01 The Hour
Friday
24 September 2021. Reconstructed to the day.
At a branch counter in Afghanistan that week, an account holder could draw 200 dollars, or 20,000 afghanis, and that was the week's allowance. Some of the twelve state owned and commercial banks had closed. Others were working at limited capacity, and were reported as often unable to hand over even the weekly maximum.
In Washington the same day, the Treasury issued two general licences: one authorising humanitarian activities in Afghanistan, one authorising the export of agricultural commodities, medicine, medical devices, replacement parts and software updates.
Five more followed over the next five months.
02 The Sequence
June 2021 A financial statement of the central bank, Da Afghanistan Bank, put total international reserves at around 9.5 billion dollars. Of that, 7 billion sat on deposit at the Federal Reserve Bank of New York. The rest was held inside the country or with foreign financial institutions.
Aug 2021 After the takeover, the reserves held abroad were frozen and the country was cut off from the international banking system. A run followed on the domestic banks. Some of the twelve state owned and commercial banks closed; the others ran at limited capacity. A weekly withdrawal cap of 200 dollars was set for individual accounts.
24 Sep 2021 General Licence 14, authorising humanitarian activities in Afghanistan, and General Licence 15, covering the export or re-export of agricultural commodities, medicine, medical devices, replacement parts and components, and software updates.
10 Dec 2021 General Licence 16, authorising non-commercial personal remittances to Afghanistan. The money a family abroad sends home had needed its own authorisation, and now had one.
22 Dec 2021 Three more on one day. General Licence 17 for official business of the United States Government, General Licence 18 for the official activities of certain international organisations, General Licence 19 for transactions supporting the work of non-governmental organisations. A fact sheet issued with them stated that the sanctions on the Taliban and the Haqqani Network do not stand in the way of assistance for, or personal remittances to, Afghanistan. The United Nations Security Council adopted its own carve out the same day.
Dec 2021 The central bank raised the weekly cap on individual accounts from 200 dollars to 1,000.
11 Feb 2022 Executive Order 14064 blocked the Afghan central bank reserves held in the United States, with a stated intention to disburse 3.5 billion of the 7 billion then held there.
25 Feb 2022 General Licence 20, authorising transactions involving Afghanistan or governing institutions in Afghanistan. The Treasury described it as expanding authorisations for commercial and financial transactions in the country, including with its governing institutions, and noted that it, together with the six issued before it, helped implement the Security Council resolution of December.
03 The Hidden Dependency
The sanctions in question were not sanctions on a country. They were counter terrorism designations of named persons and groups, of the kind that had been in place for years.
Those persons then became the governing institutions. A tax receipt, a customs payment, a utility bill, a salary paid by a ministry: each of these now touched a blocked party without anyone intending it. That is the work the licences were doing. Read their titles in order and you are reading a list of the ordinary transactions that had stopped being ordinary.
The question at the desk was no longer whether a payment was lawful in itself. It was which licence it fell under.
The question at the desk was no longer whether a payment was lawful in itself. It was which licence it fell under.
04 What Still Worked
The Personal Remittance
Non-commercial personal remittances were authorised by name from 10 December 2021, and the fact sheet of 22 December repeated that the designations were not meant to stand between a family abroad and the money it sends home.
Food And Medicine
The second licence of 24 September covered agricultural commodities, medicine, medical devices, replacement parts and components, and software updates, which is a list of the things a country cannot go without while its payment routes are being rebuilt.
The Weekly Allowance
The counter kept paying out inside the cap, and the cap was raised from 200 dollars a week to 1,000 in December. What it could actually hand over on a given day was another matter.
05 The Plumbing
The Plumbing 22 December 2021
A general licence is a standing authorisation. It is published, it names a class of transactions, and anyone whose transaction falls inside that class may proceed without applying to anybody.
The alternative is set out in the same guidance. For transactions not otherwise authorised or exempt, the office considers licence requests one at a time, prioritising those related to humanitarian assistance. The published list is the fast route; everything else joins a queue with a telephone number and an email address at the end of it.
06 The Pattern Library
1 When one retail withdrawal channel closes or fails, demand concentrates on whichever channel is left open, and the capacity of that channel sets what a depositor can obtain.
Observed: Northern Rock 2007, Cyprus 2013, India 2016, Greece 2015, United States 1933, Argentina 2001, Lebanon 2019, Worldpay 2026, TSB 2018, Afghanistan 2021.
2 A currency replacement can require physical modification of each cash dispensing machine before the new notes can be issued, so the machine estate returns to service site by site rather than at once.
Observed: India 2016.
3 Withdrawal limits imposed on a domestic banking system can be written to exempt cards issued outside it, so one machine dispenses under two rules according to where the card was issued.
Observed: Greece 2015.
4 Domestic payment and deposit channels can continue operating while cross-border payment routes fail, with the central bank standing in as the intermediary for payments to and from the country.
Observed: Iceland 2008, Germany 1931.
5 When the institutions that convert payment instruments into cash are closed, wages and checks already received cannot be spent, and merchants and carriers extend their own credit in place of the missing conversion.
Observed: United States 1933.
6 A public employer short of the national currency can pay wages in an instrument it issues itself, which then circulates alongside the currency it stands in for.
Observed: Argentina 2001.
7 Withdrawal restrictions can be imposed by individual institutions and their trade association rather than by statute, so the limit differs from bank to bank and no law governs it.
Observed: Lebanon 2019.
8 A cash withdrawal ceiling set in nominal units has to be raised alongside the note denominations that pay it, because the ceiling can only be dispensed in the notes that exist.
Observed: Zimbabwe 2008.
9 A payment outage can hit card authorisation and merchant funding as separate faults, so acceptance at the terminal is restored while the money owed to the merchant arrives a day late under its own incident notice.
Observed: Worldpay 2026.
10 A retailer that loses electricity can go on trading by taking cash and rationing goods by hand, so the counter outlasts the checkout system that normally prices and settles the basket.
Observed: Texas 2021.
11 A systems migration can leave account records readable but wrong, including presenting one customer's account to another, so a working login is no guarantee that the balance on the screen belongs to the person reading it.
Observed: TSB 2018.
12 The size of a card processing failure can be counted twice, once on first attempts and once after the same card was presented again, and the second count can be about half the first, so part of the recovery runs through the cardholder at the till.
Observed: Visa Europe 2018.
13 A restriction on access to money can be written by purpose as well as by amount, so a balance that cannot be drawn in general becomes payable when it is used for wages, taxes or relief, and the test applied is what the money is for.
Observed: Germany 1931, Brazil 1990.
14 A deposit freeze can be paired with a transferable certificate issued against the frozen balance, so the deposit becomes a claim that can be sold before it is released, at a price the market sets rather than its face value.
Observed: Ecuador 1999, Argentina 2002.
15 A per head issue of a new currency can be distributed through the administration that issues food rations rather than through the banks, so the ration card is the proof of entitlement and the banks are used to collect the old money rather than to pay out the new.
Observed: Germany 1948.
16 When the persons under sanction become the governing institutions of a country, the prohibition reaches ordinary payments that merely touch the state, and access is restored by successive general licences written by activity, so what decides whether a payment can be made is which licence it falls under.
Observed: Afghanistan 2021.
Changed today: Entry 1 gained Afghanistan 2021, where the branch counter was the channel left open, under a weekly cap of 200 dollars later raised to 1,000, with branches reported as often unable to hand over even that. Entry 16 added, on access restored by successive general licences written by activity.