Iraq prohibits 8 banks from using US dollar in transactions

Baghdad (IraqiNews.com) – Days following a visit by a senior US Treasury official, Iraq barred eight local commercial banks from carrying out transactions in US dollars, reducing fraud, money laundering, and other illicit uses of US cash.

The banks are prohibited from participating in the daily US dollar auction held by the Central Bank of Iraq (CBI), which is the primary source of hard currency for Iraq and the focus of an American campaign against the smuggling of money into Iran, according to Reuters.

Iraq trusts that Washington will continue to provide access to oil earnings and finances, given that Iraq has reserves worth over $100 billion in the United States.

Last July, the United States barred 14 Iraqi banks from conducting US dollar transactions as part of a crackdown on transferring US currency to Iran and other sanctioned countries.

The step highlights the ongoing efforts to lessen Iran’s access to international financial networks.

The primary objective of the US sanctions is to curtail Iran’s ability to access US dollars through Iraqi banks. By targeting these financial institutions, the US hopes to disrupt the flow of funds that could potentially be used by Iran to support activities contrary to US interests, BNN Breaking reported.

The US Treasury Department identified last week Al-Huda Bank, an Iraqi bank that serves as a conduit for terrorist financing, as a foreign financial institution of primary money laundering concern.

The Financial Crimes Enforcement Network (FinCEN) also issued a finding and a regulation that would cut off Al-Huda Bank from the American financial system by forbidding domestic financial institutions and agencies from opening or keeping a correspondent account for or on behalf of Al-Huda Bank.

The US Treasury Department said in a statement that Al-Huda Bank and its foreign supporters, such as Iran and its proxies, siphon off money that would otherwise go toward supporting lawful commerce and the ambitions of the Iraqi people to become economically self-sufficient.

The US Department of the Treasury’s Under Secretary for Terrorism and Financial Intelligence, Brian Nelson, said that Iraq has made significant progress in rooting out illicit activity from its financial system, but unscrupulous actors continue to seek to take advantage of the Iraqi economy to raise and move money for illicit activity.