A US federal appeals court has rejected efforts by families of victims of the September 11, 2001 attacks and the 1998 al-Qaeda embassy bombings in Africa to claim billions of dollars from Afghanistan’s frozen central bank reserves.

In its August 21 ruling, the Second Circuit Court of Appeals in Manhattan said that the $3.5 billion held at the Federal Reserve Bank of New York is protected under the Foreign Sovereign Immunities Act (FSIA), which shields state-owned assets from seizure.

The court stressed that Da Afghanistan Bank (DAB), the country’s central bank, is a state institution and therefore immune from claims targeting the Islamic Emirate of Afghanistan (IEA).

The families had argued that Afghanistan’s reserves should be used as compensation because the IEA provided safe haven to al-Qaeda, the group behind the attacks.

But the court found the plaintiffs failed to prove that the central bank was under IEA control on August 15, 2021, when Kabul fell and the assets were frozen. While the IEA later replaced senior bank officials, Judge José Cabranes noted there was no evidence of such control at the time of the freeze.

The funds were blocked by the Biden administration following the IEA takeover in 2021. The victims’ families sought access through the Terrorism Risk Insurance Act (TRIA), but the court ruled they could not show that DAB was being used as a “terrorist instrument.”

The decision marks a major setback for families pursuing long-standing compensation claims against al-Qaeda and its backers.

Al-Qaeda carried out the September 11 attacks, which killed nearly 3,000 people in New York, Washington, and Pennsylvania, as well as the 1998 bombings of US embassies in Kenya and Tanzania, which killed 224 people.