief to the Afghan economy, which is close to collapse after moves by the United States and other countries to halt foreign aid and freeze about $9 billion in Afghan assets after the Taliban took control on August 15.

Many Afghans rely heavily on payments to migrant workers abroad. World Bank data puts remittances at $789 million in 2020, or just over 4% of Afghanistan’s GDP.

Western Union (NYSE 🙂, the world’s largest money transfer company, and MoneyGram suspended both of these services after the Taliban takeover, Closing a major source of funds on which many families depend to pay for food.

The spokesperson said the US Treasury Department’s guidance from OFAC in response to last week’s inquiries paved the way for these service providers to resume operations in Afghanistan, but it also applies to banks and other financial institutions.

Western Union said Thursday it is resuming money transfer services to Afghanistan, He said the decision is in line with a US effort to allow humanitarian activity to continue.

On August 25, the Treasury Department issued a license authorizing the The United States and its partners continue to facilitate humanitarian assistance, including the delivery of food and medicine, despite US sanctions on the Taliban.

Typically, most payments migrant workers send to Afghanistan come from Iran, Saudi Arabia, Britain, Germany and the United States.

The Afghan economy is highly dependent on cash and there are few banks, which makes remittances very important. Financial experts said sanctions against the Taliban could make broader financial institutions reluctant to deal with private money transfers, despite Treasury guidance.

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