The US government is planning to use $7bn (£5.16bn) in frozen Afghan assets to compensate victims of the 9/11 attacks and for relief efforts.
Washington froze the money after the Taliban took power last year but has been under pressure to find a way to use it without aiding the militants.
The Taliban have repeatedly called for the money to be released to avert a humanitarian catastrophe.
The move came in an executive order declaring a national emergency.
As for the funds, President Biden’s order formally blocks them, and says US financial institutions should transfer them to a consolidated account at the Federal Reserve.
The money, along with another $2bn held in Europe, the UAE and elsewhere, is primarily the proceeds of international assistance given to Afghanistan over the last two decades.
On Friday, a senior administration official said that a third-party $3.5bn trust fund would be set up to ensure that the money addresses the immediate humanitarian needs of the Afghan people, while at the same time “ensuring no benefit goes directly to the Taliban”.
“We’ve not made specific decisions about how the funds will be used,” the official said, adding that it would be months before the money was available, pending a judicial decision.
The rest of the money, the official said, would remain in the US and was subject to ongoing litigation by US victims of terrorism.
In 2010, about 150 family members of people killed on 9/11 sued several targets – including the Taliban and al-Qaeda – for their role in facilitating and planning the attack.
While some have made claims against the funds, a court will need to determine whether they can access them, the White House said.
“The US claimants are going to have a full opportunity in US courts,” the official said. “This is one step forward in a process and no funds are going to be transferred until the court makes a ruling.”
Afghanistan’s economy has been in a freefall since the Taliban takeover, with the UN warning the country could approach a “near-universal” poverty rate of 97% by the middle of 2022.