Days after a top US Treasury Department official visited Baghdad, Iraq resolved to restrict the use of US dollars for fraudulent, money laundering, and other criminal purposes by banning eight local commercial banks from trading in the currency.
The Central Bank of Iraq holds a daily dollar auction; the auction is the primary source of hard currency for the import-dependent nation. The judgment states that banks will not be allowed to participate in the auction.
A center of attention
The American strategy to decrease money smuggling to Iran now centers on Iraq.
With reserves in the United States of over $100 billion, this nation is a rare ally of both the United States and Iran. Iraq is significantly dependent on Washington’s goodwill to guarantee that its access to oil income and financial resources is not impeded.
The names of the prohibited banks, which are the Assyria International Investment Bank, the Iraqi Investment Bank, the Iraqi Union Bank, the Kurdistan International Islamic Bank for Investment and Development, Al-Huda Bank, the South Islamic Bank for Investment and Finance, the Arab Islamic Bank, and the Islamic Bank of Iraq, were listed in a document released by the Iraqi Central Bank and confirmed by a bank official. Hammurabi for commerce.
A representative for the US Treasury commended the Central Bank of Iraq for its ongoing efforts to prevent exploitation of the country’s financial system.
In July of last year, Iraq made the decision to stop 14 banks from accepting dollar transactions. This move was a part of a larger effort to stop dollars from being smuggled into Iran at that time through the Iraqi banking system. According to American and Iraqi authorities, the decision was made in response to a request from Washington.
According to the Central Bank of Iraq, banks that are prohibited from dealing in dollars are nonetheless permitted to operate and carry out transactions in other currencies.
In a meeting with top Iraqi authorities last week in Baghdad, Brian Nelson, the US Treasury Undersecretary for Counterterrorism and Financial Intelligence, explained strategies for safeguarding the international and Iraqi financial systems from acts of terrorism, corruption, and criminal activity.
During the visit, the Treasury Department imposed sanctions against Al-Huda Bank, alleging that the bank had taken part in the transfer of billions of dollars to organizations supported by Iran.
Increased Intense
Following the death of three American soldiers last week, which Washington has blamed on extremist Iraqi factions, Reuters quoted a senior Treasury Department official as saying that Washington expects Iraq to step up efforts to counter the armed groups operating out of Iraq that receive Iranian support.
Strong parties supported by Tehran and armed groups with vested interests in the country’s mostly unorganized economy, particularly the financial industry—which has long been suspected of being a hub for money laundering—helped bring the present Iraqi government to power.
The implementation of economic and financial reforms aimed at bringing the Iraqi economy into compliance with international norms and restricting the access of Iran and its allies to the dollar was commended by Western authorities for their collaboration with Prime Minister Muhammad Shiaa Al-Sudani in Iraq.
