The Iraqi government has made a decision to prohibit 8 local commercial banks from transacting in dollars as part of measures to curb fraudulent activities, money laundering, and other illicit uses of the American currency. This move comes just days after a visit by a high-ranking official from the US Department of the Treasury to the capital, Baghdad.
As per the decision, these banks will be banned from participating in the daily dollar auction regulated by the Central Bank of Iraq, which is the primary source of hard currency in the country, heavily relied upon for imports.
Iraq has become a critical focal point in the US campaign to limit the smuggling of dollars into Iran. The country, a rare ally of both the United States and Iran, has reserves exceeding $100 billion in the US. The Iraqi economy is significantly reliant on Washington’s goodwill to ensure the unhindered access to its oil revenues and financial resources.
The Central Bank of Iraq issued a document listing the prohibited banks, which include Ashur International Investment Bank, Iraqi Investment Bank, Iraqi Union Bank, Kurdistan Islamic International Bank for Investment and Development, Hudha Bank, Islamic Bank of the South for Investment and Finance, Islamic Arab Bank, and Hammurabi Commercial Bank.
A spokesperson for the US Department of the Treasury praised the continuous steps taken by the Central Bank of Iraq to safeguard the Iraqi financial system from misuse.
In a broader campaign, Iraq had previously barred 14 banks from conducting dollar transactions in July last year, part of a wider effort to prevent the smuggling of dollars to Iran through the Iraqi banking system. This decision was made following a request from Washington.
The Central Bank of Iraq has stated that the banned banks are allowed to continue operations and conduct transactions in other currencies.
Recently, Brian Nelson, the US Treasury’s Assistant Secretary for Terrorist Financing and Financial Intelligence, met with senior Iraqi officials in Baghdad to discuss ways to protect the Iraqi and international financial systems from criminal, corrupt, and terrorist entities.
During the visit, the US Treasury announced measures against Hudha Bank, stating its involvement in transferring billions of dollars to Iran-backed groups.
Furthermore, a senior official at the Treasury mentioned that the US expects Iraq to make greater efforts to assist in countering armed groups supported by Iran, which operate from Iraq. After the killing of three US soldiers last week, the US attributed responsibility for the attack to Iraqi extremist factions.
The current Iraqi government, supported by powerful parties backed by Iran and armed factions with significant stakes in the informal Iraqi economy, is being lauded by Western officials for collaborating with Prime Minister Mohammed Shia al-Sudani in implementing economic and financial reforms aimed at limiting Iran and its allies’ access to the dollar and aligning the Iraqi economy with international standards.
