Category Archives: Terrorism

Afghanistan Bank Governor on Economic Prospects

Ajmal Ahmady, the acting Governor of the Central Bank of Afghanistan, Da Afghanistan Bank (DAB) in the ousted government has continued to post a series of tweets about events in the country. He answered questions about the country’s reserves, future relations with the IMF, relations with the US, management of the budget and deficit and the local banking sector.

1. Ajmal Ahmady @aahmady This thread is to clarify the location of DAB (Central Bank of Afghanistan) international reserves.

I am writing this because I have been told Taliban are asking DAB staff about location of assets. If this is true – it is clear they urgently need to add an economist on their team.

2. First, total DAB reserves were approximately $9.0 billion as of last week.

But this does not mean that DAB held $9.0 billion physically in our vault. As per international standards, most assets are held in safe, liquid assets such as Treasuries and gold.

3. The major investment categories include the following assets (all figures in billions):

(1) Federal Reserve = $7.0

  • U.S. bills/bonds: $3.1
  • WB RAMP assets: $2.4
  • Gold: $1.2
  • Cash accounts: $0.3

(2) International accounts = 1.3

(3) BIS = $0.7

4. Interesting note was that the IMF had approved a SDR650 billion allocation recently.

DAB was set to receive approximately $340 million on August 23rd. Not sure if that allocation will now proceed with respect to Afghanistan.

5. Given Afghanistan’s large current account deficit, DAB was reliant on obtaining physical shipments of cash every few weeks.

The amount of such cash remaining is close to zero due a stoppage of shipments as the security situation deteriorated, especially during the last few days.

6. On Friday morning, I received a call notifying me that there would be no further USD shipments (we were expecting one on Sunday, the day Kabul fell).

On Saturday, banks placed very large USD bids as customer withdrawals accelerated.

7. For the first time, I therefore had to limit USD access to both banks and dollar auctions to conserve remaining DAB dollars.

We also put out a circular placing maximum withdrawal limits per customer. During the day, afghani depreciated from 81 to almost 100 and then back to 86.

8. On Saturday at noon, I met with President Ghani to explain that the expected Sunday dollar shipment would not arrive.

On Saturday evening, President Ghani spoke with Secretary Blinken to request dollar shipments to resume. In principle it was approved.

9. Again, seems ridiculous in retrospect, but did not expect Kabul to fall by Sunday evening.

In any case, the next shipment never arrived. Seems like our partners had good intelligence as to what was going to happen.

10. Please note that in no way were Afghanistan’s international reserves ever compromised.

Assets are all held at Fed, BIS, RAMP, or other bank accounts. Easily audited. We had a program with both IMF and Treasury that monitored assets. No money was stolen from any reserve account.

11. Given that the Taliban are still on international sanction lists, it is expected (confirmed?) that such assets will be frozen and not accessible to Taliban.

I can’t imagine a scenario where Treasury/OFAC would given Taliban access to such funds.

12. Therefore, we can say the accessible funds to the Taliban are perhaps 0.1-0.2% of Afghanistan’s total international reserves. Not much.

Without Treasury approval, it is also unlikely that any donors would support the Taliban Government.

13. I believe local banks have told customers that they cannot return their dollars – because DAB has not supplied banks with dollars.

This is true. Not because funds have been stolen or being held in vault, but because all dollars are in international accounts that have been frozen.

14. Taliban should note this was in no way the decision of DAB or its professional staff.

It is a direct result of US sanctions policy implemented by OFAC. Taliban and their backers should have foreseen this result. Taliban won militarily – but now have to govern. It is not easy.

15. Therefore, my base case would be the following:

  • Treasury freezes assets
  • Taliban have to implement capital controls and limit dollar access
  • Currency will depreciate
  • Inflation will rise as currency pass through is very high
  • This will hurt the poor as food prices increase.

Nairobi Riverside Terror Attack

Here are some noteworthy moments covered on Twitter.

The calm shatters.

First documentary video of the attack by journalist John Allan Namu.

Some early advice.

Breaking news advice.

This is a Twitter thread, but Facebook has more reach in a crisis.

Volunteer first responders.

Pleas for help.

Mistaken identity.

Victims

Terrorism has no religion, tribe, or colour. Islam does not condone terrorism.

Survivors and Survival Tales

 

Keep hope alive.

Police lines.

Bank customers okay.

Others Tales

The foreign media, and the New York Times become a talking point.

Situation updates by the Police.

Calls for support.

Corporate support for the responders.

Counseling and therapy services.

Support the victims’ families.

Supporting business continuity.

Lessons learnt.

14 Riverside reopens on January 28.

Remain vigilant! – US Embassy cautions.

Bank manager charged with failing to report suspicious funds transactions linked to the attack.

 

Hotel Reopens – August 1, 2019.

Flag flies around the world to six countries, passing Bhutan, Thailand, Cairo, China, and Dubai in honour of the hotel’s fallen heroes.

Hotel ceremonies to mark the reopening.

Cellulant wins an award for resilience from the Business Continuity Institute (BCI) – Jan 14 2020.

What other notable tweets did you see this week?

Kenya’s CBK risk safeguards against bank laundering and terror financing

The Central Bank of Kenya (CBK) has published new guidelines to assist Kenyan banks to assess and mitigate the risk that their institutions and systems may be used for money laundering (ML) or terrorism financing (TF).
They risk rules stipulate, among other proposals that:
  • Senior management of banks are to implement board-approved money laundering/terror financing policies.
  • Bank staff are to prepare periodic reports on money laundering and terrorism finance for their senior management and boards of the bank and also communicate these to the CBK. 
  • Financial institutions will be required to appoint a money laundering reporting officer who will be the point of contact for CBK.
  • Banks should assess and rank TF and ML instances and actions in terms of high, moderate, and low risk. 
  • They should identify countries and regions that are high risk for business; high-risk includes countries subject to sanctions from the UN and other credible organizations, countries that don’t have appropriate banking safeguards and countries known to sponsor terrorism.
  • Banks are to assess their customers for money laundering and terror financing risks; suspicious customer activities include frequent and unexplained movements of money to other accounts, or other institutions, and to far locations. They should also look at politically exposed persons who bank with them including prominent public figures, senior politicians, judicial officers, corporate CEO’s who dealing with them, or their families, may bring a reputational risk to the bank.
  • Banks are to assess their service delivery channels for money laundering risks. They are to pay attention to cash-intensive businesses, including supermarkets, convenience stores, restaurants, retail stores, liquor stores, wholesale distributors, car dealers. 
The guidelines follow an earlier directive on paper bag banking from two years ago. The new ML and TF rules are in draft form and bankers and any interested persons are invited to send comments to the CBK on the proposals before January 31, 2018.

Investor Motivated Terrorism

There have been two recent attacks which have looked like they were motivated by terrorists, but which now appear to have been linked to investors with issues or seeking gains

There was the deadly attack in Manila, Philippines on a casino and shopping complex that’s now attributed to a heavily indebted Filipino (a, former finance department employee who owed more than $80,000, and had sold off some property) who was hooked on gambling (his family had even asked casinos in the capital to ban him) …authorities released security footage showing Carlos casually exiting a taxi just after midnight and walking calmly into a vast entertainment and gambling complex like any other visitor. Shortly afterward, he dons a black ski mask, slips on an ammunition vest and pulls an M4 carbine assault rifle out of his backpack…at least 37 patrons and employees died, mostly from smoke inhalation as they tried to hide

But more shocking was the bus attack back in April on the team bus of a German soccer team.

  • In what seems like a plot from a James Bond movie, police arrested a man on suspicion he attacked the bus of German soccer team Borussia Dortmund GmbH last week as part of a scheme to profit from a slump in the club’s share price.
  • The man stayed in the same hotel as the soccer team, with a room overlooking the site of the attack. He bought put options online via the IP address of the hotel, the prosecutor’s office said. The options grant their owner the right to sell shares at a fixed price in the future. The man had taken out a loan to finance the transaction, according to the statement.
  • On the day of the April 11 attack in the team’s home city, he bought 15,000 options on Borussia Dortmund shares, betting they would drop sharply after the attack. (On the day of the attack, 15,000 equity-covered put options were traded at 18 cents a piece at 11:16 a.m. in Frankfurt, about 8 hours before the bombs went off. The options, issued by DZ Bank AG and due to expire on June 16, give the right to sell Borussia Dortmund shares at 5.20 euros. The shares closed at 5.61 euros that afternoon, shortly before the attack took place, and fell as low as 5.50 euros the next day. The stock hasn’t traded below 5.20 euros since February. DZ Bank declined to comment. The suspect bought three types of derivatives, with the suspicious trades leading authorities to the man)
  • The man later placed three bombs in a hedge on the road that the team bus was due to take to the stadium, prosecutors said. The explosives contained metal pins, which after the explosion were found as far as 250 meters (275 yards) away. One pin was found in a head-rest of one the bus seats, the authorities said.
  • “A massive share drop would have had to be expected, had a player been gravely injured or even killed as the result of the attack,” the prosecutor’s office said. Police are still calculating what the maximum profit could have been had the plot gone as planned, she said.
  • Borussia Dortmund said in a statement that it hopes all details of the plot will be cleared up in order to help the team, one of the few to be publicly traded, cope with the trauma caused by the incident.

Here in Kenya, we don’t have many mass attacks linked to such, but there are numerous stories of people who have taken their lives after gambling losses.

Globalisation affects terrorism

At one time the IRA used to bomb the British mainland with impunity while enjoying some local sympathy and receiving funds from Irish-American causes. But now that other terrorists have taken over, bombing it is no longer ‘acceptable’ and the IRA has now decided to end violent actions against Britain. It’s like when a new bully shows up in a school, who’s stronger, badder and crazier than the reigning school bully, the incumbent bully realizes that he doesn’t scare and no one fears/cares about him anymore – and so loses and gets a haircut, cleans up his act and tries new things such as becoming a better student.